THE BEEF CHECKOFF

What a difference a decade can make!

In 1988 after two earlier defeats, a quarter of a million cattlemen voted to approve a mandatory beef checkoff. Two organizations that worked furiously for the checkoff in those days were the NCA, and the Livestock Marketing Association (LMA). Eleven years later the NCA has transformed itself into the NCBA and has seen the portion of its budget that is derived from checkoff dollars soar to 86%. This despite the fact that of the estimated 1,212,110 cattle producers in the country, less than 40,000 are actually NCBA members.

And the LMA? They are in the final days of a furious effort to gather up 120,000 signatures to have a referendum on the checkoff.

Gathering up the names of 10% of all cattlemen in the country has proven to be a daunting task. Although the LMA is not officially releasing numbers it has been widely reported, and not denied, that as of the first of March they had about 80,000 signatures, with 60,000 gathered in the previous ninety days. But the LMA is running out of time. The deadline is May 15 and the final countdown has begun.

Let´s Review, Shall We?

You´ll recall that the Beef Promotion and Research Act was passed as part of the 1985 Farm Bill. We know that you are painfully aware that since that time per capita U.S. beef consumption has gone down 15% and the rancher´s share of the beef retail dollar has gone down 21%.

Cattlemen aren´t the only ones questioning the accomplishments of their checkoff. The USDA oversees 11 other such promotion programs, for milk, soybeans, pork, eggs, potatoes, honey, mushrooms, watermelons and popcorn. All together the USDA collected $659 million in obligatory payments from producers last year alone. In the past year all of those groups except dairymen have seen their industry experience tough times. So, naturally, questions have been raised as to the effectiveness of the various commodity programs.

In response to grassroots unrest and embarrassing media scrutiny, Secretary of Ag, Dan Glickman, appointed a Research and Promotion Task Force to review federal commodity programs and on March 8 and 9 that Task force convened a hearing in Washington DC. Nancy Robinson, Vice President for Government Affairs for the LMA, presented her group´s testimony. She testified that...

"Many cattle producers have become increasingly critical of the Cattlemen´s Beef Board´s incestuous relationship with their principal contractor, the NCBA. That´s because of the NCBA´s and CBB´s interlocking organizational structure and meetings, as well as the commingling of staff and budget." Robinson pointed out that "85% of NCBA´s revenues and nearly 70% of their employee salaries and benefits come from the checkoff. This structure has made the two groups so called arms length relationship´ highly suspect, if not an outright pretense. An obvious question," Robinson said, "is whether the firewall that NCBA has purportedly erected between their policy and checkoff related expenditures is built of paper, or of brick and steel." Further, Robinson told the Task Force that "far too many checkoff dollars are spent propping up the industry´s image, tooting the checkoff´s horn and reconfirming its approval rating. Results are what count, and many producers today don´t feel the beef checkoff is showing results."

Of course the NCBA and the Cattlemen´s Beef Board had a completely different take on the checkoff when it came their turn to testify. Basically, they said that the beef checkoff is working just fine, producers don´t need to vote on it and the producers who signed petitions asking for a referendum didn´t know what they were signing. There is no problem with the NCBA providing staff to run the Beef Board and they also felt that the USDA should not increase it´s oversight.

How would you expect the NCBA to feel when 86% of their $62.6 million budget came from Checkoff funds. Why wouldn´t you expect staff and officers to fight tooth and toenail for their empire. After all, as the sole contractor for most checkoff grants the NCBA finds itself in the enviable position of being on both sides of every program, first proposing the programs and then helping to decide who gets the money. If you were making $226,543 a year, not counting benefits, like Chuck Schroeder as CEO of the NCBA, or Monte Reese as head of the Checkoff making $140,000 per year plus $30,271 in benefits, wouldn´t you think the program was working pretty well?

Look What We´ve Done For You Lately

Nancy Robinson testified in Washington that reforming all commodity research and promotion programs is necessary to keep producer support. "Without changes, she said, "there will be a groundswell from the grassroots to eliminate these programs all together." That groundswell began long before the LMA went to Washington. In recent years seven agricultural marketing programs have been rejected in referendums by producers, including sheep, pecans, wheat and cut flowers.

Of the 12 programs that remain in place, petitions are currently being gathered for referendums on several, including the pork checkoff. At this writing more than 14,000 U.S. hog farmers have signed a petition to end their mandatory pork checkoff because their results have been even worse than beef. Since their mandatory pork checkoff began in 1986, almost half a billion dollars has been collected while the pork producer´s share of the retail dollar dropped from 46% to 12% this last December. During the pork checkoff´s tenure 230,000 hog farmers have gone out of business. Oh, but think how much worse it could have been if they didn´t have the checkoff!

A big stink was raised by the attention that big media gave two checkoff programs in particular. The USDA´s own Inspector General recommended that the National Fluid Milk Processor Board promotion program be suspended. This program has been in existence since 1993 and raises about $110 million per year and is responsible for the well known milk mustache ad campaign. The government claims the milk board spent $127 million without proper approval from the USDA.

