Companies unhappy with canola council, want restructuring, refocus

Canola Council of Canada, one of the largest ag industry associations in the country, is under pressure to adjust its priorities and get costs under control.

Some are even calling for it to merge with other oilseed organizations.

Ag industry leaders have told The Western Producer that oilseed crushers and grain elevator companies have become increasingly frustrated with the council, to the point that a couple of firms have contemplated leaving the organization.

The elevators and crushers, who are members of the CCC, are unhappy with the amount of levies they pay to the council each year and the return on their investment.

“It is about members’ sense of value from the canola council,” said Jim Everson, CCC president, who spoke to The Western Producer from Japan Nov. 15.

Everson confirmed that some members of the CCC are dissatisfied with the status quo and are asking for an overhaul.

“We are, as a council, having a review of our priorities at the council and our funding arrangements,” Everson said.

“It’s more about the priorities the industry has for the association. And how much (are) the costs of running programs to reach those priorities.”

The canola council was the first agricultural association in Canada to represent all parts of the value chain. It has members from canola grower associations, grain handlers, processors and food manufacturers, who work together through the council to advance the growth of the canola sector.

Under the CCC funding model, grain companies who are members of the council pay 23 cents per tone of canola exported. Canola processors also pay 23 cents a tonne on their crush of canola seed.

• In 2015, Canada exported 9.2 million tonnes of canola. Assuming 2016 levies were based on 2015 tonnage, elevator company contributions to the council would have been about $2.1 million in 2016.

• In 2015-16, processors crushed 8.3 million tonnes of canola, provoking a levy of around $1.9 million

Canola growers also pay a levy of 23 cents per tonne to the CCC. Provincial grower groups, which are members of the council, pay the levy on behalf of farmers.

Based on annual report data for the grower groups:

• In 2016, Manitoba Canola Growers’ contribution to the CCC was $600,000.

• Sask Canola contributed $1.7 million to the CCC.

• Alberta Canola contributed $1.25 million.

In total, grower levies to the CCC were $3.55 million in 2016, compared to approximately $4 million from the processors and elevator companies.

Crop science firms also fund the canola council, but their fees are smaller than the primary funders.

A grain industry rep said crushers and elevators want fewer commodity councils within Canada’s ag sector. For companies, it costs time and money to send reps to meetings for multiple commodity organizations. More significantly, companies that both export and crush canola must pay the council levies on both business activities. Those firms are likely paying hundreds of thousands in annual fees to the canola council.

Some members want the CCC to merge with other organizations, such as Soy Canada and the Flax Council of Canada, to form an oilseed council that represents a broader swath of commodities.

So far the CCC board is resisting that suggestion.

Everson said all members of the canola council are still focused on growing the industry and reaching a production goal of 26 million tonnes by 2025. However, the Council needs to listen to the concerns.

“There is a changing economic environment out there,” he said.

“A magnifying glass is being applied to all organizations … making sure we’re making efficient use of the dollars that industry and producers provide to us.”

Prairie canola grower organizations acknowledged that commercial players rather than farmers are creating the impetus to fundamentally change the canola council.

“This current round of changes is being driven from other parts,” said Langham, Sask., farmer Doyle Wiebe, chair of Sask Canola, who noted that his farmers are generally happy with the council’s activities, especially its extensive agronomy extension work.

Greg Sears, chair of Alberta Canola, said his board had no problem with a re-examination of the structure and functioning of the CCC, but suggested changes can’t be rushed, especially if there is a serious move to merge canola with other crop organizations.

“It’s not in itself a bad idea, but there are a lot of complications in making a merger like that work,” said Sears, who farms at Sexsmith.

For instance, virtually no soybeans are grown in Alberta, but millions of acres are grown in Manitoba, and Manitoba already has a vibrant soybean organization that also contains pulse crops. Making sure funding and other resources are properly allocated between regions and crops could be a challenge.

“There’s quite a bit of hair on this issue,” said Sears.

“It’s not as simple as it might at first appear.”

Farmer organizations say the nature of the changes being demanded by commercial players is not completely clear yet.

“We’ve had some discussions, but it’s a very fluid situation, changing every couple of weeks or months,” said Starbuck farmer Charles Fossay, chair of Manitoba Canola Growers.

