SASKATCHEWAN ALFALFA SEED PRODUCERS

DEVELOPMENT COMMISSION

2001 ANNUAL REPORT

The Saskatchewan Alfalfa Seed Producers Development Commission (SASPDC) w~. establishedon July 24th, 1997 and is currently in its fourth year of operation. The 5th SASPDC anrual meetingwas held in Saskatoon on January lOth, 2002.

The current SASPDC board is comprised of the following directors:

Carrot RiverPrince AlbertPorcupine PlainMelvilleZenon Park

LanghamSaskatoon

Bill Weighill, ChairmanSheldon Dowling, Vice ChairmanErnest HolinatyDavid KushnirukClem LalondeGaylord MierauWayne Goerzen, Executive Director

The Commission's EstablishmentThe process leading to the establishment of the Commission was initiated by the Sa~;katchewanAlfalfa Seed Producers Association (SASPA). The intent of the alfalfa seed produ(:ers was toestablish a commission whereby producer funding could be utilized in areas of research anddevelopment in order to benefit the alfalfa seed industry in Saskatchewan. A length:{ period ofconsultation with alfalfa seed producers in the province was undertaken with the advice andassistance of the Saskatchewan Agri-Food Council. Following this consultation period, a producervote was he1d in January, 1996 at a well-publicized general meeting of alfalfa seed producers inSaskatoon, with representation from the Agri-Food Council in attendance. At the meeting, theimplementation of an alfalfa seed levy was strongly supported by alfalfa seed producers. TheCommission was established on July 24th, 1997 and collection of the levy commenced on August1st, 1997. Initially, he levy was set at $0.0075 (3/4 of one cent) per pound of alfalfa see(!. The levyis mandatory in nature and completely refundable to producers twice each year.

Purpose of the Commission (SASPDC Mission Statement)The general purpose and intent of the Commission is to provide for the orderly and effectivedevelopment of the alfalfa seed industry in Saskatchewan. Specific purposes of the Commission are:

I. To promote and develop the alfalfa seed and alfalfa leaf cutting bee industries in

Saskatchewan;To develop procedures to maximize returns to producers;2.

3.

4.

5.

6.

7.

8.

To encourage the production of a uniform high-quality product;To gather, compile, and distribute information related to the production of alfalfa seedand the management of alfalfa leaf cutting bees;To conduct and encourage research on the production ofalfalfa seed andthe management of alfalfa leaf cutting bees; ITo promote and improve understanding among individuals and organizations within thealfalfa seed and alfalfa leaf cutting bee industries; ;

To establish a system of levies on alfalfa seed crops for carrying out the purp)ses of theCommission; andTo represent and lobby on behalf of registered producers in matters rel~ting to thedevelopment of the alfalfa seed and alfalfa leaf cutting bee industries.

Mandate or the CommissionThe Saskatchewan Alfalfa Seed Producers Development Commission was established to assist inthe growth of the alfalfa seed and alfalfa leaf cutting bee industries in Saskatche\van. As theavailability of government funding for research and development is affected due to redul:ed budgets,the Commission allows alfalfa seed producers to take on a role in the funding of n~search anddevelopment. Through the Commission, producers have major input in the utilization oflevy fundscollected; collection of the levy also makes it possible for the alfalfa seed and alfalfa lea Fcutting beeindustries to match funds with government under new funding initiatives in order to supportresearch and development projects in which the alfalfa seed producers are directly involved.

Research Priorities of the CommissionConsultation to detennine the research priorities of Saskatchewan alfalfa seed producers is ongoing.Research projects currently underway include the following initiatives:

I. Investigation of potential value--added components of alfalfa seedThe alfalfa seed value-added research project is co-funded by the SASPDC and Agricult\lfe & Agri-Food Canada (AAFC). The objective of the research project is to identify value-added componentsof alfalfa seed which could have uses in either the nutraceutical or pharmaceutical industry. and thussupport development of secondary processing of alfalfa seed in Saskatchewan. Seed from twovarieties of alfalfa (Algonquin and Rangelander) has been evaluated to date and initial extractionresearch has been completed. Work is now underway to isolate sufficient quantities of individualcomponents to allow for identification and characterization. Research is being carried out under theguidance ofDr. Neil Westcott (AAFC -Saskatoon) and Wayne Goerzen (SASPDC -Saskatoon).

