Saskatchewan Pulse Growers is reducing its annual levy for the upcoming crop year, putting millions of dollars back in the pockets of the province’s farmers.
The new mandatory levy will be .67 percent of gross sales collected at the first point of sale, down from one percent.
SPG chair Tim Wiens said record pulse acres and prices have created a situation where levy revenue has been exceeding the operational expenses of the organization.
“We are trying to find ways that we can still do what we need to do as an organization but yet not take too much money from the farmers,” he said.
Read Also
Ag in Motion speaker highlights need for biosecurity on cattle operations
Ag in Motion highlights need for biosecurity on cattle farms. Government of Saskatchewan provides checklist on what you can do to make your cattle operation more biosecure.
The organization collected $18.3 million in levy revenue in 2014-15, which was $4.6 million more than it had budgeted.
That led to a surplus of $2 million for the year. The accumulated surplus at the end of 2014-15 was $23.8 million, which is more than enough to cover a full year’s worth of expenses.
And the surplus is likely to grow again in 2015-16. The organization is anticipating $25 million in levy revenue for the year, which is once again well above the budget.
By comparison, the Saskatchewan Canola Development Commission is forecasting $5.5 million in levy revenue.
Wiens said the SPG board looked back at the last couple of budgets and determined that a .67 percent levy would have been sufficient to cover its expenses.
“This was the number where all the projects in research, market development and our commitment to the Crop Development Centre for plant breeding efforts will all still be 100 percent fully funded,” he said.
The SPG board wanted the new levy to be permanent, but the Agri-Food Council wanted to take a more measured approach.
“What they did is they approved it for a one-year period,” he said.
“They thought because we were having a fairly short timeline going into the changeover that we could take a year to discern as an organization whether this was a good move to go forward.”
SPG intends to consult with growers and make a decision over the next year about whether it wants to keep the .67 percent levy in place.
If it does, the Agri-Food Council will likely approve it for a 10-year period starting Aug. 1, 2017.
SPG estimates a one percent levy would have generated $30 million in revenue in 2016-17. The new levy is forecast to raise $20 million.
“It’s $10 million more in all farmers’ pockets. It’s a huge number, a huge number,” said Wiens.
He believes it will amount to about a $4 per acre savings at the farm level.
Cherilyn Nagel, a farmer from Mossbank, Sask., started the levy debate with a resolution she tabled at SPG’s annual general meeting in January.
She proposed changing it to a refundable levy. SPG has had a mandatory levy since 1983 and is the only crop group in the province to have one.
Nagel is pleasantly surprised at how quickly SPG’s board responded to the levy issue.
“I was happy, to be honest. I think they were listening,” she said.
Nagel suspects the board sees a huge pulse harvest coming in 2016 along with good prices and realized it was time to reduce the levy.
“The board is being really prudent,” she said.
The move does not address her original resolution, which was put forth to bring more accountability to the organization by allowing growers to opt out of the levy if they felt SPG had lost touch with farmer wishes.
Wiens said the organization is still debating that proposal. SPG has hired Insightrix Research to survey growers on their thoughts about switching to a refundable levy.
The topic was discussed during regional meetings this winter and there was a mixed response from growers.
Some want the ability to opt out, while others think every farmer should be funding research and market development efforts.
Growers who are not contacted by Insightrix can provide their feedback on the SPG website before Sept. 5.
Wiens said the board will have a proposal to share with growers at its annual general meeting on Jan. 9, 2017.
