Province of Ontario allows beer sales in some grocery stores

The premier of the province of Ontario, Kathleen Wynne, announced the government will allow beer to be sold in up to 450 grocery stores.

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Up to now beer in Ontario has been sold through the Beer Store chain — owned by breweries — but also through Liquor Control Board of Ontario stores that sell liquor and wine as well. There are also outlets at individual breweries. Only 13 percent of Canadians surveyed knew that the Beer Store was not a government-owned monopoly. It is actually owned by multi-national breweries: Owned at its inception by a consortium of Ontario-based brewers, subsequent national and international consolidation has resulted in control now being shared by three multinational brewing companies, two foreign owned and one which is 50% controlled by non-Canadian interests.The new regulations indicate the Beer Store should open ownership to others than the three current owners. There are 447 Beer Stores across Ontario.

Craft brewers are happy the new regulations require the Beer Store to devote 20 percent of its shelf space to craft brewers rather than just the seven percent now required. Also brewers who have more than one production site will be able to sell beer in more than just one.

Beer marketing varies from province to province with Quebec, for example, already allowing beer sales in even small grocery stores. Wynne also announced she would be adding a 25 cent tax to each case of 24 for the next two years. There will also be a beer ombudsman who will ensure that the changes are carried out properly. The grocery stores will only be able to sell beer in single bottles and six packs.

In announcing the changes, Wynne told reporters:“When it comes to the sale of beer in Ontario, I’m here to announce that the status quo is over and that the days of monopoly are done.” She claimed these were the biggest changes to beer sales in Ontario since prohibition ended in 1927.

Harper privatizes Canadian Wheat Board to US-based and Saudi multi-nationals

Canadian Agriculture Minister Gerry Ritz announced the deal with the multinational G3 Global Grain Group. The G3 are actually paying not one cent for the 50.1 per cent share they will get in the company.

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To get that share, the G3 Group must invest a total of $250 million. The G3 Group is a joint venture of Bunge Canada and SALIC Canada, the latter a subsidiary of the Saudi Agricultural and Livestock Investment Co.The other 49.9 percent of equity will be held in trust for seven years but the G3 has the option to buy back the trust units from farmers after seven years at their market value.

Ritz claims the new Wheat Board will increase the ability of Canada to export grain, as well as creating jobs, and promoting economic growth on the prairies: "Every relevant farm group across Canada supports this move. We see this as a great first step moving forward. We look forward to having another viable competitor."Farm groups opposed to the government action, such as the National Farmer's Union(NFU), are apparently just not relevant.

Jan Slomp, NFU president noted:"The CWB’s physical assets, its commercial relationships, and its good name have all been given away. The “buyers” of the CWB actually get to keep the $250 million pittance they are “paying” for it. Bunge’s 2014 sales totalled $58 billion and multi-billion dollar SALIC is a subsidiary of the Saudi sovereign wealth fund, PIF.”An NFU board member from the province of Manitoba, Ian Robson, said the deal was brokered in total secrecy and wondered about the financial accountability of the government. Robson discusses the benefits of the Wheat Board in this article After dismantling what is called the single desk selling feature of the Wheat Board, which gave it monopsonic power, the government has refused to release complete financial statements on the Wheat Board.

The Canadian Wheat Board(CWB) has a long history in Canada but was established as a marketing agency for prairie-produced wheat and barley on July 5, 1935. The Board was the sole buyer and marketer of wheat and barley, although barley was removed a few years ago. It is sometimes called a monopoly but the proper term would be a monopsony or single buyer. It is often called the single desk system. Many farmers believe the Wheat Board allowed them to get higher prices for their products than trying to bargain individually with huge grain companies. However, other farmers have claimed that they could get better prices bargaining themselves.

From the moment the Conservatives took power in 2006, the agriculture minister Chuck Strahl was determined to end the Wheat Board monopsony. In December of 2006 Strahl fired Adrian Measner. president of the Board, because of his vigorous defense of the the Board's monopsony.Some of the bitter history of the struggle can be found here and also here. A plebiscite taken by the Board showed that a majority of farmers supported the monopsony power or single desk selling. The CWB's monopsony was ended on August 1, 2012, as a result of the passage of Bill C-18, the Marketing Freedom for Grain Farmer's Act. While the CWB still functioned as a voluntary marketing organization, the bill also set a timeline for eventual privatization that has now been achieved ahead of schedule.

The government touts 49.9 percent of the company as a "Farmers Trust." The farmers will be allocated $5 per tonne of grain they deliver up to $250 million or a period of seven years. After that G3 can buy them out. The Trust will be operated by a three-member appointed board, one of whom can serve on the company board as well. The farmer's equity will not be in shares but in "units" in the trust fund. Not only will farmers have no control of this equity, the equity will give them no control in the company. NFU board member Doug Scott from Alberta said: “This $250 million “Farmer Trust” 49.9 percent equity gimmick is an insult. Since they destroyed the single desk, farmers have lost more than $7 billion dollars in less than 3 years. We had an elected Board of Directors at the CWB that managed the business in our interests and earned premium prices in the world market for all western grain farmers, year after year. Now, the Bunge-Saudi partnership plans to bribe us with our money just to get us to do business with them.”