2. Development ofa prototype alfalfa leaf cutting bee incubatorThere is currently no standard alfalfa leaf cutting bee incubator design utilized by alfalfa seedproducers~ this lack of unifonnity makes development and transfer of new parasite controltechnology difficult. For this reason, a research initiative was undertaken through joint f'unding bythe Saskatchewan Alfalfa Seed Producers Association (SASP A) and the SASPDC with th~, objectiveof designing and constructing a prototype leaf cutting bee research incubator. The first prototypeincubator to be constructed was utilized during the 1998 field season to further evalu3,te use of

pyrethrin aerosol for chalcid parasite control. A second incubator of identica] design wassubsequently constructed and both incubators were utilized for chalcid parasite corltrol researchduring the 1999,2000, and 2001 field seasons. The purpose of research on the development ofaprototype leaf cutting bee incubator, incorporating features designed to optimize parlSite control,is to provide important technical information to producers which will allow them to either constructnew leaf cutting bee incubators or retrofit existing incubators to a recommended set of specificationsin order to enhance parasite control efforts.

3. Identification of optimum soil fertility conditions for alfalfa seed productionThe object of this research project (co-funded by SASPDC andAAFC) is to determine 1he influenceof balanced fertilization on alfalfa seed yield, longevity of alfalfa seed stands, weed populations,and disease severity .Field experiments will be conducted from 2000 to 2004 (using tile same sitesevery year) on 3-year old alfalfa seed stands at two sites in northeastern Saskatchewan. Thefertilizers will be surface-broadcast in mid to late April ( early spring) of every year beginning in2000. Seed yield will be harvested in the fall each year. Information on weed counts, weed biomassand disease severity will be collected during the summer at all sites.

4. On-farm soil fertility research projectThe on-farm soil fertility research project. initiated in the spring of 2000. was fully operationalduring the summer of 200 I. This project is investigating the effect of fertilizer nutrien ts on alfalfaseed yields over three years. Phosphorus. potassium. and sulfur ( as well as several micronutrients )are being evaluated in trials throughout the alfalfa seed production area of eastern Sa~ katchewan.These trials have been established by eleven producer-cooperators who have agreed to carry out thetests on their own fields. The field-scale plots not only encompass the variations in soil, landscape,and climate that can occur across a quarter section. but also allow all operations to b,~ done with

standard farm equipment. II

5. On-farm disease control research projectAn on-farm disease control research project incorporating fungicide trials was initiated in thesummer of200 I. Nine producer-cooperators established fungicide treatment plots eitheI in additionto, or in conjunction with, their soil fertility plots. These trials will provide valuable baselineinformation to alfalfa seed producers regarding the use of fungicides for disease contr(ll. On-farmresearch in this area will assist producers in gaining a better understanding of the diseas\~ processesassociated with alfalfa seed production, and of the mechanisms by which fungicides protect the

alfalfa plant, flower, and seed development.

Overview of the Saskatchewan Alfalfa Seed IndustryAlfalfa seed production in the province has expanded rapidly over the past several years to thf;current level of over 100,000 acres, representing 75% of the alfalfa seed acreage in C~mada. Theestimated value of Saskatchewan alfalfa seed production, based on an average yield of I ~'5 Ibs./acreand an average price of $1.00/Ib. is $17.5 million annually. The alfalfa leaf cutting bee is allimportant pollinator of alfalfa for seed production and has been used by Saskatchewan a .1falfa seedproducers a.c; a dependable pollinator for about thirty years. Alfalfa leaf cutting bee p<lpulations.estimated at 20,000 per acre, have grown to a total of approximately 2 billion. U tlder ideal

conditions, this population doubles each year and the excess production is marketed primarily toalfalfa seed growers in the United States (at a value of about $10 million each year).

SASPDC Proposed Budget -2001/2002A copy of the 2001 / 2002 proposed budget of the Saskatchewan Alfalfa SC{:d ProducersDevelopment Commission, as approved by the membership at the 5th SASPDC annual meeting heldin Saskatoon on January 10,2002, is attached as an appendix to this report.

SASPDC Budget and Expenditures -2000 12001( comparison of actual results with planned results)A copy of the 2000 /2001 budget of the Saskatchewan Alfalfa Seed Producers I)evelopmentCommission, as approved by the membership at the 4th SASPDC annual meeting held in Saskatoonon January 11th, 2001, and including data re: fiscal year-end comparison of actual results withplanned results, is attached as an appendix to this report.