Sharon Walsh blew the whistle on the cotton checkoff program in a November article in the Washington Post. The Cotton Board collects about $60 million per year from cotton farmers to promote its use. Walsh found that some funds were going for things that had little or nothing to do with the promotion of cotton Such as spending $450,000 on a lavish black tie affair at New York´s Metropolitan Museum of Art and $8,500 for adult entertainment at topless bars and other such establishments. This at a time when cotton farmers were experiencing one of their worst years. A former boss at Cotton, Inc. received a $269,00 per year salary and when he left he was given a $215,000 consulting contract. Walsh also found that no other entity was ever invited to bid on Cotton Board contracts other than Cotton, Inc. Sound familiar?

Dueling Press Releases

The battle between the NCBA and the LMA has been ferocious. carried on mainly by press release. Clark Willingham made the LMA livid by attacking auction markets and promoting strategic alliances in a Beef Magazine interview. Since then relations have grown steadily worse. When the LMA Board voted to launch its petition drive the NCBA said that the LMA was doing so because they weren´t getting any checkoff funds. Overtures were made in their direction but Hatch Smith, LMA´s president has said repeatedly, "the LMA is not interested in receiving checkoff dollars, participating in the restructuring of other industry groups, or serving on additional industry committees. We are committed to obtaining a producer vote on the checkoff and periodic votes. We are also committed to abiding by the producer vote."

The NCBA countered that such a vote would not allow for improving the checkoff but would just be an up or down vote, winner take all. So the CBB and the NCBA came up with a four part proposal that would have called for a producer referendum if a producer survey failed to show support for the program in two of every three years. Such a survey would contain only items relating to the CBB. In return the LMA would be asked to officially discontinue their petition drive.

The LMA politely refused the generous offer.

Instead, the LMA came up with a proposal of their own "that called on the Beef Board to demonstrate its commitment to a producer-run beef checkoff by supporting a producer vote next year in which producers would decide to either hold an up or down vote on the checkoff in the year 2003, or reconfirm the checkoff as it is now. Such a vote would have given the CBB and the NCBA three years to make changes to regain producer confidence. "It´s important for producers to know," said LMA´s president, Hatch Smith "that the common element running throughout LMA´s proposal, and lacking from the CBB´s is a four letter word...VOTE."

To no one´s surprise the CBB did not go for LMA´s proposal and instead announced the formation of a Task Force to seek input on constructive changes to the checkoff and, get this, "Depending on the nature of these final recommendations, producers MIGHT then be asked to approve the suggested changes in a referendum."

"It´s very obvious," said Hatch Smith the CBB does not want to let those who pay the $1 per head to have their voices heard on the program. Instead the CBB has proposed yet another task force which will seek industry input on possible changes. Even then, the CBB does not guarantee producers will ever get to vote." Smith pointed out that, "nowhere in the CBB´s response to LMA´s proposal is any commitment for a periodic revote on the beef checkoff."

Yes, We Want You Not To Have A Vote

Past NCBA President Clark Willingham said repeatedly that NCBA did not oppose cattle producers having a vote. But LMA´s Robinson testified at the hearing that an unprecedented $4 million in checkoff funds has been spent over the past eight to ten months to promote the checkoff and to stop the petition drive dead in its tracks.

Those in favor of a vote have had to rely on more austere measures: Selling $5 red buttons and signs that say "Rein In The NCBA."

Interestingly, soon after the petition drive was announced by the LMA the Beef Board discovered, after years of polling, that 4 out of 10 producers knew little or nothing about the checkoff. They felt it was necessary to spend more money in order to educate them. Interesting timing, don´t you think?

If nothing else the threat of a referendum has forced the NCBA to alter some policy positions. At its recent convention in North Carolina, the NCBA adopted a resolution reversing its opposition to mandatory reporting of live cattle prices. And after initially being opposed to all three prongs of R-CALF, the NCBA buckled under intense disapproval, although they still oppose the anti-dumping case against Mexico.

Skeptics reman that NCBA has seen the light. Jeanne Charter who along with husband Steve, have shown their displeasure with the merger by withholding checkoff dollars and becoming active in gathering signatures, is one of those doubters. "We don´t believe there´s been any true change of heart in the inner NCBA circles in Denver," said Charter.

Those looking for help from the USDA shouldn´t expect much. Why would you expect it? In the Beef Board´s budget is $250,000 to pay the USDA for oversight expenses. Yes, the USDA is getting paid for the poor job it has done in over- seeing the checkoff groups they created in the first place. The USDA doesn´t appear to be in any hurry to cut off those income streams or admit that their oversight might have been lax. Their recent Task Force made no effort to hold field hearings and many of those in attendance said the hearings looked like nothing more than window dressing. Sadly, even if enough petition signatures are collected it is up to the Ag. Secretary to call for a vote. We can only speculate about the politics that will go into that decision.

