With his introduction of Bill 9 on April 11 Alberta Agriculture Minister Oneil Carlier gave the Alberta Beef Producers (ABP) the gift of a second chance to unify the provincial cattle industry as it faces increasingly uncertain times.
The bill revokes previous marketing legislation to give producers the right to choose via a plebiscite whether they want a refundable or non-refundable checkoff to fund their industry organization.
It’s about time.
Back in 2009 the beef industry in Alberta was still suffering from the fallout of BSE and warring over which direction the industry should take to dig itself out of the hole. The tension over what should be done and who should have the money to do it eventually compelled then agriculture minister George Groeneveld to convince his colleagues to rewrite Alberta’s marketing legislation to make producer checkoffs refundable.
At the time there was some thought producers should be given the choice to declare which organization would get their checkoff dollars while others thought some checkoff dollars that were refunded would be diverted to organizations that had a different view of what should be done.
For a time, it was chaotic. By September of that first year everyone realized that an open refund policy would starve the national promotion and research activities that were needed more than ever at that time. From that came a memorandum of understanding between the ABP and the Alberta Cattle Feeders’ Association (ACFA) to turn the $1 a head that Alberta was collecting for national marketing/promotion efforts into a mandatory levy.
It was a rough start but in retrospect that may have been the first step in bringing the Alberta industry together.
Fast-forward eight years and we now have a national beef strategy that all factions had a hand in creating. We have a National Cattle Feeders’ Association, and while it is thinly funded it is more often found at the table today when policy is being made. And we have a national debate on the need for an increase in the national checkoff to do more on the marketing front and fund more research that benefits beef producers in every part of the country.
So maybe it is time to put the demons of 2009 to rest. Sure, there are still tensions between the various factions. That is natural in this business, but with all the consolidation and value chains appearing today, even those tensions seem to be more manageable now.
Certainly with the Trump administration itching to renegotiate NAFTA, and U.S. trade officials openly praising the value of 332 studies to correct trade imbalances, and congressmen swooning over import taxes, there is need for unity on our side of the border.
The one constant with trade fights is they’re expensive. In the past when the Canadian Cattlemen’s Association (CCA) suited up to battle 332 actions on COOL they often had to dip into the Alberta Beef Producers’ back pocket to cover legal fees and unexpected expenses.
That’s a bit harder to do with a refundable checkoff. For the year ending March 31, 2016 the ABP refunded $2,352,697 on checkoff revenues of $10.38 million. Looking at it another way refunds add up to about 64 per cent of the $3.69 million raised that year by the Alberta’s mandatory $1 checkoff to pay for promotion and research.
It’s a tidy sum. But that is only one side of the challenge presented by a refundable levy. The other is the uncertainty. ABP executives can never be sure from one year to the next how much they will have to pay out in refunds although the total number of claims made every six months seems to have settled around 400. The last recorded number of refund requests was 429 with 294 from cow-calf producers and 135 by feedlot operators. Feedlots generally claim about 88 per cent of the refunds, and much of that goes to a handful of larger lots.
To be safe ABP has had to adopt an accounting system of paying forward. It’s like the layaway plans your parents or grandparents used to use to buy those little luxuries in life.
Each year once they’ve paid out the refunds and dealer rebates they set a little under $5 million in a fund to pay their operating expenses for the next year (which includes a monthly payment to the CCA for the work it does). The rest goes into funds for future years, trade advocacy and special projects.
The upshot is the ABP has had to learn how to live leaner which isn’t a bad thing but it makes it harder to recover if hit with big bills to lobby Washington or Ottawa.
Carlier has made it very clear he has no interest in the choice producers make, only that they have the right to choose. How people feel about that should become clear after a plebiscite is held.
The ABP will lose little time in asking the provincial marketing council to conduct a plebiscite once Bill 9 is passed in the legislature.
The next step will be to decide on the question that should be asked. ABP has been clear that it will seek support for a return to a non-refundable checkoff. The details, however, will be the subject of discussions between the provincial marketing council, which will conduct the vote, and the ABP, hopefully with the input and co-operation of other industry organizations, particularly the Alberta Cattle Feeders’ Association (ACFA).
Rich Smith, the executive director of the ABP says they are having ongoing discussions with the ACFA to see if they can arrive at a set of conditions under which it could support a return to a non-refundable checkoff.
That is hopeful.
In the end, it will be up to the beef producers of Alberta to decide how their checkoff funds should be managed. And that’s as it should be. Minister Carlier deserves some credit for giving them the chance to choose.