SASPDC Payee List -2000 / 2001A list of payees, including individuals and organizations receiving payments from the S:lskatchewanAlfalfa Seed Producers Development Commission during the 2000/2001 fiscal yew', is attachedas an appendix to this report.

SASPDC Financial Statements for the 2000 /2001 fiscal yearThe Saskatchewan Alfalfa Seed Producers Development Commission audited financi~u statementsfor the year August 01,2000 through July 31,2001 is included with this report. Th(:se financialstatements include an audit report on the financial statements, an audit report on intenlal rules andprocedures to control assets, and an audit report on compliance with authorities.

SASKATCHEWAN ALFALFA SEED PRODUCERS

DEVELOPMENT COMMISSION

SASPDC BUDGET 2001 -2002

for period

August 01,2001 -July 31,2002

INCOME

Estimated net levy income90,000.00

Total

90,000.00

EXPENDITURES

25,000.00

SASPDC on-farrn research projects20,000.00

20,000.00

Other research project-related expenditures7,500.00

Prairie pesticide minor use consortium5,000.00

Directors expenses / fall research letter5,000.00

SASPDC annual audit2,500.00

SASPDC levy collection expenses5,000.00

Tota.l90,000.00

SASPDC 2001-2002 budget approved by the SASPDC membership atthe SASPDC 5th annual meeting held in Saskatoon on January 10, 2002.

SASKA TCHEW AN ALF ALF A SEED PRODUCEH.S

DEVELOPMENT COMMISSION

SASPDC BUDGET 2000 -2001income and expenditures for period

August 01, 2000 -July 31,2001

INCOME Budget Actual

Estimated net levy income 75,000.00 lO4,837.0g

Total 75,000.00 104,837.0:~

EXPENDITURES

25,000.00 25,OOO.O()SASPDC / AAFC soil fertility research project

15,000.00 15,281.2(1SASPDC on-farm research projects

15,000.00 15,000.0(1Leafcutting bee parasite / disease research project

7,500.00 6,500.0(1Herbicide resistant weed research project

5,000.0(1Prairie pesticide minor use consortium

5,000.00 3,673.34Directors expenses / fall research letter

2,034.0C2,500.00SASPDC annual audit

4,940.7a5,000.00SASPDC levy collection expenses

77,429.3275,000.00Total

SASPDC 2000-2001 budget approved by the SASPDC membership at the4th SASPDC annual meeting held in Saskatoon on January 11. 2001.

SASKA TCHEW AN ALF ALF A SEED PRODUCEFtS

DEVELOPMENT COMMISSION

SASPDC payee list for periodAugust 1st, 2000- July 31st, 2001 a

PAYEE Amount

Agriculture & Agri-Food Canada@ (soil fertility research project)

25,000.00

15,000.00Saskatchewan Alfalfa Seed Producers Association(j) (alfalfa leaf cutting bee parasite / disease research project)

6,250.00Agriculture & Agri-Food Canada(:1} (herbicide resistance research project)

((i) SASPDC on-farm disease research project producer-cooperators(on-farm disease research group out-of-pocket chemical expenses)

(1) Prairie pesticide minor use consortium

SASPDC on-farm soil fertility research project producer-cooperators(Q (on-farm soil fertility research group out-of-pocket travel expenses)

/;;) Keith Head & Associates Ltd.l:::f/ (SASPDC on-farm soil fertility and disease research projects)

2,806.87SASPDC board of directors( directors out-of pocket board meeting expenses)

2,034.00Hergott Duval Stack & Partners(SASPDC 1999- 2000 audit)

2,190.00Jim Altwasser(SASPDC levy collector fees)

72,955.77Total

a Individuals, groups, and companies receiving more than $1,500.00 in SASPDC funill.

SASKATCHEWAN ALFALFA SEED PRODUCERS

DEVELOPMENT COMMISSION

FINANCIAL STATEMENTS

JULY 31.2001

HERGOTI' DuvAL STACK &: PARTNERS

y

,HERGOTT DUV AL ST ACK & PARTNERS

1200 SASKATOON SOU RE410-22ND STREET ST

SASKATOON, Sf\SKATCHEW NS7K T6

TELEPHONE: (306) 934-8 00FA)( (306) 653-5 59

www.h,3rgottduval.sl<.caE-MAIL: office@hl~rgottduval.sk,ca

AUDITORS' REPORT

To the Members of

Saskatchewan Alfalfa Seed Producers Development Commission

We have audited the balance sheet of Saskatchewan Alfalfa Seed Producers Development Commissionas at July 31, 2001 and the statement of operations and change in net assets members' equity for theyear then ended. These financial statements are the responsibility of the Commission's management.Our responsibility is to express an opinion on these financial statements based on our audi1:.

