Editorial: Day of reckoning looms as impact of refundable checkoffs hits home

Alberta Beef Producers has seen checkoff refund requests hit the 
30 per cent level, and that will not only impact it but also the effort to 
battle COOL and gain market access

It feels ominous, but a financial day of reckoning may be coming for the Alberta Beef Producers (ABP). It was predictable, but it seems to be coming a lot sooner than expected.

It’s the consequence of the refundable cattle checkoff, a measure that was part of Bill 43, which is now almost four years old. At ABP’s recent annual general meeting, there were a number of resolutions demanding the provincial government reinstate the non-refundable checkoff. No wonder — ABP has seen a whopping 30 per cent (and growing) checkoff 
refund request.

At that rate it’s starting to have some real impact, as reserves have been depleted to keep the operation going. When budget problems arise, the usual mantra one hears is that ABP will just have to make more cutbacks. That’s usually directed at administration costs, which many producers see as too big and fat. But that can only go so far. There comes a time when cutbacks are going to have real impact on services 
and programs.

In fact, the organization has already reduced some funding for assorted programs and research projects. That has serious consequences as many of those activities are funded with matching government grants. What has also become serious is the financial consequences on the Canadian Cattlemen’s Association (CCA) to which ABP has been the main contributor. It should be noted that the mandatory national $1 checkoff does not cover any of the expenses of operating the CCA. The problem for ABP is it has agreed to pay a proportional share of the CCA budget. That share is not based on the retained per-head checkoff income and means the CCA share is consuming more ABP budget even as checkoff income declines because of refunds.

At the rate the decline is going, most ABP income will soon be going to maintain the CCA. That caught the attention of many delegates and there was a resolution to deal with that trend. A meeting of the financial officers of the CCA and its provincial members has been called. However, I expect it will not go well for the CCA as other provinces will be in no mood to ante up more cash, even though many of them have non-refundable checkoffs.

After all, they’ll likely argue, it’s not their fault that Alberta went to a refundable checkoff.

However, the reality is if Alberta can’t meet its financial contribution to the national organization, there will be consequences to the operation of the CCA and its activities. Considering further COOL battles and ongoing market-access negotiations, this couldn’t have come at a worse time for the cattle industry.

Most folks who have any understanding of the machiavellian politics of the Alberta cattle industry pretty well knew this was going to happen. Most of the checkoff refund requests are coming from big feedlot operators. That was entirely predictable as that sector has fought and lobbied long and hard for a refundable checkoff.

The contention that a refundable checkoff would make ABP more accountable was nothing more than a red herring tossed out by its opponents. It always boiled down to power 
and money.

To be fair, at times when feedlot operators are losing money on every head they sell, it helps when they can get back their $2-per-head checkoff. That’s only human nature.

However, the irony is that one of the reasons prices have been depressed is the direct result of COOL stifling and depressing Canadian cattle marketing — and the only way that battle can be fought is by the CCA with a healthy war chest. But that needs to be supported by checkoff funds, which many Alberta feedlot operators are demanding be refunded to them.

You can see that something is amiss here, and those not demanding refunds are getting fed up with having to pay the whole bill, particularly for those who seemingly benefit the most from CCA lobbying.

Whether you are for or against the refundable checkoff, everyone would agree it’s in the hands of the Alberta government. It created this impending crisis and only the province can fix it.

And there is a political opening to do just that — the ag minister and many of the senior bureaucrats who ended the non-refundable checkoff are now gone.

One would expect the present minister and new senior staff are aware of the negative consequences of Bill 43, not just here but potentially across the country. As the cattle herd declines and refunds increase, it’s only going to get worse. Repealing the act would be the right thing for the government to do for the industry.

The feedlot sector also needs to revisit this issue. They are sophisticated business people who should understand the strategic nature of such issues as market access, trade restrictions, and industry regulations. They know what needs to be done, and they should be in the forefront of supporting the CCA in its battle with those who threaten the economic viability of the industry here or abroad. 

Instead, they are seen by many to be undermining the industry with their fixation on the refundable checkoff. They also need to do the right thing by being the industry leaders they are and support a return of the non-refundable checkoff.

Perhaps there is another timely opportunity to take some positive steps.

The Straw Man Beef Industry Strategy plan has just been released and has received a positive response from most of the industry. Within the strategy recommendations, reference is made to checkoffs and how vital they are to moving industry development forward. This would seem a critical opportunity for the Alberta Cattle Feeders Association, ABP, and government to show real initiative and support the strategy by moving forward on how the non-refundable checkoff can be fully reinstated, made to work better, and maybe even extended 
to processors.

What a great leap forward that would be for cattle industry unity. It can be done. All it takes is real leadership from all sectors.

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