Investing in Ontario's Beef Sector: Proposed Check-off Increase

December 8, 2024

Your Decision. Your Vote.

As an association, Beef Farmers of Ontario (BFO) utilizes valuable check-off dollars, provided by our membership, to advocate in the areas of sustainability, animal health and care, environment, food safety, and domestic and export market development to help beef farmers, and provide solutions to issues facing the beef sector in Ontario.

The check-off system has a long history in the province dating back to its first introduction in 1968. Provincial check-off has been collected since that time at various rates, and the mandatory national check-off of one dollar was first implemented in Ontario in 2008. Prior to that, Ontario voluntarily directed funds to the national organizations to support marketing and research.

Ontario beef farmers and the entire beef sector have withstood both change and challenge in recent years. We’ve been through a global pandemic and experienced firsthand the impact of supply chain disruptions and our ability to access things like fertilizer, pharmaceuticals, equipment parts and processing space. We endured the temporary closure of Cargill in Guelph due to the pandemic and then later by labour negotiations. As a result of a number of factors, including drought and its impact on cattle inventories in North America, as well as an increase in global beef demand, we’ve been fortunate to experience strong cattle prices – both for calves and finished cattle. While prices have been strong, inflation continues to put pressure on input costs and farmers’ cost of production.

These experiences have also affected our association. With the impact of inflation and flat marketings, we have growing budget concerns. We believe in the work we do and the value it provides to our membership. We want to maintain and increase the level of support we provide to Ontario’s beef sector through our government relations and advocacy work, our focus on policy and issues and the educational opportunities we provide to farmers through our producer relations team.

As we look ahead, in addition to addressing our own financial situation here in Ontario, we have some lingering national issues that date back to 2018 that need to be a part of this conversation. First, Ontario is misaligned in the national portion of our check-off with the rest of the country, and second, we’re not meeting funding targets identified in the National Beef Strategy.

If we maintain current income and expenses with modest increases, we’re looking at a growing deficit for the foreseeable future. This will require us to draw on reserves or make some significant budget cuts, both of which are not sustainable in the long term. If we do nothing, we will be faced with decisions on what services or programs we can scale back on, or possibly do without.

After careful consideration and consultation, BFO is requesting an increase in check‐off of $1.50 per head which, combined with existing check‐off, would make a total Ontario beef check‐off of $7.00 per transaction. This would bring the total national portion of check-off to $2.50, which aligns with the rest of the country, and the provincial portion will remain at $4.50.

Unlike other increases in recent years, this check-off increase request largely comes down to inflation and our ability to effectively maintain services, capacity and our presence with government and key decision makers, and to help align Ontario with our provincial counterparts and support our national groups who we believe are doing good work.

The other element at play is that if the national check-off rate is increased by Ontario, a levy called the National Import Levy would also be triggered to increase. The National Import Levy is a fee collected by the Canadian Beef Cattle Check-off Agency that is applied on all beef, beef products and live cattle imported into Canada.

The levy rate is set at the lowest amount of national check-off which is currently at $1.00 per head and would move to $2.50 if the check-off increase is approved in Ontario. Close to eighty per cent of import levy revenue is generated from imported beef and beef products with the balance generated from live cattle.

Import levy dollars can be used for generic beef marketing and the promotion of unbranded beef. Largely used by Canada Beef, these activities focus on keeping beef on the plate of Canadian consumers by promoting the healthfulness of beef, growing consumer culinary skills, and reinforcing food safety practices.

Ultimately, the BFO Board of Directors is seeking the membership’s support to approve the proposed increase through our voting delegate body this upcoming February.

BFO Directors and staff will also be sharing a presentation on this topic at each county and district meeting in January. It will be important for our membership to participate in this discussion.

To help support discussions amongst our membership, we’ve created a couple of documents for review. The first is the fourth edition of our Report Card, which highlights some of our accomplishments over the last three years. The second is our December edition of Ontario Beef magazine, which highlights the proposed increase, as well as our Report Card.

As well, we’ve compiled a number of questions and answers below to help address questions you may still have.

Under Regulation 54 of the Beef Cattle Marketing Act, a compulsory check-off on per head sold by cattle farmers is payable to the Beef Farmers of Ontario (BFO). Packing plant operators, auction market operators and livestock dealers are required to deduct the check-off from the proceeds payable to the seller and remit check-off fees to BFO. Breeding stock, cull dairy cows and beef calves are included. Exemptions only exist for cattle sold for the production of milk and veal.