A Defining Moment

In retrospect one can point to certain events that helped shape the future of the cattle business. Certainly one of those events was the merger of the NCA and the CBB in 1996. May 15 is another of those defining moments. If that date passes without enough signatures for a vote it looks like ranchers will be forever saddled with paying a dollar per head to finance an industry group that does not represent their best interests. If the LMA can´t pull it off the petition drive who will in the future? With the time and effort they have expended who would even try? And without that threat, the NCBA and CBB will be even more emboldened to follow their own agenda.

This may well be the last chance for producers who don´t want their money used to enhance NCBA´s policy agenda. A policy that appear to favors corporate agriculture and big feeders and packers at the expense of the independent cattle rancher. When we titled this story, "It´s Almost Over," we could have been referring to the petition drive for a referendum... or your future as an independent cattleman.

If you are a cattle producer subject to the dollar per head assessment you can still get a petition or signature card by calling the LMA at 800-821-2048.

If you thought creative usage of the English language, evasive answers and selective memory were practiced only in Washington D.C. you haven´t been reading the press releases spewing forth from NCBA headquarters. These people could give the Clinton White House lessons on spinning the facts. For example...

High Approval Ratings

ITEM: "What researchers found," said Chairman of the Cattlemen´s Beef Board, Steve Hailey, "is that 4 out of 10 producers say they´ve never heard of the checkoff, or know very little about it."

This startling revelation came after the LMA announced they would attempt to gather up the signatures necessary for a referendum on the checkoff. These survey results are now being used as an excuse to spend more money to inform cattlemen about all that the checkoff does for them. There´s only one small discrepancy. For years we´ve been told that 70-72% of all cattlemen approve of the checkoff. Even in a recent press release the Beef Board said, "the research found that 68% of producers approve of the checkoff."

Let´s do the math. If 4 out of 10 cattlemen don´t know about the checkoff that means if every rancher in the country approved of the checkoff the highest approval rating possible would be 60%. Yet for years we´ve been told that at least 70% of producers approve of the checkoff. Did a large number of cattleman simultaneously come down with the same case of amnesia afflicting our President?

"I Have No Recollection Of That"

ITEM: "USDA officials reported at last Fridays meeting that the import permit requested for the Australian cattle had been withdrawn, largely as a result of concerns raised by NCBA leadership and members regarding animal health issues."

While NCBA leader´s were issuing that release regarding the possible importation of Australian cattle into this country, Clark Willingham, the current NCBA President, was saying something very different, according to the Australian Broadcasting Company: "The President of the U.S. National Cattlemen´s Beef Association, Clark Willingham says he now believes it may be economically viable for Australia to export live cattle to Mexico for on-sale to feedlots in the United States. Mr. Willingham who is currently in Australia for high level cattle industry talks says that if Australian cattle producers comply with U.S. import regulations, his Association will not oppose attempts to export live cattle to U.S. feedlots via Mexico. The comments are something of a turn around from last week´s claims by Mr. Willingham´s association that applications to trans-ship Australian cattle through Mexico to the U.S. were an attempt to enter the market through the back door. But after visiting Australia this week, Willingham says he now understands how the trade is possible and he WOULD NOT oppose it." (emphasis ours)

Despite Willingham´s comments, the NCBA is now attempting to take full credit for stopping the Australian cattle. A professor at New Mexico State University told the Digest that U.S. influence had nothing to do with it, because the issue never got that far. It was the Mexican government and the Mexican cattlemen who denied the Australian cattle because they were worried about a backlash and did not want to jeopardize their ability to export Mexican cattle to the U.S.

"It´s A Vast Right Wing Conspiracy"

ITEM: "From its inception the checkoff program has focused on five key producer directives: It´s fair. Everybody pays. No one gets a free ride." NCBA Fact Sheet

What about the beef packer? They don´t pay the dollar per head on the cattle they process, yet so far they are the primary beneficiary of checkoff dollars.

"I May Have Said That. I Don´t Remember"

ITEM: Depending on the audience, the NCBA often says that they are in favor of mandatory price reporting.

Senator Bob Kerrey introduced an amendment to the Senate Agricultural Appropriations Bill which, if passed, would move livestock marketing closer to the open, public, competitive, capitalistic markets necessary for producers to receive a fair price for their livestock. In opposition to their published policy position, the NCBA viciously opposed Senator Kerrey´s amendment and tried to mount hurried attempts to get the amendment tabled. The NCBA-backed effort to kill Senator Kerrey´s amendment was defeated by a tie vote.

But don´t take our word. We quote from a two page flyer handed out in Congress by the NCBA prior to the vote on amendments to S.2159, including the amendment dealing with mandatory live cattle reporting and packer concentration: "The amendments are not fair and equitable to beef producers and many of these provisions are counter to our producer´s policy," said the NCBA. Further, the flyer said the NCBA was opposing the mandatory price reporting measure "on behalf of over one million beef producers from across the country." It was signed by Chandler Keys, III, VP of Public Policy.