Stomp also noted that at the very least $170 million in public funds were transferred to the CWB for the sole purpose of promoting its privatization. The result is that the Canadian Wheat Board is now majority owned by Bunge, an American-based multinational grain dealer and SALIC, a subsidiary of the Saudi Arabian sovereign wealth fund.

Last year a bid to buy the CWB by a farmer-owned group was rejected by the CWB. Of course Harper does not see any role for farmers in owning and controlling a marketing agency, that is for global traders and Saudi sovereign wealth funds. The main role of farmers is to faithfully vote for Conservatives, as most usually do.

Bank of Canada leaves overnight interest rate at 0.75 per cent

The Bank of Canada announced that it will be maintaining the overnight interest rate at a low 0.75. The bank rate will be one per cent and the rate on deposits 0.50 per cent.

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Total Consumer Price Index(CPI), according to the Bank, rose just one percent even though core inflation has remained near 2 percent for the last few months. The lower CPI rate is the result of the sharp drop in energy prices. The drop in the value of the dollar, increasing the cost of U.S. imports, has offset other factors that might reduce prices.

During the first quarter of this year, the Canadian economy has stopped growing due to damage caused by the decline in oil prices and its negative effect on the oil production sector.The Bank statement said:“The impact of the oil price shock on growth will be more front-loaded than predicted in January, but not larger. The ultimate size of this impact will need to be monitored closely.” The Bank predicts that the remaining quarters will see a rebound due to low interest rates, and the positive effect that lower dollar will have on exports. While the lower dollar helps exporters in that their products may be cheaper in countries such as the US, the higher prices for imported machines and materials used in production may partially offset these gains in some cases. The Bank has decided not to lower interest rates further as it did in January this year.

Stephen Poloz, the Bank of Canada Governor said: "By the middle of the year we should be seeing only the good stuff." However the statement also contained a number of warnings about the road ahead including the slow pace of business investment, and falling prices for Canadian commodity exports including oil, natural gas, lumber, hogs and iron ore.

For the entire year, the Bank predicts a growth rate of 1.9 per cent, down from the forecast of 2.1 per cent predicted in January. After no growth this quarter, the growth rate will be 1.8 per cent, 2.8 per cent and 2.5 per cent over the following three quarters on an annualized basis. Given the relatively slow growth rate, many economists expect that the Bank could very well cut rates again before raising them next year. Economist, David Madani, of Capital Economics insisted that it was "pure fantasy" if the Bank believes that economy will rebound as quickly as it predicts unless there is even more interest rate relief. However, the Bank sees the current rates as appropriate at least for now. If growth remains relatively sluggish Poloz may decide to lower rates once again as some predict. The Canadian dollar reacted positively to the Poloz announcement, increasing in value relative to the US dollar.

International Monetary Fund reduces Canada GDP growth rate projection

The International Monetary Fund(IMF) has slightly reduced its forecast for Canadian economic growth both for this year and next. Reduction in oil prices is partly responsible for the reduction in the growth outlook.

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The IMF's, World Economic Outlook, predicts that Canadian GDP will grow by 2.2 per cent this year and only 2.0 per cent in 2016. These predictions are both down 0.1 per cent from the last projection in January of this year. The US economy will do better than Canada, and is predicted to grow by 3.1 per cent both this year and next. Lower oil prices in the US will help spur consumer demand there. The US growth rate will still be below the global average estimated at 3.5 per cent for this year.

In spite of the slight decline, the IMF still describes Canadian growth as solid and reinforced by a relatively stronger US economy and the decline of the Canadian dollar which will help exports. The report said:“These developments have led to a welcome pickup in exports, but have yet to translate into strong investment and hiring. But risks are tilted to the downside, because the unusually large fall in oil prices could further weaken business investment in the energy sector and lower employment growth.”The lower oil prices will lower investment and employment significantly in areas such as Alberta where the energy sector is a key part of the economy. While the lower oil prices might have a net negative effect on Canada, the IMF estimates that if the lower prices were passed through to consumers globally there would be a net jump in global growth of about one per cent.

The IMF also suggested that the Canadian government pursue "targeted macroprudential policies that would address high housing sector vulnerabilities". The IMF is concerned that low mortgage rates will encourage borrowing and send house prices soaring, resulting in a possible real estate price bubble. If interest rates rose or there was a slump in employment many borrowers might not be able to make mortgage payments. The government has already taken some steps to make qualification for mortgages a bit stronger. Other policies to dampen demand may be required. House prices are still rising in Canada although mostly in some key markets such as Toronto and Vancouver. Cities in Alberta such as Edmonton and Calgary could see price declines as the energy industry cuts back due to the low price of oil. Some statistics on recent home prices can be found in this article.

Read more: http://www.digitaljournal.com/business/business/imf-slightly-reduces-growth-outlook-for-canada-this-year-and-next/article/430740#ixzz3XUZxqMfX