Vol. 145, No. 23 — November 9, 2011
SOR/2011-226 October 18, 2011
CANADIAN WHEAT BOARD ACT
Regulations Amending the Canadian Wheat Board Contingency Fund Regulations
P.C. 2011-1181 October 18, 2011
His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to sections 6 (see footnote a) and 61 of the Canadian Wheat Board Act (see footnote b), hereby makes the annexed Regulations Amending the Canadian Wheat Board Contingency Fund Regulations.
REGULATIONS AMENDING THE CANADIAN WHEAT BOARD
CONTINGENCY FUND REGULATIONS
1. Subsection 2(3) of the Canadian Wheat Board Contingency Fund Regulations (see footnote 1) is replaced by the following:
(3) The Corporation may not deduct an amount referred to in subsection (1) and credit it to the contingency fund if, as a result of the credit, the balance of the fund would exceed $100,000,000.
COMING INTO FORCE
2. These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Canadian Wheat Board (CWB) markets wheat and barley and manages pool accounts for wheat and barley. The CWB also operates certain producer pricing contracts such as Producer Payment Options (PPOs) and cash trading programs offered outside of the pool accounts. Producers who opt for these payment programs can benefit from fluctuations in the price of grain and can receive their payments sooner than those who opt for the pool account programs.
The operation of the PPOs and cash trading programs is not subject to the same federal government guarantees as the pool accounts. In 1998, provisions for a contingency fund were established through amendments to the Canadian Wheat Board Act to guarantee adjustments to the initial payments made by the CWB during the pool period, and to provide for losses that may occur as a result of the producer pricing programs. Since its inception, the contingency fund has only been used to provide financial backing in the event of losses from such programs offered outside of the pool accounts.
Surpluses generated from the operation of the non-pool programs and some interest earnings, primarily from prior feed barley credit sales, are allocated to the contingency fund. Subsection 2(3) of the Canadian Wheat Board Contingency Fund Regulations establishes the limit on the balance of the contingency fund at $60 million. The CWB has projected a surplus from its non-pool activities. The transfer of this surplus to the contingency fund would surpass its current limit of $60 million.
The regulatory amendment would, therefore, increase the limit of the balance of the contingency fund to $100 million to enable the CWB to transfer the surplus from non-pool activities into the contingency fund.
The alternative considered was to keep the limit at the current $60 million. Section 33 of the Canadian Wheat Board Act prescribes that revenues from sales of wheat and barley are to be placed in the pool accounts, unless there are provisions in the Act and Regulations specifying otherwise. Therefore, when the contingency fund reaches its limit, the only placement for surplus funds from the producer pricing programs is in the pool accounts. Transferring these surplus funds to the pool accounts may not be consistent with the intent of the Act and Regulations, unfairly benefiting one group of producers over another and distorting pool returns.
Benefits and costs
Increasing the limit of the balance in the contingency fund would provide greater financial security to the CWB in continuing the operation of the non-pool programs. There is no environmental impact of this amendment.
The CWB recommended that the limit be increased to respond to increased participation in the producer pricing programs. The higher limit will facilitate the continuity of these programs that the CWB offers to producers.
Compliance and enforcement
There is no compliance and enforcement mechanism. The Regulations govern the limit on the balance of funds in the contingency fund.
Crop Sector Policy Division
Policy Development and Analysis Directorate
Strategic Policy Branch
Agriculture and Agri-Food Canada
1341 Baseline Road
S.C. 1998, c. 17, ss. 6 and 28
R.S., c. C-24