The whole affair prompted this reply from Tom Breitbach, a Montana rancher speaking on behalf of the Western Organization of Resource Councils: "NCBA has consistently lobbied against the wishes of its own members and against the interests of all the other cattle producers it claims to represent, in opposing competitive bidding and mandatory price reporting."

"That Depends On Your Definition of Mandatory"

ITEM: The NCBA countered that they were all in favor of price reporting but not MANDATORY price reporting. The NCBA contends that they don´t believe in anything that is mandatory. "Beef producers should work to minimize direct federal involvement in agriculture and beef production," said an NCBA release.

One would assume therefore that the NCBA would be against the checkoff since it´s mandatory and is a federal program.

"Just A Coincidence, I´m Sure"

ITEM: "Producers do have a right to request and then vote in a nationwide referendum to determine the future of the beef checkoff." So said, Beef Board Chairman Steve Hailey.

But it appears that the NCBA and the Beef Board don´t want to give producers a chance to vote. They are going to spend millions of your money to convince you to keep the checkoff intact. In the face of the referendum by the LMA, the NCBA used the previously referred to survey as an excuse to raise the level of spending to inform producers about the checkoff. At its Mid-July meeting the Beef Board Approved a budget amendment for fiscal 1998, to spend $1.935 million for producer communications. This is in addition to $845,00 already allocated to producer communications for FY98. This is up from $600,000 spent in 1997.

"After 12 years, the major beneficiaries of the checkoff have suddenly discovered that communicating with those who pay the bills is important," said the LMA in response. "The fact that this multi-million dollar campaign coincides with LMA´s campaign to let producers vote on continuing the checkoff, is just a coincidence, supporters say. At LMA, we are confident that producers will see through this transparent education and information campaign for what it is: an obvious attempt to keep them from ever again voting on the mandatory checkoff."

Incoming NCBA President George Swan said that "none of the dollars can in any way be used to attempt to influence a vote for the checkoff." Do you think they´ll spend any of your money to tell you about the failures of the checkoff?

NCBA Hires Political Strategy Firms

ITEM: According to the Livestock Weekly, Merlyn Carlson, an NCBA Checkoff Committee member, said the NCBA hired two political strategy firms to "develop an educational program to combat the petition drive seeking a referendum on the beef checkoff program." Carlson was further reported to have said that the NCBA wanted to hold off on a pro-checkoff campaign but "the consulting firms advised them to move forward now to dissuade producers from signing the petitions in the first place." Smith said that within days of the consultant´s report almost $1 million was budgeted by the NCBA to carry out their advice.

"Misinformation Costs Money"

ITEM: "Best estimate, based on the last beef referendum would be about $3 to $4 million." NCBA Fact Sheet as to the cost of a referendum on the beef checkoff.

When someone got around to asking Barry Carpenter, Deputy Administrator of USDA´s Ag Marketing Service his response as to what it would cost was, "probably less than than $500,000." And he ought to know considering he´d be in charge of the referendum. When confronted with the slight discrepancy incoming NCBA President, George Swan, said, "the LMA makes matters worse by misinforming producers about various aspects of the checkoff, including how much it will cost to hold a referendum. Correcting misinformation costs money," he said.

"Again, That Depends On Your Definition"

ITEM: The NCBA contends that they are in favor of country of origin labeling.

Well, sort of. Actually what the NCBA is in favor of is "generic labeling of fresh muscle cuts." If the NCBA has their way there will be no labeling of ground beef, which is where most imported beef ends up. The fact is, packers and feeders are opposed to country of origin labeling just as they are mandatory price reporting. The situation was summed up by Jordan Valley, Oregon rancher, Margene Eiguren. "It appears that this is the way NCBA does business. They make it appear as if they stand officially behind an important issue to producers, whom they claim to represent, but their actions reflect who they actually represent. They state over and over that the world is run by those who show up, so we show up, adopt country of origin labeling policy that is critical to the producer, only to have it swept under the rug by a task force consisting of two conference calls and one meeting in Denver, both dominated by packers."

"I Was Never Alone With The Money"

ITEM: In a press packet titled, Myth and Facts, the NCBA denies that the Cattlemen´s Beef Board is now a part of the NCBA. "Fact: The CBB is a separate entity. CBB and NCBA are completely separate entities."

If that is the case how come in all their press releases the NCBA says of itself, "The National Cattlemen´s Beef Association is the marketing organization and trade organization for America´s one million cattle farmers and ranchers?"

The NCBA is certainly supposed to be a separate trade organization but recently they have assumed the marketing role and claim as members the one million ranchers who pay the checkoff. This despite the fact that fewer than 40,000 people have joined the NCBA. And some of them were forced to join.

"The President Has Spoken To That"

ITEM: "NCBA policy does not allow NCBA to recommend one marketing alternative over another."