However, commercial interests have been raising concerns about costs and duplication between oilseed organizations for a number of years and the issue appears to be coming to a head.

Wiebe said he expects concrete proposals to appear before the next crop goes into the ground.

“It’s sooner rather than later,” said Wiebe.

“Some things will likely happen that will be announced this winter some time.”

Contact robert.arnason@producer.com

Contact ed.white@producer.com

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Comments

  • ed

    At one point there was a very strong movement to put canola on the Canadian Wheat Board list of grains that were sold collectively for the gresater good. At the same ratios as the CWB was getting for farmers wheat, that would translate to about $25/bushel for their canola. That beats getting screwed on sales of canola to the turn of many billions of dollars each year. Obviously most farmers are getting this by now. Or at least we could all still hope!

    • Denise

      Monsanto owns (can)ola.

      • neil

        No single company owns canola. There are a few big ones that have substantial influence on canola research, sales and marketing but it is still up to each individual farmer what they want to use for growing canola.

  • neil

    I understand the grain company and crusher concern of double paying if their company does both functions. But they do make separate money on those two functions, exporting seed vs. exporting oil. Its too bad the article doesn’t elaborate what the life science companies pay. Is this a problem for the elevator and crusher companies too? Lastly, as a farmer I find their concern that there are too many commodity organizations for their staff too attend all the meetings a bit insulting. It is farmers who will decide how we want to be represented on the different commodity boards, it is not industry”s decision to make. Perhaps it is a good time to evaluate the priorities and budget of the Canola Council of Canada but I hope the farmers on that board do not get pushed around by the big companies and stand up for their constituents want, that being farmers.

    • ed

      Ya, that standing up for farmers thing will not happen. Most people on these boards are looking for their edge.

  • Richard

    People thinking cross-border wheat trade is good are the same people that wanted to rid of the Crow Rate? Really? 22 years ago? Might as well suggest they are also the grandchildren of people who wanted industry friendly amendments to the Manitoba Grain Act of 1900, where a lot of NFU thinking is still anchored. Stewart we have a whole generation of farmers who never knew the Crow Rate, and are farming successfully without it !! Use more current analogies please.

    • ed

      Actually not much of farming is successful right now unless you are in supply management where there is a slight margin. Every other sector is funding production with increased long term debt against capital items such as land. Even recyling that debt capital thru your operating sales is still leaving most farms at an annual lose or trivial profits. ROI is near zero. 75% of all farm income is coming from off farm sources. It is quite bad. It was not near so bad when we had the Crow Rate. Most the farms (over 70%) dissapeared after that was taken away.

  • Happy Farmer

    …”actually not much of farming is successful right now”
    There sure are a lot of farms proving that statement wrong!

    If your farm is successful with your methods and philosophies, good on you.
    Mine is successful, and i know for a fact that my methods and philosophies are quite different that yours, so good on me.

    Times change, CWB, Crow Rate, small companies, big companies, small farms, big farms, organic, conventional, gmo, non-gmo, tillage, zero-till.

    Successful people learn from the past, adapt in the present in order to survive in the future. What each of us can do with the past, present and future is up to each of us.

    Freedom of choice in a free enterprise society, we are incredibly blessed. It seems to me that talking down to others using different methods and philosophies, will hinder the future of farming more than it will help.

    • ed

      The national numbers do not show that and even with over 75% less farms than not too many years ago, the national ag. debt continues to rise at an ever increasing rate of speed. By the way the majority of departing farmers in the west were under 35 years of age, which in itself is a bit of a dilemma. Fueled by cheap credit this feeling of success will eventually end abruptly.

      • Happy Farmer

        Less farms does not mean they are not successful. More debt does not mean they are not successful.

        With regard to farmers under 35 leaving farming- Perhaps they can make a better pay check doing something else. Maybe they don’t have the guts to put in the time and effort necessary to farm. All around me it is the older farmers that are retiring, not younger ones. Unless you mean that farm kids leave home after grade 12 and don’t ever come back.

        Cheap credit is a great thing. But it must be used wisely just like anything else, including the wisdom to keep or throw away stuff from the past.

        Change is inevitable. The only constant is change.

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