Saskatchewan Pulse Growers has decided to keep its levy at a reduced level for at least one more year.
The mandatory levy on pulses and soybeans was dropped to .67 percent of gross sales from one percent on Aug. 1, 2016, in response to complaints from ratepayers.
It will stay at that level for another year starting Aug, 1, 2017.
Levy revenues had escalated to $22 million in 2015-16 from $13 million in 2013-14 due to record acres and strong pea and lentil prices.
SPG is estimating revenues declining to $16.5 million in 2016-17, which will fall short of expenses, leading to an estimated $2 million reduction in the association’s accumulated surplus.
“We recognized that we were still in a situation where a one percent levy rate may result in SPG adding to its accumulated surplus,” said chair Corey Loessin.
“Based on that, we have chosen to extend the reduced .67 percent levy rate for an additional year.”
When former chair Tim Wiens announced the initial levy reduction in 2016, he said the board had wanted to make it a permanent reduction but the Agri-Food Council wouldn’t allow it because there was too short of a timeline leading to the change.
Wiens said at that time he thought the Agri-Food Council would approve the .67 percent levy for a 10-year period starting Aug. 1, 2017.
Loessin said SPG would have to seek approval from the broader membership base if it wanted to make a permanent change.
However, the board no longer wants to go that route because the University of Saskatchewan’s Crop Development Centre is undergoing a major renewal of its breeding program in 2020.
“We do see on the horizon some significant changes in research funding,” he said.
The board doesn’t want to commit to any lasting changes in the levy until it knows how that renewal process is going to affect its future funding expenses.
“The prudent thing to do is to keep it flexible until we determine some of the longer-term program needs,” said Loessin.
The association is forecasting another budget deficit of about $2 million in 2017-18.
Loessin doesn’t want the surplus to be drawn down too far because there needs to be a buffer for times when the levy falls far short of expectations or to take advantage of opportunities that come along, such as the $250,000 that SPG invested to kick-start the International Year of Pulses campaign.
“We saw an opportunity and we invested early on before really anybody else did,” he said.
“That was probably a once in a lifetime one that should result in permanent, long-term increased demand for pulse crops.”