Now listen to the words of NCBA President Willingham as quoted in Beef Magazine. "Alliances continue to be very important. They´re growing because the ones in existence have worked. Alliances are still the best way to get paid for value in cattle. If you sell them through a feedlot or auction barn, you´re not going to get full value, especially if you´ve spent time and money improving your genetics."

It sure sounds like NCBA President Willingham was promoting one method of marketing over another, doesn´t it? And he´s promoting a method that would increase vertical integration, concentrating the power into fewer and fewer hands, thereby bankrupting much of rural America.

"Yeah, And Hogs Can Fly"

ITEM: "The NCBA will expedite consideration of R-CALF´s request for help in filing a petition for import relief against Canada." NCBA Press Release

Don´t hold your breath waiting for NCBA to help ranchers rein in imports. These are the same people who continue to push for fast track legislation that would allow more imports. Do you really think the packers who need more numbers and feeders who depend on foreign feeders are ever going to allow THEIR organization to support a petition in favor of import relief? Yeah, and pigs can fly and "that woman" got her job because she could type real fast.

In case you thought it was just we here at the Digest making a big deal about the merger and the subsequent confiscation of the beef checkoff by the NCBA, we share with you quotes from other interested parties. Admittedly, we present more negative comments than positive, figuring that the CBB and the NCBA have already spent four million of your dollars in the last ten months telling their side of the story. That should have provided ample opportunity to make their case.

"The beef checkoff isn´t all bad. But there are areas where improvement is needed, including accountability. If taking the checkoff to a referendum will send that message to the Secretary of Agriculture, then let´s do it." -- Chris Abbott, Nebraska Sandhills Cattleman.

"The stuffed shirts are, even as we speak, creating an advertising blitz, not for promotion of beef, but rather the beef checkoff itself. A referendum would cost too much: all those wasted funds should be used for more gainful pursuits, like golf tourneys in temperate climes and other languid respites. When the checkoff was a voluntary collection,there was in effect a referendum at the time of each and every sale. If it ain´t broke don´t fix it. Not content to allow a cowman to decide for himself if it is worthwhile, the now famous mandatory beef checkoff was masterfully force fed, complete with the full weight of the government´s mighty hand upon any who dare to retain any of his own money for his own selfish designs. Now my money (and opinion) has about the same effect as a yard dart thrown into a section of summer fallow when it´s given to the packer controlled, custodian of the checkoff: the NCBA." -- K.T. Hayward, rancher from Parks, Nebraska

"The Cattlemen´s Beef Board continually asserts that a referendum isn´t needed, because the checkoff is producer run and the majority of producers support the program. However the 60,000 signatures we´ve gathered in the last ninety days on our referendum petitions would indicate otherwise." -- Hatch Smith, LMA President speaking in March

"Whenever market share is lost, over a ten year period, we´re not doing something right. I´m saying it´s time for a review. We have to challenge the fact that demand has not come up. There needs to be rethinking of where are dollars spent." -- Larry Jantzen, Kansas cattleman and petition signee who was also the Business Manager for the NCA in the late 1980´s and the architect of the National Beef Checkoff´s accounting system

"As a producer, I am pleased and encouraged by the progress we´re making with our checkoff investments. During our cattle industry annual convention in Charlotte we heard that the checkoff is working as a catalyst for new product development, and even had an opportunity to taste products now being introduced to consumers a round the country. We saw the new consumer advertising with the familiar "rodeo" music and "Beef. It´s What´s for Dinner" theme. I and other producers were excited about our efforts to educate consumers about beef´s important role in a healthful diet. And we even heard from ag. economist Dr. Wayne Purcell, who said his data indicates that for the first time in two decades that the beef demand appears to have stabilized. But there´s more work to be done and now is not the time to be diverted. We must focus our checkoff efforts on building demand for beef." -- George Swan, Idaho cattleman and new NCBA President

"NCBA is using their quasi-governmental status and authority to advocate a radical restructuring of the beef industry. NCBA advocates abandonment of a competitive-bid market structure in the beef industry in favor of a trans-national corporatized system. In doing so, NCBA claims to speak for a million independent producers. In fact, it is really serving as a mouth piece for centralized food conglomerates like IBP, ConAgra, Sysco, Sara Lee, Cactus Feeders. Simplot, National Farms, Harris Farms and a rapidly growing network of smaller captive supply feeders." -- Northern Plains Resource Council

"U.S. producers pay almost all of the $600 million used to fund commodity research and promotion programs each year." -- Gene Paul, National Farmers President

"The NCBA has spent the last year listening and learning from its members and others in the industry and we have begun the process of strengthening our organization to meet the needs of cattlemen today. This process has been assigned to a Blue Ribbon Commission that will seek information and input over the next few months and then present our recommendation to our board during our summer conference in July. NCBA is poised for change and ready to provide bold new leadership. We will continue to move forward in order to achieve the vision of a dynamic and profitable beef industry." -- George Swan, NCBA President

"Most producers feel strongly that it makes no sense for us to be paying the advertising expenses of multi-billion dollar corporations to sell foreign beef. We also object to having two-thirds of the $10 million NCBA spends on staff salaries and benefits and 70% of NCBA´s overheads paid by producer´s checkoff dollars. It´s outrageous that NCBA is living off funds paid by family ranchers while they use our money to advocate economic policies that fundamentally threaten the future of independent family ranching in America." -- Jeanne Charter, Montana rancher who with husband Steve, refused paying the checkoff on the sale of a set of their cattle as a direct challenge to the merging of the NCA and CBB.

