Prairie farm organizations that rely on commodity checkoffs to fund
research projects and market development may be in serious trouble this
year as much of the crop that they take their funding from withers in
the field.
Roy Button, executive director of the Saskatchewan Canola Development
Commission, said he’s run about 20 versions of the upcoming year’s
budget, but the numbers don’t look good in any of the scenarios.
The canola crop is not in the bin yet, but he’s estimating 40 to 50
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percent less revenue than a normal year.
“It’s quite a huge reduction,” Button said.
“The drought affects us the same as the farmers.”
Many grain and livestock associations on the Prairies are funded by
checkoffs on each tonne of grain sold and each animal that changes
hands. They use the money to target research, create new markets or
raise awareness of their product.
Button said the commission managed to squeak through another year by
dipping into a contingency fund. Even so, it will only fund research
projects to which it has already committed money.
Its budget was $1.8 million two years ago. This year it is hoping to
reach $600,000 or $700,000.
It’s the same in Alberta, said Days-land farmer Ed Gaudet, president of
the Alberta Canola Producers Commission.
He estimated that Alberta’s canola crop will be less than half the
normal production, which means the commission’s normal $1 million
budget will also be cut in half.
“We’re really in a difficult financial position.”
Because this is the second and third year of dry weather in parts of
Alberta, the canola group has already used up much of its contingency
fund.
“As a commission we’re in trouble. We had a nice contingency fund but
we’ve burned it up.”
Because it has been operating on a shoestring budget for so long, the
commission plans to double the checkoff to $1 a tonne from 50 cents a
tonne at next year’s annual meeting.
“We’ll survive, but we’ve sure had to cut.”
Garth Patterson, executive director of Saskatchewan Pulse Growers, said
his group may be luckier than most because its checkoff is based on
value, rather than the more common volume-based checkoff. With this
year’s drought, the volume may go down, but the value of the crops will
rise.
“Anyone with a volume-based levy is going to be very concerned,” he
said.
Clif Foster with the Alberta Barley Commission said it’s too early to
tell yet how the drought will affect the group’s budget. Recent rain
may boost some barley crops from poor to fair.
“It’s a crap shoot.”
Foster said it is likely the commission will be forced to substantially
reduce its budget, which had already been shrunk in recent years from
$1.2 million to $1 million to $800,000 this year.
Maureen Duffy of the Alberta Sheep and Wool Commission estimates half
of Alberta’s 113,000-head flock will be sold this year, making a
drastic dent in the money collected through its $1 a head checkoff.
In a unique twist, the sheep commission may not suffer as much because
of a change in the way the checkoff is collected.
In the past, it relied on dealers, auction markets and producers to
submit the checkoff when an animal was sold, which resulted in revenue
“slippage” because not everyone submitted the checkoff.
This year the checkoff will be collected when the Canadian Cattle
Identification Association sheep tag is bought. Duffy expected this
will help the commission maintain the $140,000 it collects.
Duncan Porteous, general manager of the Canadian Hereford Association,
said his organization will likely feel the effects of the dry weather
next year.
With cattle going to slaughter, there will be fewer people registering
or transferring ownership of purebred animals. The Hereford association
doesn’t collect a checkoff from animals. Instead, it gets its main
funding from 2,000 members across the country, registrations of 100,000
purebred cows and ownership transfers.
A massive herd sell off will mean little demand for breeding bulls from
purebred breeders.
“There won’t be an opportunity to sell bulls if you don’t have cows to
breed.”
Greg Conn, chair of the Alberta Cattle Commission, said at the last
board meeting, the group estimated cattle sales would drop from five
million head a year to four million head. With a checkoff of $2 a head,
that means the commission’s $10 million budget drops to $8 million.
“It’s affecting us big time,” Conn said.
The commission is already feeling the effects of the drought because
animals change hands fewer times.
During preliminary discussions, the group has said it won’t send $1
million to the Canadian Cattlemen’s Association next year. It will rely
on its $4 million surplus for the rest of its budget.
