A resolution on the agenda for the Saskatchewan Pulse Growers annual general meeting in January could make for a lively debate that goes beyond pulse crops and Saskatchewan.
The resolution reads:
“Whereas the Saskatchewan Pulse Growers checkoff is the only provincial grain levy that is not refundable, whereas a refundable levy helps to ensure directors are accountable to their members, whereas individual farmers should have the right to determine the best use of their dollars, be it resolved that the board of Sask-atchewan Pulse Growers ask the provincial government to amend its regulations to make its checkoff refundable.”
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There are strong arguments on both sides of this debate.
On one hand, why should levies that go toward varietal development, market promotion and agronomic research be refundable? All growers of the crop benefit whether they take a refund or not. You don’t have an opportunity to opt out of paying taxes.
Pulse crops in Saskatchewan are an incredible success story, and a large part of the credit has to go to the producers who supported a levy in 1983, well before any of the other levies were in place.
On the other hand, why should pulse crops in Saskatchewan be treated differently than other crops, particularly when the pulse levy is much higher than most others?
The pulse levy is one percent of gross sales, and $13 million was collected in 2012-13. As well, the organization reported more than $24 million in assets, mostly in investments.
The current price of lentils, and to a lesser extent field peas, means levy revenue will be high this year. Most lentil crops are generating gross returns of $500 an acre or more, which produces a levy of $5 an acre. A thousand acres of lentils is easily $5,000 in non-refundable levy.
Contrast this with SaskCanola, where the levy is a flat 75 cents a tonne. An average canola crop of 34 bushels an acre (.77 tonnes) generates a levy of just $1.35 an acre. The levy contribution would average $1,350 for a producer with 1,000 acres of canola.
SaskCanola generated $5.7 million in the last fiscal year that was reported. It was less than half what Saskatchewan Pulse Growers raised, despite canola being grown on a much larger acreage.
As well, SaskCanola had to make refunds of $304,000 to producers who asked for their money back, which was five percent of the money that was collected.
It should be noted that Saskatchewan Pulse Growers has funded the development of most of the pulse crop varieties that producers now grow.
Varietal development in the canola sector happens within the private sector with the cost and a profit margin attached to the price of seed that producers buy every year.
Most of the producers who regularly request refunds don’t go to annual meetings or read annual reports and commodity newsletters. They don’t deserve our sympathy.
However, there can also be well-informed conscientious objectors who oppose how their levy dollars are being spent, and these producers deserve consideration.
Some observers, such as Dean Klippenstine of MNP, say producers should be able to pull their levy money, but the “refund” wouldgo to a charity such as the food bank.
Another idea is that a producer could choose to reallocate their levy to a different crop. This could be a novel way to approach the refundable versus non-refundable debate, which would encourage accountability rather than encouraging freeloaders.