"Most of the NCBA employees had either little or no farm/ranch background. But they sure had lots of good reasons why my business would go in the toilet if I didn´t let them handle my money." -- Tim Latham, Powell Wyoming Cattleman

"Ranchers pay into the checkoff program but make no money. Beef packers and supermarkets don´t pay into the checkoff programs but make lots of money. Something is wrong here. Advertising our own products so someone else can make a profit selling them is like asking workers in steel plants to fund the promotion of toaster ovens or cars. The NCBA is embarrassed that market share has decreased and is searching for another tactic. Its current focus is to develop quick and easy microwavable beef meals. Now perhaps ease of cooking is the problem, or perhaps not, but the fact is that beef packers and retail stores have seen their profits from beef sales rocket out of sight, while rancher´s ledger sheets are bleeding gallons of red ink. Why should an organization representing only 3-4 percent of producers control money which 100 percent of producers are required to pay?" -- Giles Stockton, Montana rancher

"The business of the Beef Board needs to be selling more beef and improving markets for cattlemen. We must not let ourselves be diverted from this mission by a continuing controversy resulting from misinformation and innuendo." -- Les McNeill, CBB Executive Committee

"Our interest all along has simply been to find a mechanism to bring the checkoff to an immediate vote, and a periodic vote every 3-5 years. The producers who pay for this program deserve no less, and to assume that the LMA is not aggressively moving forward to gain signatures is extremely inaccurate." -- Hatch Smith, LMA

"It is hugely ironic that all the while the CBB, NCBA and the state beef councils have been decrying the cost of holding a referendum, they have spent four million plus of the producer´s promotion and research dollars, so there won´t be one." -- Nancy Robinson, VP for Government Affairs for the LMA testifying at government oversight hearings on ag checkoffs.

"The original concept of the beef checkoff program started within LMA. It was only through their extensive efforts that the individual state cattlemen´s associations were convinced and the idea moved forward." -- Ed Uvacek, respected ag economist and columnist

This can´t be what industry elders envisioned when they arranged the merger of the NCA and the Beef Board four years ago. When the NCBA gathers this month in the Phoenix desert for their annual convention they will do so under a big thundercloud of doubt that this marriage of new money and old tradition was maybe not such a good idea after all. With two states recently calling for the removal of NCBA´s head lobbyist in Washington and at least one former NCA President and Beef Board Chairman going public in the past year with their displeasure with the merger, the NCBA "shareholders" confab is more apt to resemble a dysfunctional family reunion.

By forcing through the merger in San Antonio the NCBA and CBB are now in danger of losing the goose that lays all those golden eggs: The checkoff. For it to survive it must first pass a gauntlet of no less than four serious challenges that may or may not have been thrown down had the merger never occurred.

Two of those confrontations we´ve told you about in detail previously. Jeanne and Steve Charter would surely NOT have risked considerable time and money in forcing the USDA to sue them over $250 in checkoff fees they purposely didn´t pay. The merger and subsequent NCBA actions provoked the Charter´s defiance and they based their case on the merger being illegal. The judges ruling is expected soon. Then there is LMA´s apparently successful petition drive to call for a vote on the beef checkoff. (We say "apparently" because the names on the petitions still have to be verified that they are from bonafide cattle producers.) It´s inconceivable that the LMA´s petition drive would have been initiated, or successful, if the NCBA had not created so much ill will in the country. Now when NCBA and Beef Board staffers gather in Phoenix they will have two other new clouds hanging over their collective careers. Either one should be enough to have them dusting off their resumes.

Vote Is A Four Letter Word

The Livestock Marketing Association said from the beginning that their goal was a vote by the ranchers paying the checkoff on whether or not they wanted it to continue. The LMA wasn´t after more seats at the table or a big fat contract from the Beef Board. LMA President, Jim Schaben, has said time after time that the LMA "supports a beef checkoff that has a provision for a mandatory reconfirmation vote by producers every three to five years." Well before the LMA handed in their boxes of petitions to the USDA, they offered the NCBA a compromise. Last March the LMA indicated they would stop their petition drive if the NCBA would make provisions for a periodic vote on the beef checkoff. They declined the offer.