We appreciate that this is a significant request, but we also want to avoid coming to the membership for the foreseeable future. This increase will help us to tackle the impact of inflation on our operational budget, increase support for the Ontario Cattle Feeders’ Association and address the lingering request for an increase in national check-off. We do not currently have the resources to address all of these needs with current funding.

We have seriously considered scaling back efforts and looked at budget cuts that could help us reduce our operating costs. We have looked at reductions in lobbying capacity, consumer engagement work, sponsorships, research and programming. If we do nothing, we will be faced with making some decisions on what services or programs we can scale back on, or possibly do without.

The question will be asked of BFO voting delegates at our annual general meeting on February 19, 2025 in Toronto. If approved by the delegates, the request for an amendment to the Beef Cattle Marketing Act will be directed to the Ontario Minister of Agriculture, Food & Agribusiness and Cabinet for their approval, which historically has taken around 10 months to complete.

Depending on the outcome of the decision, the BFO Board of Directors will review and finalize the 2025 budget in March. If approved, we will do our very best to maintain our current level of support and programming during the implementation period and if deemed necessary, we will look at cost cutting measures or draw on reserves.

In total, the increase would generate an estimated $1.2 million in additional total revenue based on expected marketings.

We will continue to allocate funding to the national organizations (Beef Cattle Research Council and Canada Beef), as well as return dollars to Ontario for provincial investment into research and marketing that shows a benefit to the Canadian beef industry as a whole.

Each year, we are required to submit a business plan to the Canadian Beef Cattle Check-off Agency demonstrating the use and impact of our provincial investment.

If the increase in check-off is approved, we will reevaluate the total $7 to ensure national check-off dollars are accounted for, as well as increasing support for BFO.

We intend to increase support for national research and public and stakeholder engagement, as well as our return for provincial investment.

Canada Beef fills an important gap by developing nutrition and culinary skills information, working with nutritionists/dieticians to ensure beef continues to play a role in the diet of Canadians, and teaching Canadians how to safely and properly cook, store and prepare beef for the best experience. They also promote Canadian beef and beef products around the world.

We believe there is value in the national marketing dollars we currently invest, but with the additional revenue generated by this proposed increase, we do not expect to send more dollars to Canada Beef, but rather focus on our provincial efforts through our Ontario Beef Market Development Program with the Ontario Cattle Feeders’ Association.

No. We do not expect to ask our membership for another increase in provincial or national check-off for the foreseeable future.

BFO employs one manager of compliance who primarily concentrates his efforts in areas where the volume of check-off dictates. The vast majority of check-off is collected and we do not ignore any known or proven avoidance of check-off fees. We encourage any producers knowing of instances where farmers are not submitting check-off as required to contact Chris Millar through the BFO office at 519-824-0334 and provide specific names and details. These tips will be followed up and we will continue to communicate to producers their obligations under the Beef Cattle Marketing Act. In addition, we have recently partnered with the National Beef Cattle Checkoff Agency to conduct more proactive reviews of check-off compliance on producers, dealers, auctions and processors throughout the province to help ensure compliance and promote education of the current system and its requirements. Work on this new model began this fall.

No. We do not have any plans to increase the number of staff.

The additional revenue will provide sufficient flexibility to address Ontario and national needs, and limit any impact of current and future inflationary pressures for the foreseeable future.

Beef Farmers of Ontario and the Ontario Cattle Feeders’ Association are partners. Together, we each have our own roles in the areas of sustainability, animal health and care, environment, food safety, and domestic and export market development. To support the entire Ontario beef sector, both organizations require resources to be effective.

Regarding the promotion of the Ontario Corn Fed Beef program and Ontario Beef, a rising tide floats all boats. By growing the market for Ontario-branded beef we can see the market prices for all Ontario beef improve. An increase in consumer demand for Ontario beef will tighten the flexibility within the Ontario market and reduce the volatility of pricing for all animals, thus decreasing the impact of market volatility for all producers.

Individuals who have their cattle custom processed are not currently required to remit check-off at processing because no sale or transfer of ownership has occurred. The same is true for processors who own their own cattle and process those animals at their facility. This collection gap has led to concerns raised by check-off paying members that the current system provides an unfair exemption for certain producers.

In 2018 and 2019, resolutions were submitted to BFO in response to this issue calling on BFO to request the province amend the Beef Cattle Marketing Act (BCMA) to require check-off to be paid on all cattle processed in Ontario.

