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SD wheat producers could see higher fees

PIERRE — Farmers have been planting fewer acres of wheat in recent years in South Dakota. That’s meant less money for wheat research at South Dakota State University.

The solution sought by the South Dakota Wheat Commission is to end the check-off fee of 1.5 cents per bushel that’s collected from farmers and install a fee that’s linked directly to prices.

The new approach would collect four-tenths of 1 percent of the actual market value at the first point of sale. The switch, using recent production, would nearly double the amount raised by the commission.

The commission collected more than $1.4 million in 2012 and more than $1.3 million in 2013, but the revenue is expected to drop below $1.2 million this year, according to the state Bureau of Finance and Management.

Legislation that would make the change to the new system received its first hearing Thursday.

The House Agriculture and Natural Resources Committee endorsed the bill 10-1. The bill now moves to the full House of Representatives for debate.

Rep. Lee Qualm, R-Platte, said a $7 bushel would net 2.8 cents.

Qualm said the additional money would be used for more consistent funding of wheat research at SDSU. The check-off revenue also covers promotion, market development, government affairs and administration.

“Ag research is not like building widgets. We cannot turn it on and off,” Qualm said.

There are “very few private companies that do research in wheat. We have to rely on SDSU for that,” he said.

Steve Halverson, a past member of the South Dakota Wheat Commission, said the plan began in 2012. Halverson operates a 4,000-acre farm and ranch south of Kennebec.

He said the 1.5-cent check-off served well in years of good production but forced research funding to be reduced in lesser years.

“Overall, it all comes down to farmers investing in their future,” Halverson said.

Farmers who don’t want to participate can request refunds.

Brian Jorgenson of Ideal, who serves on the South Dakota Crop Improvement Board, said the wheat industry is extremely important.

He said corn and soybeans popularity in recent years led to reductions in wheat acres where there has been sufficient rainfall.

There isn’t enough money currently to support the need for wheat research, he said. There is a strong base of genetics produced through work at SDSU. “Most farmers would probably agree with me,” he said.

Under the proposed fee, Jorgenson said his wheat-seed business would spend about $3,200 annually. He said he pays about half that much now.

Former Rep. Kim Vanneman, RIdeal, spoke in support of HB 1081. She and her husband operate a farmstead that Clint’s grandfather homesteaded in 1909 in northern Tripp County.

“I’m pretty sure there weren’t many years wheat wasn’t grown on our farms,” she said. “Wheat is one crop we’ve never even considered taking out of our rotation.

“We also have never considered refunding from the wheat checkoff,” she said. “We view the checkoff as an investment.”

“As we all know, a dollar today doesn’t buy what it did probably even yesterday.”

SDSU leverages the check-off money at a $1 to $4 ratio through assistance from other agencies and sources, according to Barry Dunn, dean of the university’s college of agriculture.

“We’ve been cutting edge for a long time. We’re proud of it,” Dunn said. “This is really a key investment for the state and the future of the state.”

Mike Held of Huron said South Dakota Farm Bureau supports the change. He said Farm Bureau organizations in wheat-producing counties favor it.

But Mike Traxinger of South Dakota Farmers Union testified against it. He said additional money for research is valuable and is needed, but the Farmers Union policy is that check-off boards should be elected .

The five wheat commission members are appointed by the governor.

Traxinger said the Legislature increased the check-off fee to 1.5 cents from 1 cent per bushel in 2005.

He said U.S. acres in wheat are declining and U.S. market share of wheat exports are shrinking. Production and acreage aren’t projected to increase, Traxinger said, but the check-off revenue would nearly double under the change, based on current market prices.

Farmers Union has concerns about how the money has been used since the 2005 increase, Traxinger said.

Farmers Union is open to increasing the check-off but in a different manner than proposed, he said.

Qualm said he “can appreciate” the Farmers Union position but the shift in acres from wheat to corn resulted from high prices for corn. Dry conditions prevented a lot of wheat planting in recent years, he said.

“It wasn’t going to come up anyway,” Qualm said.

He said wheat is an important piece of the crop rotation for weed control.

“I don’t think there’s any abuse there that I have seen,” Qualm said about the commission’s spending. The additional money would allow SDSU to further develop more varieties and improve disease resistance, he said.

Dunn said wheat research takes 10 years to get a new variety in line. He said SDSU’s program would benefit from a steadier flow of money.

Rep. Gary Cammack, R-Union Center, said the program has widespread support from producers and producers can get their money refunded. He said the declining acres show research is needed.

“South Dakota is perfectly suited for wheat. It’s grass with big seeds,” he said. “There’s no place in the world where grass grows better than South Dakota.”

Rep. Dean Schrempp, D-Lantry, said he was backing away from his previous support of the bill. He said he didn’t know the governor appointed commissioners. He said he’s been fighting the beef checkoff for a long time.

Rep. Jim Schaefer, R-Kennebec, said he personally knows some of the current and past commissioners and “they’re the best.”

Rep. Elizabeth May, R-Kyle, said the wheat check-off is refundable and that’s an important difference from the beef check-off.

The full House of Representatives could debate the bill as early as today.