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A Manitoba judge has dismissed a class-action lawsuit seeking damages for grain farmers following the federal wind-down of the Canadian Wheat Board monopoly, in what the decision says was the last of the litigation spurred by that controversial move over a decade ago.
In a decision this month, Court of King’s Bench Justice Chris Martin dismissed a 2017 claim from farmer Edward Andrew Dennis against the attorney general of Canada and G3 Global Grain Group, which became the successor to the wheat board.
The Canadian Wheat Board was established in 1935 as a voluntary marketing program and later became a compulsory monopoly — meaning western Canadian farmers were forced to sell it their wheat and grain, with few exceptions.
That was the case until after the 2011 federal election, when then prime minister Stephen Harper’s Conservative government took steps to transform the wheat board into a private entity.
That “spurred a host of litigation,” of which Dennis’s claim “is the last,” Justice Martin wrote in his decision.
Agricultural economist Barry Prentice said the decision marks “the last chapter” as the Canadian Wheat Board saga moves into history — and he thinks it’s time for the tale to finally come to an end.
“It caused a lot of divisions in the agricultural sector between farmers, because it was felt very passionately,” Prentice, the director of the University of Manitoba Transport Institute, said in an interview.
“There were those who were adamantly in favour of the wheat board, and those who were actually risking going to jail by trying to take the grain across the border to protest this limitation on their freedom.”
At rallies in Regina, farmers stand divided on keeping or ending the monopoly of the Canadian Wheat Board in 1994.
Lawyers for G3 said in a statement the decision “brings closure to a claim that had been pursued through multiple courts in multiple jurisdictions.”
A federal spokesperson said the government is “grateful for the time and diligence the court has brought to the consideration of this matter.”
Lawyers for the farmers declined to comment.
Misfeasance, contract breach claims
The class action was filed on behalf of grain farmers who sold through the wheat board’s pool marketing program in the last two years of its operation as a monopoly. The suit revolved around how money and specific accounts were used by the board during that time, the decision says.
The claim alleged misfeasance in public office by the federal minister responsible for the wheat board, and breach of contract by the board itself, seeking a total of up to just over $91 million.
The claims circle around the two options farmers had at the time to sell their wheat and grain: a pool program, where grain delivered in a geographic area was pooled by type, and a non-pool program.
Pool sellers would get an initial payment based on expected price, plus later payments for any increases in value as the product sold and any financial surplus from the pool. Non-pool sellers would get a higher upfront payment, but no later payments, the decision says.
Because the wheat board was responsible for covering non-pool losses, it had a separate contingency fund where it would put gains from non-pool sales.
But that contingency fund had a cap on how much money it could hold, and profits from non-pool programs defaulted to a pool account if the contingency fund’s limit was reached. If that amount contributed to a surplus in the pool account, it would be paid out to producers who were part of the pool, the decision says.
Prime Minister Stephen Harper celebrates the end of the Canadian Wheat Board monopoly and pardons farmers who were convicted of breaking the law under the old rules
The claim alleged the minister committed misfeasance by recommending to cabinet the board increase the contingency fund cap from $60 million to $100 million and then $200 million, and by then directing the wheat board to credit money to that fund.
The farmers argued that in the lead-up to the change at the wheat board, the fund was effectively used “as a general retained earnings account to capitalize the privatization” of the board.
The claim also alleged the wheat board breached its contractual obligations to farmers by crediting money to that fund in the fall of 2011, and by using money from pool accounts to pay some costs it alleged were related to the board’s transition to a private grain entity.
Justice Martin dismissed those claims, finding the minister’s actions were proper and lawful, there was no contract with the farmers, and the board had no choice but to pay the costs in question from pool accounts.
‘Outlived its usefulness’
The U of M’s Prentice said while the wheat board once served a purpose for farmers, it “essentially outlived its usefulness” and failed to adapt — something he said might apply to other regulation regimes today.
“Some might argue that maybe it’s time to take a hard look at the supply management program” for goods like dairy, eggs, chickens and turkeys, he said.
“It’s politically so sensitive, and nobody wants to touch it with a 10-foot pole,” but “it’s always been questioned … whether it’s still serving the need that it originally was designed for,” said Prentice.
“There’s a lot of people who support it. And there’s others who say … ‘No, this is inflating our food prices, and it’s time it ended.'”
