Winners And Losers Now That Checkoffs Are Voluntary

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The landscape of the Alberta livestock industry was forever changed by the upheaval surrounding the move to voluntary checkoff deductions on September 1, 2010, but the cumulative effect remains to be seen.

Alberta Beef Producers (ABP) was anticipated to take the biggest hit under the new checkoff regimen.

ABP chair Chuck MacLean said he expected as much as a 40 per cent reduction, and other industry pundits anticipated as much as 60 per cent. In fact it’s been around 28 per cent.

“I personally was hoping to stay under 40, and I thought that would be an optimistic place, and we actually came in under 30,” MacLean said. “A lot of the producers I guess feel we’re doing a decent job.”

Despite the revenue loss, MacLean says ABP has not had to dip into its reserve fund.

“Previous to the checkoff actually becoming refundable, we did some really good management… we set aside $5 million and said ‘this is the operating budget.’ Since then, we don’t do deficit financing. Whatever money we take in this year will be the money that we use next year.”

While the movement to end the mandatory levy began within the cattle sector, other livestock industries with mandatory checkoffs were also required by the same legislative change to move to the voluntary format.

The Alberta Cattle Feeders Association (ACFA), which never did have a mandatory checkoff, is still seeing continued support from its members. The ACFA requests a 50-cent per head checkoff, and whether members will choose to give more because they are no longer mandated to pay $2 to ABP remains to be seen.

“We’re getting quite a bit, but it’s hard for us to know too,” said ACFA chair Doug Price, who is happy producers have more options when it comes to their checkoff dollars.

“Those members might be saying that they’ll take their $2 and put a portion of that into the Alberta Cattle Feeders, or for a lot of members, they’ll take all of their two dollars and put it all in the Alberta Cattle Feeders,” he said.

Price said a voluntary provincial beef checkoff now means producers are free to choose what industry initiatives to invest in.

“We just feel that’s how you get accountability. As soon as you have a mandatory checkoff, you have the threat of losing accountability. When it’s voluntary, well, you’d better be doing the job or you won’t get the money.”

Price said checkoff to the ACFA will help nourish the Positive Basis Fund, a relatively new initiative designed to cushion exporting costs to new markets.

ALP sees losses

Alberta Lamb Producers (ALP) has already lost between 10 and 15 per cent of its checkoff revenue since the change.

“So it’s definitely an impact on the budget and what we can do and we’re still early into it,” said ALP chair Philip Kolodychuk.

ALP’s website addresses the checkoff situation, asking producers to continue to invest in their industry by stating for every $1 of checkoff, the producer group is able to leverage $3 of government funding.

“That’s a pretty good return on your dollar,” said Kolodychuk. “Who is going to lobby the government on their behalf if we can’t afford to keep our organization running?”

In Alberta, checkoff of $1.50 is paid only once for lambs, at the same time new tags are purchased. Currently, the government is fully refunding the cost of RFID tags to lamb producers as an incentive to make the high-tech change from the old tag system. Kolodychuk said programs like that are what producer groups lobby for, and worries that dwindling checkoff will bode ill for his industry.

“We’ve leveraged a lot of money with the little amount that we have, so I think we have a really good relationship with the government in Alberta.”

ALP must pay a fixed percentage to the Canadian Sheep Federation, regardless of how much checkoff it receives provincially, which means the organization’s revenue could be doubly eroded if checkoff continues to shrink.

Alberta Pork refunding

At Alberta Pork, an entirely different situation is playing out. Its checkoff of $1 for every market hog sold, and 25 cents for each weaner pig shipped out of the province also became voluntary, but producers aren’t asking for a refund – the organization is simply giving it back.

“It’s different from what other industries are doing because primarily, our industry has been hurting financially for over 3.5 years and when we made this decision, even though prices had strengthened a bit this spring, producers in pork production really weren’t making a profit yet,” said Alberta Pork Chairman Jim Haggins.

Producers are being refunded 85 per cent of their paid checkoff levies, to the tune of approximately $2 million. Only four individual producers had requested a refund – less than one per cent of the pork farmers in the province.

“We’re hoping this gives producers some encouragement that the industry will maybe stabilize a bit, and we’re hoping it will give our processors some encouragement too that we’re solidily behind our producers. And maybe even the lenders too for that matter, who have tended not to be too co-operative lately,” Haggins said.

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“Whoisgoingtolobbythegovernmentontheirbehalfifwecan’taffordtokeepourorganizationrunning?”

PHILIP KOLODYCHUK

ALBERTA LAMB PRODUCERS

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