Dairy farmers fine with checkoffs

Some prairie grain farmers suffer from a condition called “check-off fatigue.” They are sick of paying a 75 cents to $1 per tonne levy every time they deliver wheat, canola, barley and other crops to the elevator.

The levies are used to support the activities of provincial commodity groups, and a percentage of farmers grudgingly pay the levy and another group, perhaps 10 percent, asks for a check-off refund.

But dairy farmers, who pay much more in checkoffs to their provincial associations, don’t seem to mind levies of $20,000, $30,000 or more per year.

David Wiens, vice-president of Dairy Farmers of Canada, said he rarely hears dairy farmers complain about the $1.50 per hectolitre of milk levy for promotion costs or the 50 cent per hectolitre checkoff for administration that is used to operate the provincial and national dairy groups.

Most are OK with the large levies, he said.

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“They are…. Every farmer is obligated to the same checkoff,” said Wiens, who farms near Grunthal, Man., southeast of Winnipeg.

The dairy organizations are democratic, meaning farmers have a say in the size of the levies.

“When we increased it to a $1.50 (per hectolitre) a number of years ago, of course that requires a resolution at the annual meeting and would require a majority vote,” he said.

“Without that we wouldn’t be allowed to … (collect) the levy.”

Because grain, pulse and oilseed growers get frustrated with checkoffs that amount to $2,000 to $3,000 per year, it may be surprising to some that dairy farmers are willing to pay 10 times more in annual levies.

The Western Producer spoke to several representatives of national commodity groups for this story, and one of them said dairy farmers don’t worry about levies because provincial milk marketing boards set the price of milk. It’s completely different for a canola grower, who doesn’t have control over the price of canola.

Wiens said dairy farmers are aware of the checkoffs and know that they cut into farm profits.

“In (Manitoba), farmers get paid twice a month for their milk…. It (the levy) is all itemized on the cheque,” he said.

“(Farmers) realize that if they reduce the checkoff, there would be more money that stays on the farm.”

The lion’s share of the levies is used for marketing, nutrition and education campaigns for dairy products.

“In Canada, I would say there’s more than $100 million spent every year on promotions and marketing,” Wiens said.

“All of this has to be done with the support of producers. Without their support, we wouldn’t have the approval to (have) those check-offs…. They (farmers) feel it’s an important investment…. In the end, they have returns through market growth.”

Dairy Farmers of Canada spends significantly on marketing and brand building, but only a fraction of producer levies are used on lobbying.

“As it relates to our advocacy efforts we rely heavily on dairy farmers on their own time to do their advocacy and this is why advocacy represents only a small portion of DFC’s budget,” said spokesperson Lucie Boileau.

Two months ago, dairy farmers were in the political spotlight. The federal government announced $1.75 billion in direct payments to compensate dairy producers for potential market losses from recent trade deals.

Some farm groups criticized the federal government over the deal, saying dairy farmers don’t need the help.

However, the Liberal government was acting on a compensation package that was arranged four years ago, Wiens said.

“In 2015 when Stephen Harper’s government signed the … TPP (Trans-Pacific Partnership) deal, they had already worked out this compensation for dairy and other supply managed commodities,” he said.

“The government got more markets for some of the exporting commodities (beef, pork, canola), but in lieu (of) that they …. allowed more (dairy) imports into the country. That’s how the compensation worked out.”

Measuring up

A look at Dairy Farmers of Canada budget compared to U.S. commodity groups:

  • DFC: Income from levies totals $50-$55 million a year.
  • United Soybean Board: Checkoff was $102 million in 2018, collected from 300,000 growers on 80 million acres.
  • U.S. Wheat Associates: Supports $7.5 billion in wheat exports and has 15 overseas offices. Budget of $17 million ($11 million from government).

Source: staff research

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