How Will the Proposed Increase in Wheat Checkoff Affect Growers? - March 2, 2012

How Will the Proposed Increase in Wheat Checkoff Affect Growers? - March 2, 2012

March 3, 2012

Nebraska wheat acreage 1989-2011

A bill currently before the Nebraska Legislature would increase the checkoff rate for wheat, update provisions regarding external funding sources available to the Nebraska Wheat Board (NWB), and allow the Board to commit to multi-year contracts.  The bill, which has been designated as an Agriculture Committee priority, was introduced by Holdrege Senator Tom Carlson (38th Dist.), O'Neill Senator Tyson Larson (40th Dist.) , and Ogallala Senator Ken Schilz (47th Dist.) on behalf of the Nebraska Wheat Growers Association.

In his March 1, 2012, newsletter to constituents, Carlson writes that LB905 would change the wheat assessment from a fixed rate per bushel to a percentage of value.  

"Both the corn and wheat checkoffs have remained the same for more than 20 years while the purchasing power of the checkoffs has eroded," Carlson noted. 

In addition, the number of wheat acres planted in Nebraska has decreased from more than 2.5 million acres in 1989, the year the checkoff was last changed, to approximately 1.5 million acres in 2011.

Q&A on Wheat Checkoff Proposal before the Nebraska Legislature

This week the Nebraska Wheat Growers Association released information about the proposed changes and how they would affect growers.  This information follows. 

What changes are being made to the statute?

Three changes have been proposed:

  • Adjust the checkoff rate from 1.25 cents per bushel to 4/10 of 1 percent (0.4% or .004) of the market value
  • Allow NWB to accept outside sources of money, for example, grants, gifts, and research royalties
  • Allow NWB to support multi-year contracts, especially in the field of research

How would I calculate the new checkoff rate?

At 0.4% of the value, the rate would be affected by the price of wheat when you sell.

.004 x price of wheat/bushel = new checkoff amount

For example, if wheat were $6.00 a bushel, the rate would be 2.4 cents per bushel. (.004 x $6.00/bu = $0.024/bu)

Why are these changes being requested?

The Nebraska wheat checkoff has not been changed since 1989. Since then, costs for research, education, and marketing have all gone up. In addition, acres planted to wheat have decreased drastically. Nebraska has posted record low acreages planted to wheat the last two years. To account for the resulting decrease in funds, NWB has faced drastic budget cuts, particularly in the areas of research and education. However, NWB has reached the point where cutting funds to areas such as research and education could drastically impact the long-term stability of wheat production in the state.

How will these changes affect me?

Adjusting Checkoff to 0.4%
By adjusting the checkoff, producers will pay an increased amount per bushel on average ranging from 0.25 to 1.5 cents more than the current amount. However, with the checkoff based on the market, the checkoff will fluctuate with wheat prices. When prices are high, producers will pay a higher amount ($6/bu wheat = $.024/bu checkoff); however, when prices are down, producers will pay a lower checkoff ($4/bu wheat = $.016/bu checkoff).

Accepting Gifts, Grants, Royalties
By allowing NWB to accept funds from outside sources, particularly research and development (R&D) fees with UNL varieties, NWB will have increased funds to support research, marketing, and education. With R&D fees, the Nebraska Wheat Board can reap some of the rewards of previous checkoff investment in research and reinvest those benefits in continued support of UNL’s efforts to develop wheat varieties with better traits and more benefits for wheat producers.

Multi-year Contracts
Multi-year contracts would allow NWB to provide more financial security and long-term stability in the area of research. Research on a wheat variety or production practices is a multi-year commitment. By being able to confirm funding for several years, NWB could offer the stability many researchers need to undertake wheat research projects. More research means more and better wheat seed and production opportunities for producers.

How will these increased funds be used?
NWB invests funds in five main areas: research, international marketing, domestic marketing, education and promotion, and federal policy. Increased funds would be spent to support projects in these areas, particularly continued research at UNL, increased educational support, and more investment in international marketing where more than 50% of Nebraska’s wheat is exported.

I have more questions. Where can I get more information?
Basic information about the Nebraska Wheat Board and Nebraska Wheat Growers Association can be found on the web at www.nebraskawheat.com. NWGA staff are available to answer any questions producers may have. Contact NWGA at (402) 471-2358 or by e-mail at newheatgrowers@gmail.com.