The court overturned a lower court ruling that said Agriculture Minister Gerry Ritz should have held a plebiscite among farmers before making the change.
The Appeal Court's decision released Monday says there is nothing to prevent the government from changing its own law in Parliament.
"I am of the view that none of the arguments advanced by the respondents or the interveners can sustain an interpretation that would preclude the minister from introducing in Parliament legislation which would fundamentally modify the CWB’s mandate or which would lead to the repeal of the CWB Act," Justice Robert Mainville wrote on behalf of the three-member panel.
"I have found no statement confirming or implying that the intention behind (a 1998 law) was to restrain the minister from proposing to Parliament legislation fundamentally modifying or repealing the CWB Act."
The ruling might be the final nail in the coffin for the six-decade-old requirement for western wheat and barley sales to be made exclusively through the wheat board. The federal government passed a law last year to allow western producers the right to sell to whomever they choose, as producers in other regions do.
Supporters of the monopoly, including former board directors, immediately challenged the change in court. They argued that under a 1998 law, the government could not make major changes to the wheat board without first holding a plebiscite among producers.
Last December, Federal Court Justice Douglas Campbell agreed with the wheat board supporters. He ruled that the government broke the law by not holding a plebiscite. But Campbell also made it clear his ruling was just a statement on the government's actions. He said he would not interfere with the legislative process and did not order the government to reverse its decision.
The federal government appealed Campbell's decision, and with that ruling now overturned on appeal, the government has a clear path to an open market.
"Farmers are moving forward and contracting their wheat and barley with buyers of their choice for delivery beginning Aug. 1, 2012," Ritz said in a written statement.
Since the 1940s, wheat and barley farmers in Western Canada had to sell their grain through the board.
The Conservatives had long promised to allow farmers the option of independently selling their grain, but couldn't push through legislation until winning a majority government. The move has the support of many farm groups, who say producers can often get better prices on the open market.
But supporters of the monopoly say the open market will leave farmers at the mercy of railways and big, international grain companies. They argue the monopoly prevented producers from competing against each other for sales.
— By Steve Lambert in Winnipeg