It would seem that the Minister in his quest to rein in the ABP may have opened a whole new can of problems.
Arecent decision by Alberta Minister of Agriculture George Groeneveld to introduce a refundable cattle checkoff is going to affect the cattle and beef industry both nationally and even internationally. The decision, which will come into effect in 2011, will in all likelihood, see a significant reduction in checkoff income for the Alberta Beef Producers (ABP) organization.
The existing checkoff is nonrefundable and generates more than $10 million a year. It is paid on all cattle transactions in Alberta and refundability has been an irritant with other cattle producer groups – in particular the large feedlot sector. Cattle feeders feel that they pay a disproportionately large amount of the checkoff with no political power as to how that money is spent. ABP voting structure is based on one producer/one vote and not on cattle numbers.
The refundability issue goes back many years, with cattle feeders having launched a legal challenge in the past. Refundability was also defeated in a producer plebiscite. Those setbacks haven’t stopped them from keeping the issue alive. Recently dissident cattle producer groups including cattle feeders banded together to form the Beef Industry Alliance. The main purpose of that group seemed to be to lobby the ag minister for a refundable checkoff.
The timing of the BIA seemed to be fortuitous as Minister Groeneveld and his officials were at loggerheads with the ABP over part of the Alberta Livestock and Meat Strategy concept. Rumours circulated that the minister was not pleased with the ABP’s lack of enthusiasm. It would seem with BIA lobbying, the minister decided to bite back where it hurts most – ABP checkoff income.
The minister stated that his decision was to deal with governance problems in the Alberta cattle industry. That may be wishful thinking, in the fractious world of Alberta cattle producer politics, “who governs” is a blood sport as sectors of the industry are polarized by money and power issues and the ever-present tension between primary producers and the powerful cattle feeders. This decision would seem to be a victory for the BIA and a loss for the ABP, certainly a recipe for more acrimony and bitterness in the Alberta industry. The ABP has protested that this arbitrary action by the minister is undemocratic and should have been put to another producer plebiscite.
EXERCISE THEIR POWER
It is expected that many cattle feeders will exercise their power by means of refunding their checkoffs, that could result in the disappearance of millions of dollars in ABP funding. As the major cattle-producing province in Canada, less ABP funds means less money for national groups like the Canadian
Cattlemen’s Association. It would also mean less money for a myriad of other organizations and projects that receive financial support from the ABP. A huge concern is that if the cattle industry is once again faced with an American trade challenge, the millions needed to fight that will not be available with a diminished ABP.
In the minister’s announcement, no mention was made of the National Cattle Checkoff. This is a mandatory non-refundable national cattle checkoff agreement to which Alberta is a signatory. It requires Alberta and the other provinces to submit $1 in checkoff per head to fund groups like the Beef Information Centre, the Canada Beef Export Federation and the national cattle research fund. At present, the national checkoff is collected by the ABP through their nonrefundable provincial checkoff process. If the Alberta government does not agree to honour the non-refundable national cattle checkoff, it could see a reduction of millions in support
to beef promotion and research organizations in Canada and in export markets. It would seem that the minister in his quest to rein in the ABP, may have opened a whole new can of problems.
In order to legitimize his action against the ABP cattle checkoff, three other Alberta commodities got caught in the crossfire and also saw their nonrefundable checkoffs disappear. The minister forced refundable checkoffs on Alberta Pork producers, Alberta Lamb Producers and Alberta potato groups. That probably came as a complete surprise to those organizations that were under the impression that they were on friendly terms with the minister. The pork and lamb groups in particular were completely supportive of the minister’s livestock and meat strategy scheme. This decision may well hasten the demise of the Alberta Lamb Producers group as they could barely survive on already limited income from their non-refundable checkoff.
Both the minister and the BIA state that refundability will force the ABP to be more accountable as producers are able to vote with their checkoff money. It’s often mentioned that other refundable commodity groups in Alberta exist and refund rates are low. But there is a difference between a nickel-a-bushel checkoff and three-bucks-a-head checkoff. Besides most other groups are not faced with the millions needed for promotion, research, trade issues and lobbying. Only pork producers are in a similar situation.
It is expected that compromises will be made before the refundable checkoff legislation is implemented. However, with all the marketing issues and downsizing facing the livestock industry in Alberta, it would seem this action by the minister has not helped cattle industry harmony in Alberta.