We conducted our audit in accordance with generally accepted auditing standards. Those standards

require that we plan and perform an audit to obtain reasonable assurance whether l:he financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made by management, as well as evaluating

the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial positiqnof the Commission as at July 31, 2001 and the results of its operations for the year then ended inaccordance with generally accepted accounting principles.

11

~r;t~SASKATOON,SASKATCHEWAN

September 25, 200 1

CHARTERED ACCOUNTANTS

PARTNERS SENIOR COUNSEL

LYLE ZDUNICH, BComm CA LEE HERGOTT, BComm CAR. JOE PARKER, BComm CA MAURICE DUVAL, BComm CATHOMAS J. STACK. BA CABARRY FRANK, BComm CABLAIR DAVIDSON, BComm FCA

BERNIE A. BROUGHTON, BComm CADAVID W. BALLANTYNE, CBV FCA

CRAIG HERMANN, BComm CACAROL MAJLLOUX, BComm CA

Chartered Accountants

BALANCE SHEET

JULY 31.2001

2:QQl ~ASSETS

Curreut Assets

Chequing accounts

Levy collection accountGeneral account

Levy set-aside fundsTerm deposits

$ 97,02517, 149

$ 67,16219,579

56.341 53.756

$ 170.515 :$ 140.497

NET ASSETS

$ $114,17456.341

86,741

53.756

Net assets -unrestricted

Net assets -levy set-aside funds

$ .170.5.15 $ 140.497

Approved by the Members

Member Member

HERGOTT DUVAL STACK & PARTNERS

~

ST A TEMENT OF OPERATIONS

YEAR ENDED JULY 31.2001

2QQl ~

$; 111,140

(6.303)

104,837

2.611

Revenue

Levy funds collected

Less levy refund requests

Interest

Total revenue 107.448 86.064

15,625

25,000

-

25,0006,500

15,28115,0005,000

2,807

2,034866

72.488

5,281

ExpensesResearch

Alfalfa seed value-added research project(1) Soil fertility research project

(i) Herbicide resistant weed research project

r:J) On-farrn research projects@ Leafcutting bee parasite / disease research projectf!) Prairie Minor Use Consortium

Miscellaneous research projectsDirectors expenses

SASPDC auditFall research letter

1,250

3,922

1,819

1.068

53.965

2,190

1,130

419

674

203

267

59

4.942

2,040

991

313

523

193

476

48

4.584

Levy collectionLevy collector salary

Levy collection administrative expenses

Office equipmentPrinting formsAdministrative support services

Solicitor services

Bank service charges

Total expenses 77.430 58.549

Excess of revenue over expenses $ 30,018 $ 27,515

HERGOTr DUVAL STACK & PARTNERS

$ 90,731

(8,509)

82,222

3,842

)

~

STATEMENT OF CHANGE IN NET ASSETS

YEAR ENDED JULY 31.2001

.Set-aside Funds Unrestricted 2QQl 2Q.QQ

Balance, beginning of yearExcess of revenue over expensesInterest on term deposits

$ 53,756 ~

2.585

; 86,741 $

30,018

(2.585) .

140,497 $

30,018112,982

27,515

Balance, end of year $ 56.341 $ 114.174 $ 170.515 $ 140,497

HERGOlT Duv AL STACK & PARTNERS

Net Assets Net AssetsLevy

JJJL Y 31. 20M

I.

2. Significant accounting policiesThese financial statements have been prepared to reflect the following significant accounting

policies:

&venue recof!nitiQ!!Levy funds are recorded as revenue when received or receivable if the amount to be received can

be reasonably estimated.

Caoital asse~

Capital assets are expensed when purchased in accordance with generally accepted accounting

principles for non-profit organizations. There were no capital asset purchases during the year .

3. Income taxesNo provision for income taxes has been made in these financial statements as the Commission is

exempt from income tax under the Income Tax Act.

4.

5. Comparative figuresCertain of the comparative figures have been reclassified to conform with the current. year's

.presentation. .

