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It’s all about the money

Alberta Beef Producers seeks a return of the mandatory checkoff

After five years of doing without and a year of town hall meetings and weeks of internal discussion Alberta Beef Producers is primed to put its case for a non-refundable checkoff before the Alberta government this spring.

The question will be carved into the revised five-year plan governing the ABP operations that will be presented first to the provincial gatekeepers who sit on the Agricultural Products Marketing Council and ultimately Agriculture Minister Verlyn Olson for a final decision.

As the producer delegates gathered in Calgary last month to put the final touches on their proposal the irony of the situation wasn’t lost on anyone. While most of them were wondering how to invest the windfall profits coming from their calves this year, their cattle organization was scrimping just to meet its current obligations.

At a time when the industry is largely optimistic about the future and busy negotiating some lofty targets for a new National Beef Strategic Plan to ensure Canada’s beef business remains competitive it is increasingly clear that it doesn’t have the money to pull it off.

Alberta has long been the engine that drives the industry but the ABP simply won’t be able to prop up the grand plans the industry is making for itself, not without some significant changes to its checkoff. Total revenues are down with shrinking cattle numbers and bound to go lower in the foreseeable future. Add to that a fairly steady drain of about $2 million a year in refund claims and the ABP has been short of cash for some time now.

The pressure on the nationally funded Canada Beef and Beef Cattle Research Council isn’t quite as severe since an earlier agreement between the ABP and Alberta Cattle Feeders’ Association left the national checkoff dollar non-refundable. ABP provides 27 per cent of Canada Beef’s total budget and a similar portion for the research council.

The remaining $2 of the provincial checkoff can be refunded twice a year, in June and December.

The drain has been fairly consistent since the first refunds were made in June 2010. An average of 320 cow-calf producers have filed for refunds totalling between $170,155 and $304,527 so far. Between 149 and 191 feedlots filed claims during the eight refund periods between 2010 and 2013, with the totals ranging from $871,955 to $1,281,630. A small number of feedlots takes out most of the funds but the names remain confidential.

At the same time the total provincial checkoff has shrunk from $12.8 million in 2009-10 to $10.8 million in the last fiscal year, 2013-14. Last year, once they deducted the refunds and dealer rebates that left $8.3 million. Of that $3.7 million is national checkoff funds and went off the top to Canada Beef and the Beef Cattle Research Council. Another $1.6 million went to the Canadian Cattlemen’s Association, to support its work.

What’s left is set aside to fund the ABP’s operations (including the CCA allotment) the following year. Up to now, they’ve managed to keep $5 million rolling forward after refunds every year to cover their expenses.

In searching for a way out of this zero sum game, the ABP had no choice but to consider raising the checkoff.

One option was to raise the national checkoff to $2 per head but no one wanted to try and sell that option, not when other provinces aren’t collecting their full share of the levy, and others are clawing some of it back to run their own marketing and promotion programs.

They also considered a single checkoff at the farm gate, possibly tied to the sale of RFID tags, and a single checkoff at slaughter or export but dismissed both as either unfair, or unworkable.

In the end they decided to broach the idea of raising their own provincial checkoff. Obviously that won’t go down well with the majority if these few hundred producers continue to pull out their share whenever they want.

To get around that the board proposed a three-piece checkoff that added a non-refundable $1 provincial levy to be spent solely on marketing, promotion, research, and industry communication and collaboration with other beef groups. The $2 service charge that pays for ABP and CCA lobbying, administration and legal bills would remain refundable. Add the national $1 and this would give Alberta a $4 per head checkoff with half of it still refundable.

It was a compromise, one that obviously didn’t sit well with the delegates who were clearly fed up with the refundable checkoff, and those who claim it every year. In a series of heated debates the delegates recommended the board ask for a non-refundable $4 checkoff.

Short of that they want the names of those requesting refunds to be made public. They also supported the creation of a credible Cattle Industry Leaders Forum to advise the ABP board on where the checkoff money should be spent.

Now it is up to the gatekeepers and the minister. The ABP hopes to have an answer by June.

About the author

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Gren Winslow

Gren Winslow is a past editor of Canadian Cattlemen.

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