Canada’s national beef lobby group could experience a major financial setback following Alberta’s elimination of a non-refundable provincial checkoff on cattle sales.
The Canadian Cattlemen’s Association is asking its provincial members for possible ideas on reducing programs because of a potential revenue shortfall stemming from the Alberta checkoff change.
The Alberta government earlier this year made its provincial cattle checkoff refundable instead of non-refundable. The $3/head levy ($2 is provincial and $1 is national) is still automatic at the point of sale. But sellers can apply to get it back, which they couldn’t before. The change takes effect April 1, 2010.
Alberta Beef Producers, which currently receives the proceeds from the checkoff, could lose up to 40 per cent of its budget as a result. CCA and its agencies receive roughly half of their operating budgets through ABP.
CCA needs a contingency plan should its revenues from Alberta take a major hit, said Brad Wildeman, CCA president.
The association wants feedback from provincial associations soon so it can start planning the coming year’s budget, Wildeman said.
“Realistically, we need to know by November.”
The uncertainty about a possible financial crisis was to be discussed at CCA’s national convention in Regina last week.
ABP is by far the largest contributor to CCA and its related activities through an annual membership assessment and levies from a national cattle checkoff.
ABP last year budgeted $1.44 million in direct assessments to CCA, 47 per cent of the national organization’s operating budget.
ABP also budgeted $2.4 million for the Beef Information Centre (60 per cent of BIC’s budget), $1.2 million to the Canadian Beef Export Federation (50 per cent of CBEF’s budget) and $229,000 to the Beef Cattle Research Council (45 per cent of BCRC’s budget).
BIC, CBEF and BCRC are funded through a $1/head national checkoff collected by the provinces and remitted to the agencies.
High Return Rate
Most provinces are required by provincial legislation to remit the $1 checkoff directly to the agencies. But Alberta is not. Instead, ABP administers the two checkoffs ($1 national and $2 provincial) together.
The Alberta cattle checkoff last year generated $14 million in revenue. ABP officials expect a high return rate once it becomes refundable.
Traditionally, around 40 per cent of checkoff money comes from feedlots, many of whom lobbied for the refundable levy. If every feedlot in Alberta demanded a refund, it would reduce ABP’s revenue by that much.
ABP hopes to absorb its losses internally and says it will try not to cut funding to CCA.
“The current board of ABP sees huge value in CCA and, in the proposed budget for next year, intends to maintain that,” said Erik Butters, ABP past chair.
“We’re making significant cuts to other aspects of what we do.”
Revenue to CCA from other provinces may also decline this year because of lower cattle sales. Provincial assessments are based on the number of cattle sold and financially stressed producers have reduced their herds significantly.
“With less marketings, because we’ve downsized our herds, everybody’s going to be dealing with less checkoff,” said Wildeman.
So far, provinces have not indicated they will reduce their assessments to CCA, Wildeman said.
But he worried CCA’s “big-ticket items” such as political lobbying, trade advocacy and policy development could be scaled back. [email protected]