Despite how their press releases read, the NCBA and the Beef Board have been against a producer vote from the beginning. Which is puzzling in a way because they repeatedly say their polling data indicates that 60-70% of all producers support the current program. If so, why not vote and get it over with? Go forth with a strong mandate. Instead, with hopes of heading off a referendum, they followed the advice of their paid consultants and spent millions of checkoff dollars on a reenergized effort to "educate the producer about the checkoff." One high ranking NCBA official publicly scoffed at LMA´s compromise saying, "They´ll never acquire the required signatures."

When asked if a vote wasn´t the only way to bring about a change in the program, listen to how Chairman of the Beef Board, Lyle Gray, responded: "First, a vote isn´t the only way to change the checkoff. Second, the vote LMA is calling for will either continue or terminate, not change the program. Third, as a society, we vote on our representatives; we don´t vote on our system of government. The vote LMA is asking for is akin to voting on our system of government and, if rejected, then trying to figure out what we should do next. Every cattleman can have an impact on the checkoff by supporting, nominating or even volunteering to serve as a representative on a state beef council or the Beef Board. In a democracy, we accomplish change through our representatives. The same thing applies to the checkoff."

Civics lesson aside, it now looks like the NCBA should have taken the LMA up on its offer. In November the LMA handed in the signatures of 146,000 people who signed petitions demanding a vote on the beef checkoff.

Those Who Pay Should Say

The LMA has repeatedly stated their position that all commodity checkoffs should have a periodic vote and guess what? The USDA now agrees with them. On December 15 the USDA´s Research and Promotion Task Force came up with 21 recommendations on how checkoffs should be changed. Those proposals have subsequently been endorsed by Agriculture Secretary Glickman. One of the recommendations is that mandatory producer referendums should be held on all commodity checkoff programs at least every five years.

The USDA Task Force also called for greater government oversight of the 12 existing commodity research and promotion campaigns. The Task Force felt that commodity boards should be required to use competitive bidding for contracts whenever possible. This is a crucial issue and one raised by Richard Atkinson, Chairman of the Meat importers Council of America, when earlier this year he voiced his displeasure with the NCBA/CBB relationship. "What has happened is that NCBA has control of the CBB budget and sets its goals to spend all the funds available." Continued Atkinson, "They do this by controlling Authorization Requests (AR´s) through the CBB Committee Structure. These committees, guided by NCBA staff, are then rubber stamping the AR´s. In order to get a concept for an Authorization Request to the attention of the Cattlemen´s Beef Board, one must present it to the NCBA staff. There is no competition for the CBB funding; therefore there is less and less input from industry and what you are left with is a group of people at NCBA dreaming up ways to spend the money."

In response to the USDA Task Force Report, Secretary Glickman said he would seek legislation calling for periodic votes on all checkoffs. But as the Task Force report notes, he doesn´t have to wait for that legislation: He can demand a vote at any time for any program. LMA President, Schaben, says that´s precisely the action that is called for now. "Those who want a referendum on the pork checkoff turned in 19,000 signatures seven months ago and USDA still hasn´t finished verifying them," said Schaben. "And the USDA has had our petitions since November and has yet to announce how they´ll verify them. These are perfect examples of where the Secretary should use his authority and call for an immediate vote."

Another recommendation by the USDA Task Force is that the USDA should more closely monitor so called "producer communications," especially during periods when petitions calling for a referendum are being collected. "We have repeatedly expressed our concern to USDA about the millions of checkoff dollars the Cattlemen´s Beef Board has spent, in a transparent attempt to discourage producers from signing referendum petitions," Schaben said. The Task force report takes note of these concerns when it recommends giving USDA´s Agricultural Marketing Service the right to review all such communications before they are disseminated to producers.

"It´s obvious USDA has recognized the basic democratic right of producers to be able to vote regularly on programs they are funding," says Schaben. "We hope at long last, the Beef Board, along with all other affected commodity groups, will join us in saying, "It´s time for those who pay to have the final say with an immediate vote."

Also included in the Task Force report is a strong recommendation that in future a "super majority" be required to establish any new commodity checkoff. That point may be made mute by a recent court decision that must have anyone who works for a commodity checkoff feeling a little insecure about their future.

A Mushrooming Problem

When the NCBA and Beef Board repeatedly said that an up or down vote on the checkoff would end collection of beef promotion funds this reporter consistently responded that this would NOT be the case. It was our contention that state checkoffs that were operational before the national one would still be in place. Lyle Gray, cow calf producer from Kansas and Chairman of the Cattlemen´s Beef Board acknowledged as much when he said, "It´s estimated that these laws might generate $12 - $15 million, about one sixth of what the $1 checkoff generates."

What makes this next new development so important is that if the court´s decision stands there would not even be mandatory statewide checkoffs. When the Supreme Court ruled 5 to 4 in a 1997 court case brought by California tree fruit growers that checkoffs were NOT unconstitutional that seemingly was the last we´d hear of that argument. But in December a federal appeals court struck down the mushroom promotion program as a violation of the First Amendment. It was a complete surprise because if the ruling prevails it could imply an end to all other promotion programs as well. (There are currently 12 checkoff programs including beef, cotton, dairy, eggs, fluid milk, honey, mushrooms, popcorn, pork, potatoes, soybeans and watermelons. A peanut program is about to become operational and several others are on the drawing board.)

