Alberta government legislation to make beef checkoffs refundable to producers who request it could have drastic consequences to the Alberta Beef Producers and the national beef organizations, said the chair of the provincial beef organization.
Rick Burton said it would take only a few large feedlot operators to pull funding from the organization to reduce the group’s ability to fund operations, carry out research and promotions, or fight court challenges launched by American beef producers.
“It has the potential to have a serious and negative impact,” said Burton.
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Checkoffs from the 20 largest feedlots account for 30 percent of ABP’s $12 million budget.
About 56 percent of the checkoffs comes from feedlot operations.
“It’s impossible not to imagine a feedlot operator with a $300,000 checkoff not to ask for a refund if their neighbour does. They would have a $300,000 advantage over you in labour, machinery and land,” he said.
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“If a few big feedlots pull their money out, they’ll all pull their money out and all that is left will be the medium and small producers to fund the organization. How long will it take smaller players to say they’re pulling their money out? It will have a very dismal snowball effect,” said Burton.
Alberta agriculture minister George Groeneveld introduced legislation April 28 that would change a mandatory, non-refundable checkoff for the beef, lamb, pork and potato industries in the province to a mandatory refundable checkoff.
Groeneveld said the idea is to ease dissent among commodity groups, especially beef producers.
“Most of the dissent was from the beef industry. That’s where we were hearing the most noise. There’s no doubt about that. There was dissatisfaction in every association,” he said.
“Producers have some pretty hard-earned money out there, I don’t have to tell you that. They really wanted more say in where their money was directed,” said Groeneveld, who hopes the bill will be passed into law before the spring session of the legislature ends in June.
The amendments wouldn’t take effect until 2010, allowing the four commodity groups involved time to change their regulations.
Groeneveld said he believes the refundable checkoff will force the organizations to be more responsive to producer concerns.
“I’m hoping it will get them on the same page and pulling in the same direction.”
He said he wasn’t worried the changes would affect the beef industry’s ability to combat future trade challenges.
ABP incurred $5 million in costs to fight trade bans that were brought in after BSE was discovered in Canada and other expenses to protect the beef industry from countervail challenges brought by U.S. cattle organizations.
“I have great faith in the industry,” said Groeneveld. “When that issue comes up, the money will be set aside. I’ve watched these cattle people for a while. There’s no doubt in my mind they will quickly let the fund build up to fund these countervail challenges.”
About one-third of ABP’s budget is redirected to fund the national Beef Information Centre, Canadian Beef Export Federation and Beef Cattle Research Council, which will also be affected by a refundable checkoff.
Groeneveld said it remains to be seen whether the changes will affect national organizations.
“It makes a lot of these more accountable. When it’s mandatory, the money is there. A lot of producers haven’t seen a whole lot happening in terms of additional exports, except the U.S. I don’t think they’ll disappear. They may have to get leaner and meaner. That may be just what they need to get them meaner.”
Burton said he has concentrated most of his recent efforts on trying to unify the beef industry and deal with concerns of other beef commodity groups. He said producer groups already have tools to deal with dissention in the industry. Producers can introduce resolutions to ask for a refundable checkoff at annual meetings or hold a plebiscite.
“It could have been handled differently and far more effectively with more positive results. This arbitrary action will do nothing but deepen the divisions within the industry in the province,” said Burton.
“I think it’s extremely important to have a choice to vote on this. I asked for a plebiscite and the request has been ignored.”
Groeneveld said he rejected the idea of a plebiscite because a recent survey showed beef producers were split on having a refundable or non-refundable checkoff.
“I could have gone to the plebiscite, but it didn’t matter who won, we would have still had the same problem and a lack of vision in the industry.”
Dave Burdek, general manager of the Agriculture Products Marketing Council, in charge of Alberta’s 20 marketing boards and commissions, said a survey of 600 producers in all industries showed 25 percent of producers felt checkoffs should be refundable, 24 percent said they should be partially refundable, 22 percent said non-refundable and 30 percent were undecided.
Burton said he believes ABP is being penalized because of its opposition to parts of the Alberta Livestock and Meat Strategy introduced by the minister last June.
“We were ostracized for questioning the government and their strategy. There’s some very well-connected and influential players that have got the ear of the minister. They deal in millions of dollars, where we deal in thousands.”
Burton said the only way to stop the legislation is by vocal opposition.
Not all cattle organizations oppose the new legislation.
Russ Pickett, chair of the Beef Industry Alliance, called the new legislation “historic” and important to making all organizations more accountable.
As it was structured, the Alberta Beef Producers was trying to be everything to everyone and was failing, he said. The changes allow producers to ask for a refund and redirect it to an organization that best represents them, he said.
The Beef Industry Alliance includes the Western Stock Growers Association, Alberta Cattle Feeders Association, Beef Initiative Group, Feeder Association of Alberta, Legacy Partners and Border Beef.
Pickett said it will work on plans to access some of the redirected check-off money.
