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Checkoffs to become a checkerboard

The plan is for a single checkoff next August 1, but will different provincial recipients all go in the same research direction?

What a tangled web. That’s one way to describe the system of checkoffs to support cereal research in Western Canada.

From a centralized system administered by a single agency, the plan has splintered into six separate checkoffs and five different producer-run wheat and barley commissions in three provinces.

This patchwork will simplify a little on August 1, 2017, when some of the deductions are consolidated under the provincial commissions. But the greater question is about the future of the Western Grains Research Foundation as its current role in funding wheat and barley research switches over to the provincial commissions.

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For its part, WGRF insists the work will continue but its role will be different.

“We will still be involved. We just won’t be involved in collecting the checkoff after July 31, 2017,” says WGRF chair Dave Sefton, who farms at Broadview, Sask.

Others say the change is part of an evolution in responsibility for collecting and distributing money to fund grain research.

“Now that these provincially elected commissions are in the game, it’s a logical transition in authority, making sure we don’t drop any of the good work that WGRF has done on our behalf,” says Brent VanKoughnet, executive director of the Manitoba Wheat and Barley Growers Association.

CWB fallout

Why is all this happening? It’s fallout from Bill C-18, the “Marketing Freedom For Grain Farmers Act,” which removed the Canadian Wheat Board’s central selling desk in 2011.

Previously, the CWB managed refundable checkoff deductions on wheat and barley delivered to licensed grain buyers in Western Canada. The rate was 48 cents per tonne of wheat, of which 30 cents went to the WGRF, 15 cents to the Canadian International Grains Institute and three cents for administration. Of the 56-cent checkoff on barley, 50 cents went to the WGRF, three cents to the Canadian Malting Barley Technical Centre and three cents for administration.

All three groups are non-profit organizations. WGRF, created in 1981, invests in research, and has assisted in development of more than 200 wheat and barley varieties. Cigi was established in 1972 to promote Canadian grain and provide training in production, marketing and processing. Since 2000, the CMBTC has provided technical support and market information to the malting barley value chain.

CWB forwarded the checkoff revenue to the organizations. In WGRF’s case, the foundation leveraged the money by cost-sharing the expense of public research for breeding programs.

That changed in late 2011 with the passage of Bill C-18. Stripped of its central desk, the CWB was no longer able to collect checkoffs. Suddenly, the industry realized there would be no one to collect the levies. Something had to be done to keep things going. And fast.

Multiple checkoffs

The result was the formation in 2012 of producer-elected provincially regulated commissions to handle the checkoffs instead of the CWB. They are: Alberta Wheat Commission, Alberta Barley Commission, Saskatchewan Wheat Development Commission, SaskBarley Development Commission, and Manitoba Wheat and Barley Growers Association. (Manitoba has only one commission because the province’s wheat and barley crops are smaller than the other provinces’, but the checkoffs are still separate).

Also in the same year, the federal government established the Western Canadian Deduction (WCD), a temporary transitional checkoff on wheat and barley. The rates are the same as under the CWB. Ottawa mandated the Alberta Barley Commission to administer the WCD. ABC in turn sub-contracted with Levy Central, a program operated by the Agriculture Council of Sask­atchewan, to handle the actual collection. (Alberta Wheat and Alberta Barley last year decided to do their own deductions in-house. Levy Central still does the job for Manitoba and Saskatchewan.)

Besides the WCD, growers also pay additional levies to their respective provincial commissions. The result: two separate checkoffs for each crop in each province.

For example, wheat farmers in Alberta pay a total of $1.18 per tonne, consisting of the Western Canadian Deduction of 48 cents per tonne and an Alberta Wheat Commission checkoff of 70 cents per tonne. A similar situation exists for barley.

Moving to single checkoff

Not surprisingly, farmers wonder why they have to pay two levies per crop when they paid only one previously. This has led commissions in all three provinces to move to a single checkoff on August 1, 2017, when the WCD is set to expire.

“We think it simplifies the system to have one checkoff as opposed to two because farmers are going to quite rightly ask, ‘why do you need two separate levies? What do they all do?’” says Tom Steve, general manager of the Alberta Wheat Commission in Calgary.

“It’s designed to provide some clarity and efficiency in terms of administering the funds, as well as direct accountability back to the farmers who pay the levy.”

Commissions in Alberta and Saskatchewan this past summer were drafting single checkoff proposals for their producer members to vote on. Manitoba producers have already approved single checkoffs for both wheat and barley at their annual meeting in February 2016.

As a result, come August 1, 2017, growers in Western Canada will pay a single levy for wheat and another one for barley. It’s expected Levy Central will still collect the checkoffs in Saskatchewan and Manitoba while Alberta Wheat and Alberta Barley will continue their own collections in-house.

Whither, or wither, the WGRF?

But the money collected by these levies will no longer go to WGRF. Instead, the commissions will have the authority for funding wheat and barley variety development, not WGRF.

This raises the question: whither WGRF? If it no longer receives checkoff money for wheat and barley, what will it do?

Sefton is quick to assure producers WGRF isn’t going away.

“We’re a federally incorporated charitable foundation in place to enhance crop production in Western Canada. It covers Western Canada. It covers all crops. That will continue to be the mandate under which we operate.”

Sefton points out WGRF still has its endowment fund which it uses to fund a wide range of crop research for cereals, oilseeds, pulses and special crops. Currently at $120 million, the fund was established in 1981 when money was transferred from the discontinued Prairie Farm Assistance Act. Since 2000, it has received funds collected under the Canada Transportation Act in excess of the set railway revenue cap, assuring its continuance.

Sefton says WGRF has also signed five-year core agreements to ensure funding for wheat and barley research and development until 2020.

This means WGRF will still be in the game even if some of its role is shifted to the commissions, says Steve.

“The important thing for producers is that all of the commitments to funding variety development will be met,” he says. “That is the critical point because virtually all the wheat varieties that farmers grow in Western Canada come out of public programs at universities and Agriculture Canada. We need to ensure continuity is there, and it will be.”

However, Steve acknowledges decisions will eventually have to be made about WGRF’s exact function.

“We’re working with them on what the future model will look like. After August 1, 2017, we anticipate the funds will be administered by the commissions. The commissions will work on a collaborative basis to fund Agriculture Canada and university programs. The precise role of WGRF in that mix is what we still haven’t landed on.”

Three commissions, same direction?

While it’s full steam ahead for the commissions, there’s some concern about them going in different directions by focusing on local interests rather than regional ones.

That’s the case in Manitoba where producers worry they could be overshadowed by the other two provinces. Manitoba’s wheat and barley checkoffs together generate less than $2 million a year, depending on the size of the crop. Alberta collects between $5.5 million and $6 million annually for wheat alone. For that reason, Manitoba wants to make sure future research focuses on the interests of all western Canadian growers, not just those in larger provinces with deeper pockets.

“Our ability to create even a blip on the radar in research, if we were completely isolated on our own, would be so insignificant we could get left behind very easily,” VanKough­net says.

“We need to make sure we design working groups and processes to make sure the spirit of how we work together continues in a western Canadian capacity,” he says. “It takes more effort when we have three organizations to do that instead of one.”

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