EDMONTON – Alberta Lamb used the latest issue of its newsletter to publish a list of benefits it provides to provincial lamb producers.
It’s part of a pre-emptive move by four commodity organizations in the province to minimize the refunds producers will ask for when their mandatory checkoffs become refundable next year.
The change, which the government introduced earlier this spring, will affect groups representing cattle, lamb, hog and potato producers.
For the tiny sheep organization, which operates on a shoestring budget of $150,000 a year, any decrease will make a dramatic impact.
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“We’ll start this coming year doing more promotion, telling producers all the things the checkoff does and what the impact will be of requesting refund back,” said Alberta Lamb chair Noreen Moore.
“We don’t have any idea of how much leeway we have.”
The group’s funding comes exclusively from its $1.50 per head fee, which all producers must pay.
The provincial government’s surprise decision to introduce legislation that would change the checkoff from mandatory non-refundable to refundable to those who ask for it has thrown the sheep organization into turmoil. The government initiated the change to help defuse troubles in the cattle industry.
Alberta Lamb has talked about reducing director meetings to three a year from four and publishing fewer issues of the sheep newsletter, but is reluctant to do either.
“We’d like to keep the same services to producers, but we don’t know if we can do that,” Moore said.
Alberta Lamb is also considering an administration fee to compensate for the extra accounting and handling.
“It will cost us money to keep track of everything,” said Moore, who predicted the organization will have to buy a new database program to keep track of lamb sales and refunds.
The four commodity groups must give draft copies of their new regulations to Alberta Agriculture’s Agricultural Products Marketing Council for review by the beginning of January. The new rules will take effect September 2010 for lamb, potatoes and hogs but April 2010 for cattle.
Edzo Kok of Potato Growers of Alberta said his organization hasn’t finalized details of its new regulations and won’t until it meets the marketing council to find out what it is allowed to do.
“Under the bill, we have to provide the same level of service to all producers, even those requesting a full refund,” he said.
“There’s all kinds of things been tossed around.”
Kok said the group will likely follow the rules already in place for other commodity organizations that have a refundable checkoff.
Paul Hodgman with Alberta Pork said rewriting regulations to comply with the new legislation is not a top priority. Hog producers and staff have been busy dealing with the fallout from the H1N1 flu virus and other factors that have caused a financial crisis in the hog industry.
Once things return to normal, Hodgman said the organization will take a closer look at the changes, including charging an administration fee and charging for some of the quality assurance and identity and traceability programs now offered for free.
“These are mandatory programs. We need to have a way to be compensated for them. We’re looking at lots of options.”
He said it is a challenge to guess how many producers will ask for a refund and then come up with a reasonable operating budget.
“In normal, profitable times, people will make those decisions based on what the organization does for them. If you’re in severe economic hardships, people try and obtain every cent they can. They can support you 100 percent, but still want their money back.”
Hodgman said his group has about $4 million in reserves to cushion the blow of uncertain future budgets but will take a serious look at its budget and how to cut costs.
ABP started the process of developing new regulations during its recent semi annual meeting.
“We’re all still kind of reeling, the bill is just 10 days old,” said ABP chair Rick Burton.
Burton said he has asked staff to begin drafting the new regulations.
ABP legal counsel Adrienne Waller said it would ask for an administration fee to cover the added paperwork and accounting that will be required. It will also look at giving producers the option of requesting a partial refund in the refund application form.
Also to be decided is how often producers can ask for a refund.
Burton said it is important that ABP demonstrate to producers in the upcoming year the value of their investment in the organization.
“We need to do the core things that make a difference to the economic sustainability to producers. If they don’t recognize the value we’re able to make with their investment, they will not continue to invest.”
