The Saskatchewan Canola Development Commission has had to deal with two worrisome trends this decade.
- Producer demands for refunds of the commission’s checkoff have nearly doubled, from around three percent to six percent.
- Two years of drought and a widespread killing frost devastated canola production in many areas of Saskatchewan.
The commission is hoping the two are related, with the weather causing the increase in refund demands. It hopes that it isn’t facing a growing permanent threat to its producer-financed work.
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“We think it’s probably the weather,” said Roy Button, the canola commission’s executive director.
“We’re hoping this year, with better crops, it will return” to the refund demand levels before the three consecutive poor crops.
Farmers pay for producer-controlled research in a number of ways. The most common funding comes through checkoffs, which are deductions made from crop deliveries.
Most checkoffs must be paid but can be refunded by mail to a producer who requests his money back.
Usually checkoff-funded crop commissions break the year in halves, so a refund-seeking producer would need to apply twice per year to get his money back.
The Saskatchewan Pulse Growers has the rare luxury of a non-refundable checkoff, so refunds are not a financial concern.
The Western Grains Research Foundation, which pays for research for wheat and barley, is funded by a levy collected at the elevator, but the producer can opt out of it before the deduction is made.
Linda Braun, the executive director of the Saskatchewan Flax Development Commission, said producer demands for refunds grew in the years after the commission’s checkoff was instituted in 1996, but appear to have levelled this decade.
“We’ve been holding fairly steady,” she said.
Refund demands increased from about 31/2 percent in the first year to about five percent after 2000.
In 2002, the refund rate was 5.27 percent of checkoff income. In 2003 it dropped to 4.55 percent while in 2004 it rose to 5.51 percent.
Lanette Kuchenski, of the Western Grains Research Foundation, said her organization sensed that slightly more producers were opting out of their levy because of repeated weather problems.
“We’re not seeing that this year,” said Kuchenski.
Button said better crops this summer will probably cause fewer producers to demand refunds this year.
But he hopes farmers who have demanded refunds haven’t gotten used to them, even if their accountants make them seem like low-hanging fruit.
“A large farmer, with 10-15,000 acres, when he goes through his accounting with his accountant and realizes he can get a $3,000 cheque (as a refund), well, it becomes significant,” said Button.
And refunds are understandable in a year of crop disasters, when some producers are in financial crisis, Button and his colleagues agreed.
But Button said big farmers should realize that they are benefiting most from the commission’s product and market development efforts.
“To get a $3,000 refund, they must have sold a pile of canola,” he said.
Braun said few farmers seem to object to what their checkoff-funded organizations are doing, so the challenge is to convince the average farmer to leave his money with the commission, even if it causes short-term pain.
“You’ll always find a few people who are against the principle and will always ask for it back. And there are people who firmly believe in the activities of the commission and how their dollars are being spent and they will never remove it,” Braun said.
“And then there are some who simply need the cash because of a cash flow situation and will opt back in later.”
