Alberta Canola provides a financial update and presents an annual budget to growers at our regional meetings in the fall and at the annual general meeting in January. Each year, the organization estimates the amount of revenue it will collect from the service charge when growers in Alberta deliver canola to elevators and crush plants. This service charge accounts for over 90% of the commissions total revenue which is then invested in research funding, policy and advocacy efforts, grower engagement and extension, and public engagement and promotion.
I have presented the financials and the budget more than 100 times over my 15 years at Alberta Canola, but this year was very different as I was asked by the board to report on the financial health of the organization over the last 20 years.
On an annual basis, the budget is never perfectly balanced. We make commitments on the expenditure side beginning with our preliminary budget in June based on estimates of canola production in Alberta, while assuming a normal flow of canola sales and delivery.
2004 to 2017 – The Dramatic Rise in Canola Production
The widespread drought experienced in Alberta in 2002 resulted in barely enough revenue to keep the doors open and the budget for the 2002-2003 fiscal year was slashed dramatically. Most notably research commitments had to be abandoned mid-project.
At the 2003 Annual General Meeting, eligible producers voted to increase the service charge (levy/checkoff) from $0.50 per tonne to $1.00 per tonne (roughly $0.02 per bushel). This provided Alberta Canola with stability which opened the door to new opportunities to fund projects and programs that benefit the growers.
Canola production escalated very quickly over the next 15 years as innovations like herbicide tolerance and hybrid varieties transformed canola production. During this time, global demand also made canola the most profitable crop for many farms.
In 2004, the first year of the new $1 per tonne service charge, Alberta Canola’s revenue was $2.2 million.
Driven by annual increases in canola production, revenue continually increased to a peak of just under $7 million in 2017. During this period, the board worked to ensure that the influx of revenue was invested in projects that would benefit the growers, while also building resiliency by establishing a crop failure contingency fund and ensuring revenue is set aside each year for approved research projects to guarantee funding throughout the project term.
2018 to 2024 – Adjusting to a New Level of Canola Production
Over the last six years canola production has decreased in Alberta. Canola acres have decreased as rotations diversified with improved prices and profitability in cereal and pulse crops. The drop in acres has coincided with canola yields flattening.
Production fell significantly across Alberta with widespread moisture deficiencies in 2021.
Revenues for Alberta Canola have declined almost 25% from a peak of nearly $7 million to under $5.5 million on an annual basis. This decline in revenue has unfortunately coincided not only with a period of rapid inflation, but also with decreased government support for agriculture programs, both nationally and provincially.
This has led to deficit budgets in five of the six years. The commission continually examines the expenditures of all projects and programs to ensure a return on the investment of grower dollars. During this period, the shutdown of many activities due to the pandemic provided some temporary relief on the expenditure side as activities were limited.
Alberta Canola has absorbed annual deficits by drawing on the reserves built up over a 14-year period from 2004 to 2017.
2025 and Beyond
Simply put, Alberta Canola must re-balance its budget going forward. This means either decreasing expenses or increasing revenue – and both options are on the table.
Decreasing expenditures has moved beyond sharpening our pencils to find savings to now having to eliminate entire projects and programs that growers value.
Increasing revenue can only be achieved in two ways, either through increased canola production or by increasing the service charge for the first time in 20 years. With canola acres and yields plateauing, the only way to keep the existing programs and projects will be to ask you, the grower, to contribute more than $1 per tonne when you deliver canola.
Over the next several months Alberta Canola will be looking at the impact of reducing the budget by approximately $1 million dollars to start, with ongoing reductions to keep pace with annual inflation.
This will be done in conjunction with developing a business case that would support a service charge increase to maintain core programs and to restore financial sustainability for Alberta Canola.
We started this discussion with growers at our events this past winter, and the direction we received was to present the business plan at our grower engagement events in the fall of 2024 and to be prepared to ask for the service charge increase at the Annual General Meeting in January 2025 to take effect on August 1, 2025.
The financial presentation from this past winter was condensed into a 13-minute video for our online grower engagement meeting and was also shown during the 2024 Annual General Meeting. To watch the video, visit albertacanola.com/financial-update.
By Rick Taillieu,
Director of Engagement & Analytics