Brand Renewal Fees Could See Increase

By Sheila Hildebrand

The Montana Department of Livestock (DOL) is slated to hear discussion and justification supporting a proposed increase in the Montana brand rerecord fee at its January 23 meeting.  According to Board Secretary Donna Wilham, the issue is tentatively on the agenda, and awaiting final approval.

Montana brands are renewed at the beginning of each decade.  The associated revenue is appropriated annually for ten years.  For the past two renewal periods the fee has been $100 for each brand certificate, or $10 per year.  According to DOL Executive Officer Mike Honeycutt, there are currently approximately 50,000 brands registered in the State of Montana.  Accordingly, the previous renewal would have generated approximately $5,000,000 in revenue, with annual appropriations of approximately $500,000.

“Brand rerecord fees are only one source of DOL (Brand Division) revenue,” Honeycutt explained.  “Also funding the department are per-capita fees (annual assessments), inspection fees, new brand fees, and transfer fees.”

According to Honeycutt, the current fiscal year DOL Brands Division budget is $4.2 million.  The budget is comprised of approximately $600,000 – $700,000 in operating costs such as rent, supplies, software contracts and state vehicle leases.  Labor costs account for approximately $3.5 million with a Full Time Equivalent (FTE) head count of 53.  The labor component of the budget reflects fully loaded labor costs including all burden such as (but not limited to) taxes, insurance, Workers Compensation and retirement contributions.

At the October 22, 2019 DOL meeting, a rerecord update was provided by Brands Administrator Leslie Doley.

“Doley requested input from the BOL (Board of Livestock) whether or not brands should be recorded as one species and one location per brand certificate as opposed to up to three species listed per brand certificate,” according to meeting minutes.  “A brand registration fee would be charged for each brand certificate submitted.  Concern was raised about the cost to the producer of having one species per brand certificate, rather than up to three, and then charging a fee for each certificate.”

The brand re-record fee became key to the discussion and DOL board member Brett DeBruycker moved to increase the brands renewal fee to $200.

“BOL Vice Chair John Scully reminded the BOL that statutory requirements say fees commensurate with costs, and so if the brand rerecord fee is double, the DOL costs would have to be doubled,” the minutes read.

Honeycutt said before making any decisions on the rerecord fee, the cost of program delivery over a 10-year period must first be analyzed, the minutes said.  According to meeting minutes, the BOL decided that an increase in the rerecord fee would be necessary as program administration has gone up since a decade ago – the increase amount was undetermined.

Representatives from livestock industry organizations present at the October meeting urged caution on the move.  Montana Farm Bureau Federation’s John Youngberg and Montana Stockgrowers Association’s Brian Ohs “felt that doubling the brand rerecord fee would not be well received by producers.”

Following this discussion, the motion failed and was tabled until the next BOL meeting.  According to Honeycutt, the issue was addressed in the December meeting but no action was taken.  It was determined that analytics must be developed by the department to determine an appropriate rerecord fee for the upcoming renewal period.  The department was asked to research what the costs have been over the past ten years and create a projection for next ten years.

“Everything goes up in price,” Montana Stockgrowers Association (MSGA) President Fred Wacker said in response to the potential change.  “Stockgrowers is understanding of a reasonable price increase, but not tolerant of an excessive one.”

Wacker noted that many ranch families have multiple brands for a multitude of reasons, so “re-record can become a big ticket item.”  At MSGA’s annual meeting in December, the group passed a resolution indicating that they would not support an increase of more than $200, Wacker said.

“We are well aware of the challenges facing the industry and we know that every increase in fees affects the margin of producers.  We are very considerate of that.  We see and understand the climate of the industry today and we know who is paying these fees.  That is why our fees tend to be very static,” Honeycutt said.

The aforementioned analysis will be prepared by the DOL Chief Financial Officer and will be presented to the Board at its January 23 meeting.  The meeting will be held in Helena at the Livestock Conference Room #319 in the Scott Hart Building from 8 a.m. to 5 p.m.


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