We submitted our formal request to the Province of Ontario to require check-off to be collected and remitted on all cattle processed in Ontario, whether a sale has taken place or not. This would align with the majority of cattle-producing provinces in Canada, and the Ontario veal, sheep and pork sectors.

Because the change to the Act requires approval by Cabinet, progress on this request has stalled due to a lack of a legislative vehicle to get the change through, especially near the end of the session. We do have support from Minister Flack and will continue to push the need for this change. We continue to communicate the need for equity amongst our sector.

If approved, we expect this change to generate an additional $250K in revenue, while significant, that alone will not address our long-term funding shortfalls.

Click here to see the rates of other provinces.

The increasing global demand for protein has presented Canada’s beef sector with opportunity to position itself strategically and increase demand for its beef products. Seizing this opportunity in a time of tight supplies and reduced marketings is a challenge industry can overcome by working together.

Studies done by the Canadian Beef Cattle Check-off Agency do demonstrate there is producer benefit from the investment. The most recent benefit-cost ratio study showed Canadian cattle producers earned $63 in research, $16 in public and stakeholder engagement and $15 in marketing with every national check-off dollar invested.

The Canadian beef sector is at a pivotal point in time:

We are facing new challenges and opportunities with strong influences on the supply and demand of Canadian beef.
Demand for high quality protein is expected to continue to grow in most developing nations.
Cattle numbers are down across much of the world.
Normally, record-high cattle prices would compel a strong and rapid expansion, however there is greater competition for acreage and expansion is slower than we have seen in previous cattle cycles.
Industry funding is challenged due to reduced cattle marketings and check-off collections, inflation and expiration of government development funds.
Consumers are increasingly concerned about production practices and impacts, such as environmental stewardship, animal welfare and sustainability.
Canada has an abundance of natural resources, and the finest beef and beef cattle in the world.

The National Beef Strategy is designed to take advantage of the opportunities facing the Canadian beef sector while simultaneously addressing the challenges. It’s about how to best position our industry to compete for a larger share of the world market and to become the high-quality beef product of choice in the world.

Unfortunately, only 58 per cent of the beef on our shelves here in the province is Ontario or Canadian beef with the balance of the market filled by imported beef, which is significantly affecting our industry’s competitiveness. Although some of it is premium beef, largely it comes into the province as commodity beef based on low prices. These low prices then set the standard for what processors will pay day-to-day for your animals. Because of our higher cost of production here in Ontario, due to factors beyond our control, we cannot be financially sustainable at the lowest available world price.

As a result, displacing imported product with Ontario beef was the main driver for our increased investment in market development efforts initiated in 2019 during our last check-off increase.

If the current proposed increase is approved, the national import levy will be triggered to increase from $1.00 to $2.50, meaning imported product will be subject to a higher fee and as a result retailers will have to take that into account as they price product on their shelves. This will increase the competitiveness of Canadian and Ontario beef against imported product.

Anyone who imports beef products or live cattle from outside of Canada is required to pay the national import levy. The import levy is set up to be equivalent to the domestic check-off on a per head or carcass equivalent basis. A formula is used where each product code is assigned a levy value per pound or kilogram.

The national import levy is triggered by importation paperwork at the Canada Border Services Agency. The information is shared with Agriculture and Agri-Food Canada who in turn generate invoices with funds to be delivered to the Canadian Beef Cattle Check-off Agency. Once the levy is collected, the Agency sends the net revenue to the service provider (currently Canada Beef) and retains the administration portion.

National import levy dollars are invested into generic beef marketing programs and the promotion of unbranded beef. These activities focus on keeping beef on the plate of Canadian consumers by promoting the healthfulness of beef, growing consumer culinary skills, and reinforcing food safety practices. Generic beef marketing resources and programming can be found on the ThinkBeef.ca website.

By increasing the national check-off in Ontario, it could subsequently unlock up to $1.5 million in additional import levy revenue. BFO does not collect or direct these proceeds, that work is done by the Canadian Beef Cattle Check-off Agency, dollars which are spent primarily by Canada Beef.

Within Canada’s National Beef Strategy are recommended provincial allocations to fully fund the strategy.

Each province submits the percentage they wish to allocate to research, marketing and public and stakeholder engagement, and can also allocate dollars back to their home provincial organization to conduct marketing, research and public and stakeholder engagement programs that show a benefit to the Canadian beef industry as a whole.

The allocations are submitted one year in advance, to ensure any funding changes to any of the functions, facilitated by Canada Beef, the Beef Cattle Research Council or the Canadian Cattle Association, are able to plan for the funding change in their next business plan.

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