Tough questions about producer checkoffs

The need to fund research is generally accepted by farmers, but spending by various commissions is under scrutiny

It’s annual general meeting season, and as usual, these meetings give growers a chance to scrutinize the priorities and spending habits of organizations that collect tens of millions of dollars annually through producer levies.

Saskatchewan farmers now pay levies on almost every crop they grow. The amount farmers pay in producer levies has increased steadily during the past few years, often based on greater production and occasionally on favourable commodity prices.

In 2016, Saskatchewan growers paid about $22 million to the Saskatchewan Pulse Growers Association, $6.6 million to SaskCanola, $6.2 million to the Saskatchewan Wheat Development Commission, $1.3 million to SaskFlax, and millions more to smaller commissions that manage checkoffs for barley, oats, mustard, winter cereals and canaryseed.

Those figures don’t include money that Saskatchewan farmers contribute to Western Grains Research Foundation (WGRF) programming via the maximum revenue entitlement (MRE) program.

Under the federal MRE program, the WGRF stands to collect more than $7.1 million in 2018, the result of freight rate overages that were collected from western Canadian grain shippers during the 2016-17 crop year.

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, said the province’s farmers are justified in asking tough questions about the commissions they support.

Most growers recognize the benefits of farmer-funded research, he said, but they also want an assurance that the money they are contributing is being wisely spent.

“I think farmers have some concerns about the research side of things,” Lewis said.

“They want to see as much of that money as possible put toward research…. But overall, as far as what APAS has heard from our membership, it really hasn’t been much of an issue.”

Lewis said low voter turnout during commission elections is a potential cause for concern.

It might be a sign that farmers are satisfied with the way commissions are handling check-off revenues.

On the other hand, it might suggest that growers are uninterested or simply too busy to vote.

Requests for levy refunds has also remained low.

Lewis has heard complaints that some levies are refundable while others are not.

The Saskatchewan Pulse Growers Association has come under pressure recently to make pulse levies refundable.

So far, SPG board members have chosen to retain a mandatory non-refundable levy. However, they did agree to reduce the non-refundable levy to 0.67 percent of pulse crop sales, down from one percent. That change took effect Aug. 1, 2016.

Research capacity is another area of concern.

According to some observers, research capacity needs to be expanded in Western Canada to ensure that commissions and other funders have adequate investment opportunities.

“I think that’s probably a fair assessment,” said Lewis.

“There’s been a lot of good work done but capacity is an issue.

Lewis said the capacity issue is a bit like the chicken-and-egg scenario.

“If you don’t have money there, you’re not going to build capacity. But if the money is available, then hopefully it will attract more people that want to do good research.”

Bill Gehl, chair of the Saskatchewan Wheat Commission, agreed.

In a recent interview with The Western Producer, Gehl acknowledged that SaskWheat has come under scrutiny for failing to invest farmer dollars quickly enough.

But some of those critics may not have a complete understanding of the challenges that funding organizations face, he added.

“It’s hard (to invest research money) in certain areas,” Gehl said.

“On the varietal development side, it’s pretty easy to spend a whole pile of money on genomics and that type of thing.

“But there are other areas that we are really having trouble getting money into — one would be agronomy and certainly post production would be another where we have difficulty finding good proposals.”

Gehl said work underway at the WGRF should go a long way toward expanding agronomic research capacity.

The WGRF, which manages a producer-supported Endowment Fund worth more than $120 million, has identified the need to expand agronomy research in Western Canada, a move that could spawn new investment opportunities, while supporting higher yields and better management practices on prairie farms.

Gehl said SaskWheat and other provincial cereal commissions are still in their infancy, adding that it takes years to build up spending and develop relationships with potential research partners.

In addition, research funds that are committed may take years to be fully allocated or distributed, especially when major, multi-year research projects are involved.

Through its first four years of operation, SaskWheat collected nearly $25.5 million in producer levies, issued producer refunds of more than $1.4 million and allocated roughly $5.3 million on research, market development, communications and advocacy.

Administration and governance costs were in the neighbourhood of 3.3 million.

Gehl said SaskWheat’s funding commitments and research allocations are continuing to grow.

He described SaskWheat’s first two years of operation as a process that involved building a foundation, laddering up operations and developing relationships within the research community.

Initially, a great deal of the commission’s efforts were focused on setting up an office, hiring staff members and putting necessary internal systems in place.

“All of that stuff takes time but we’ve managed to do that very, very quickly and certainly, within our first two years, we really had, I think, established ourselves as a major funder in research,” Gehl said.

“In addition to that, I think we took a pretty big step forward as well on the advocacy side … (with) the producer coalition on transportation with … SaskPulse, SaskBarley and APAS.”

Most recently, the commission signed on as a major funding partner in the Canadian Wheat Research Coalition.

The CWRC was formed in mid-2017 by provincial wheat commissions in Alberta, Saskatchewan and Manitoba.

The organization is designed to enable provincial wheat commissions to collaborate on varietal development efforts, agronomy research and regional and national wheat projects through the Canadian National Wheat Cluster.

SaskWheat has set an aggressive target on research funding.

“We have earmarked 80 percent of our budget to research,” Gehl said. “We’re trying to keep our administration costs low. We have a very lean operation with very few staff and we really do try to get as much money into research (as possible).”

In Manitoba, producer commissions that represent wheat, barley, corn, flax, pulses and sunflowers are exploring the merits of amalgamating their operations.

Under the Manitoba Commodity Organization Amalgamation Proposal, the various commissions would operate as a single entity and take a multi-commodity approach to supporting agricultural research.

Supporters say amalgamation would result in better research and agronomy capabilities, higher returns on research investments, a stronger voice for the Manitoba farm community and a more unified and co-ordinated approach to funding research.

Amalgamation would also provide stability to smaller commissions.

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