HERGOlT DUVAL STACK & PARTNERS

Financial instrumentsFair value of financial instruments

,

SENIOR COUNSEL

LEE HERGOTT, BComm CA

MAURICE DUVAL, BComm CA

PARTNERS

LYLE ZDUNICH, BComm CA

R. JOE PARKER, BComm CA

THOMAS J. STACK, BA CA

BARRY FRANK, BComm CA

BLAIR DAVIDSON, BComm FCA

BERNIE A BROUGHTON, BComm CA

DAVID W. BALLANTYNE, CBV FCA

CRAIG HERMANN, BComm CA

CAROL MAILLOIJX, BComm CA

1200 SASKATOON SQUARE410- 22ND STREET EAST

SASKATOON, SASKATCHEWANS7K ST6

TELEPHONE (306) 934-8000

FAX (306) 653-5859

www.hergottduval.sk.caE-Mail: office@hergottduval.sk.ca

AUDITORS' REPORI

To the Members of

Saskatchewan Alfalfa Seed Producers

Development Commission

SASKATOON,SASKATCHEWAN

September 25,2001

HERGOTT Duv AL STACK & PARTNERSCHARTERED ACCOUNTANTS

SENIOR COUNSEL

LEE HERGOTT, BComm CA

MAURICE DUVAL, BComm CA

1200 SASKATOON SQUARE410- 22ND STREET EAST

SASKATOON,SASKATCHEWANS7K ST6

PARTNERS

LYLE ZDUNICH BComm CA

R. JOE PARKER, BComm CA

THOMAS J. STACK. BA CA

BARRY FRANK. BComm CA

BLAIR DAVIDSON, BComm FCA

BERNIE A BROUGHTON, BComm CA

DAVID W. BALLANTYNE, CBV FCA

CRAIG HERMANN, BComm CA

CAROL MAILLOUX, BComm CA

TELEPHONE (306) 934-8000

FAX (306) 653-5859

www.hergottduval.sk.caE-Mail: office@hergottduval.sk.ca

AUDITORS' REPORT

To the Members of

Saskatchewan Alfalfa Seed Producers

Development Commission

We have examined the system of internal control of Saskatchewan Alfalfa Seed ProducersDevelopment Commission in effect as at July 31, 2001. We did not examine certain aspects of internalcontrol concerning the effectiveness, economy and efficiency of certain management decision makingprocesses. The criteria for the examination of this system of internal control consisted of the controlenvironment and control systems described in the Canadian Institute of Chartered AccountantsHandbook.

Our examination was conducted in accordance with generally accepted auditing standards. Thosestandards require that we plan and perfonn an examination to obtain reasonable assurance whether thesystem of internal control established and maintained by management is sufficient to meet the controlobjectives referred to below. Such an examination includes obtaining an understanding of the systemof internal control and perfonning tests of controls to detennine whether the internal controls exist and

operate effectively.

The management of Saskatchewan Alfalfa Seed Producers Development Commission is responsiblefor establishing and maintaining a system of internal control to achieve the control objectives noted ina) to d) below. In fulfilling this responsibility, estimates and judgement by management are requiredto assess the expected benefits and related costs of control procedures. Our responsibility is todetermine that there is a system of internal control in effect which provides management withreasonable, but not absolute, assurance that:

a) the accounts are faithfully and properly kept to pefD1it the preparation of fmancial statementsin accordance with the appropriate basis of accounting;

b) all producer money is fully accounted for and properly disposed of, and the rules andprocedures applied are sufficient to ensure an effective check on the assessment, collection andproper allocation of producer money;

Saskatchewan Alfalfa Seed ProducersDevelopment Commission

Page 2

c) transactions are executed in accordance with management's authorization, and producer moneyexpended is applied to the purpose for which it was intended by legislation; and,

d) essential records are maintained and the rules and procedures applied are sufficient tosafeguard and control producer money against loss from unauthorized use or disposition.

Because of the inherent limitations in any system of internal control, errors or fraud may occur and notbe detected. Also, projection of any evaluation of the system of internal control to future periods issubject to the risk that procedures may become inadequate because of changes in conditions, or thatthe degree of compliance with the procedure may deteriorate.

In our opinion, based upon the above criteria, the system of internal control of Saskatchewan AlfalfaSeed Producers Development Commission in effect as at July 31, 2001, taken as a whole, wassufficient to meet the objectives stated above insofar as those objectives pertain to the prevention ordetection of errors of fraud in amounts that would be material in relation to Saskatchewan Alfalfa SeedProducers Development Commission.

SASKATOON,SASKATCHEWAN

September 25,2001

I).,.;t( PwJ ~ "' ~

Chartered Accountants

HERGOlT DUV AL STACK & PARTNERS