The Canadian Canola Growers Association will be transferring funds to the Canola Council of Canada so that the council can continue to work on market development and branding in places such as South Korea, Vietnam and other Pacific Rim countries.
In December, the council unveiled plans to restructure its operations and reduce its 2019 core budget to $5.2 million, down from $8.7 million in 2017.
To reduce expenses, the council will discontinue its consumer-oriented promotion programs in established markets. The council also announced it will collaborate with the canola growers association to develop a marketing and branding program in new and emerging markets.
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However, CCGA staff will not be doing the work. Instead, the association will pay the canola council to do overseas branding and promotion.
“What our role is, is basically funding that portion for this program for the Canola Council of Canada to deliver,” said Rick White, CCGA chief executive officer.
“The canola council will do that basically as a fee for service arrangement that we’re still working on.”
It’s unclear how much CCGA money will be spent for the initiative, but the association will be paying the canola council to develop demand in countries where there is an opportunity to export more canola seed, canola oil and meal.
“There were some key areas of value that we thought were not being addressed, under their new structure … one of them being long-term brand development, diversification of our export market … getting canola introduced into markets where we don’t typically have a lot of business and trying to expand that business,” White said from his office in Winnipeg.
The CCGA chose to fund canola council efforts rather than take it on itself because it doesn’t have the necessary knowledge for the task.
“They have the expertise, they have the people, they have the co-ordination of the value chain,” White said.
“All that is there. We don’t have that expertise but we do have resources available.”
The canola council is restructuring because it has less revenue. Last January, Richardson International withdrew from the canola council, Soy Canada and the national flax council, pulling funding of more than a $1 million a year.
Richardson had concerns about the mandate and structure of the canola council and felt its contribution was not well spent. For instance, Richardson questioned why the council devoted large resources to market development for an oilseed that’s known around the world. It also wondered why the council spends money on agronomists when private companies have their own agronomists.
“We don’t think we got the value out of it,” Jean-Marc Ruest, Richardson’s senior vice-president of corporate affairs, said in January 2018.
In its recent restructuring, the canola council said it was reducing its role in agronomy extension and market development.
Based on the council’s financial statements for 2017:
• It spent $4.27 million on market development and market access, which was about 28 percent of the total budget of $15.3 million.
• Of the $4.27 million, project grants (mostly from government) covered $2.05 million for market development and access.
• canola council members provided $2.22 million.
The canola grower association’s contribution to the council for branding and market development in new and emerging markets won’t be known until the council releases details of its 2019 budget. The CCGA is one of the groups that administers the Advance Payments Program. It provides cash advances of up to $400,000, with the first $100,000 interest free, to 45 commodities in Canada. Provincial canola organizations are members of the CCGA, but White said their total annual contribution is only $3,600.
“For all intents and purposes … the Cash Advance program, our operations, fund the organization,” he said.
“We don’t get any money from the federal government at al, to do this program.”
The association earns money by negotiating with commercial banks to get the best possible terms on loans.
“That’s where we earn our money, by deep discounting the banks, and they’re happy to do big business,” White said.
“The way we fund ourselves, we’re extracting value and revenue from the banks … so it’s a great model for farmers.”
CCGA’s mandate
The Canadian Canola Growers Association represents 43,000 canola producers. Its mission is to enhance the success of Canadian canola farmers and does that in several ways:
• It is an Advance Payments Program administrator and delivers the program to 10,000 farmers a year.
• It develops policy on issues affecting canola growers, such as transportation, trade, sustainability and crop inputs.
• It advocates for growers by lobbying parliamentarians, legislators and government officials
Source: CCGA
Contact robert.arnason@producer.com
