Assessing the impact of Alberta’s refundable checkoff
Alberta Beef Producers (ABP) is as ready as can be expected for April 1, the day when Alberta’s $3 checkoff becomes refundable.
ABP delegates endorsed their refund plan at their annual meeting in Calgary last month. But it has yet to be approved by the Alberta Agricultural Products Marketing Council. In times past that would have been a sure thing. But today, with the ABP so often at loggerheads with the provincial government, it is hard to know what the council, a Crown corporation, will do.
The only topic worth debating, however, is not how the refund will be handled but how, and if, it will impact efforts to move the industry forward. There are plenty of people arguing both sides of this question. From a practical point of view it only takes a few to pull a lot of money out of the kitty. Once it starts, it’s anyone’s guess how far it will go. As soon as one big feedlot requests a refund, simple economics seem to dictate its competitors will need to do the same.
The best guess is revenue could be cut in half. In response the ABP started cutting back last year to create a revolving $5-million operating fund to cover its core expenses for 2010-11. About $1.7 million of that is earmarked to maintain the Canadian Cattlemen’s Association national and international lobbying efforts. Once the refunds are paid out twice a year, what’s left will be divvied up, $1 to the national checkoff agency and $2 toward rebuilding the operating fund, and whatever fires need putting out that year.
As a result the ABP budget for 2010-11 starts with $5 million in revenue compared to $14 million last year, and nothing set aside to pay for the Beef Information Centre (BIC), the Canada Beef Export Federation (CBEF), the Beef Cattle Research Council (BCRC).
Alberta is not the only revenue source for these agencies, but it is the largest. Last year Alberta provided $2.7 million of the $4.6 million in national checkoff dollars used by BIC. Checkoff accounts for only 42 per cent of the total BIC budget, but unfortunately the rest is made up of matching dollars. The Legacy Fund administered by the Canadian Cattlemen’s Association matches 3:1 for every checkoff dollar. Some industry partners that fund BIC match at 9:1. So every dollar lost in checkoff kicks a minimum of $3 out of the BIC budget. They are budgeting for $1.38 million from Alberta in 2010.
It’s the same story at the other agencies supported by beef producer money. About $4.4 million of CBEF’s $7.6-million budget last year was from the national checkoff agency; Alberta supplied $1.2 million of that.
The CBEF and BIC boards have already agreed to amalgamate later this year to cut costs.
National checkoff supplies about a quarter of the Beef Cattle Research Council budget and most of that is used to trigger government funds into research the council has identified as vital to the growth and survival of the business. To date, it has turned $4 million in checkoff into $18 million for 59 research projects focused on the beef industry.
Of course, many of those who will request a refund as soon as they can after April 1, may believe these agencies aren’t really accomplishing much with this money. They may hold that the Alberta Livestock and Meat Agency (ALMA), or the Agriculture and Agri-Food Canada’s new market access secretariat are more likely to get results. Why lobby government, if you have a government agency ready to do your bidding anyway?
Certainly, these government groups will have a major influence on any future trade negotiations but I can’t help but wonder if it wouldn’t be better to have producer-funded agencies working side by side with them. Indeed, there is some evidence this is already happening. CBEF officials joined a recent trade mission to Japan organized by an ALMA board member.
Surely, this is a time when the beef industry needs all hands on deck when it comes to regaining access to markets. BIC already has done a lot of legwork to expand sales with Canadian and U. S. food processors and retailers. And CBEF has a network of agents on the ground in major markets around the world. It would be a shame to start dismantling whatever is already working, but it may come to that depending on how deep the cuts go.
There is another concern about relying solely on government agencies, even benevolent ones. They tend to change direction each time, the minister in charge or the party in power changes. Producer-paid-for agencies tend to have more constancy over time.
And that is one of the worries about this refundable checkoff. Once you pop the cork on this bottle it is very difficult to go back.