In its ruling a three judge panel of the Sixth Court of Appeals distinguished the difference in the mushroom case and the California fruit case involving Wileman Bros and Elliott, Inc. The judge´s decision makes for complicated reading but basically what they said was the First Amendment is violated when an advertising program for a commodity operates in a free market, but not when the ad program is done for a regulated commodity, such as under a marketing order. "We find that the context of the mushroom business is entirely different from the collectivized California tree fruit business," wrote the judges. "Mushrooms are unregulated. Hence the compelled commercial speech is not a price the members must pay." Further, the three judges ruled, "In the absence of extensive regulation, the effort by the USDA to force payment from plaintiff for advertising is invalid under the First Amendment." The Appeals Court basically said that producers in an unregulated commodity, such as beef, could not be forced to pay for generic advertising and that "any such advertising had to be germane to a valid, comprehensive regulatory scheme, and the content of the advertising must be non-ideological."

In summary the judges ruled that "The portions of the Mushroom Act of 1990 which authorize such coerced payments for advertising are likewise unconstitutional. Mushroom growers are free to do as they please in the cases of supply and quality and therefore, cannot be constrained to support one industry-wide position."

By the way, this is essentially the point made by Jeanne and Steve Charter in refusing to pay the beef checkoff. The mushroom case will, no doubt, be reviewed and could go all the way to the Supreme Court where, if the arguments sway at least one member from their previous stance, the end of the beef checkoff could be mandated. Whether or not that happens before the USDA gets around to holding a referendum is anybody´s guess.

Did You Know What You Were Doing?

Faced with such challenges you´d think that a good dose of humble pie would be in order for the the folks at the NCBA and CBB. But that hardly seems to be the case. Listen to the response from the leaders at the NCBA and CBB when the LMA handed in their petitions. Lyle Gray, Chairman of the Beef Board said, "First, and most important I don´t know that many valid signatures actually exist. I´ve had producers all over the country tell me they considered LMA tactics less than honest, its web site and news release contain misinformation and USDA even warned LMA several months ago to discontinue "deceptive" petition activities." Gray further stated, "Producers have been misled for months on these and other issues which make our job of communicating more difficult and more critical." (One would have thought with the millions the CBB and NCBA spent on their "educational" campaign they could have straightened out any such misinformation.)

George Swan, NCBA President responded to the LMA petitions this way in a press release: "We respect the right of cattlemen to ask for a referendum. We expect the USDA to verify the names of people who may or may not be cattle producers who have signed petitions and who may or may not have known what they were signing. USDA must do this to protect the integrity of the process and the overwhelmingly majority of cattlemen who support the process." Didn´t Swan just insult every person who signed a petition? This reporter finds it interesting that the NCBA is so concerned that everyone who signed a petition be a cattleman when the NCBA was willing to sell a seat on their Board to anyone who put up enough cash. Be it a firm that sells pharmaceuticals or a car company. Frankly, considering how the merger has NOT worked thus far, one could make the case that those 700 or so folks who voted in San Antonio for the merger also did not know what they were doing.

With at least three serious challenges to the beef checkoff currently in the works the NCBA could soon experience a nearly 90% reduction in its budget. Then it would have to go back to earning its money the old fashioned way: by selling memberships. When they do they´ll find a new competitor in the neighborhood also vying to become the official mouthpiece of this nation´s cattlemen.

R-CALF USA, or Ranchers Cattleman Action Legal Fund, United Stockgrowers of America, came from humble beginnings. Formed in 1998 by a group of disgruntled ranchers in Montana, South Dakota and Colorado, its first headquarters were at the Midland Bull Test Center because that happened to be the home and business of R-CALF´s guiding light, Leo McDonnell. R-CALF USA didn´t set out to be all things to all cattlemen. Initially their sole reason for existence was to do something about what they perceived to be the dumping of live cattle from Canada and Mexico into the US market. In the process of initiating several trade investigations R-CALF gained support from 25,000 cattle producers and over 125 producer organizations.

At the same time this was happening there was growing unrest in the country with the NCBA, who many cattlemen felt had sold out to big packers and feeders and was living a comfortable life on their checkoff dollars. So when R-CALF USA held its first annual convention in February of 2000 many in the group wanted it to assume an ever widening leadership role in the cattle industry.

No Vote For Buick

R-CALF USA became a membership-based organization in 1999 and distinguished itself as the only beef industry group that reserves voting rights exclusively for cattle producers. No feedlot members, packers, drug salesmen or car companies can vote unless they are ranchers. Membership is $50 annually and each person has one vote.

Compare R-CALF´s position to the NCBA whose leaders, you may recall, told us it was too late to allow a vote by mail on the merger of the old NCA and National Livestock and Meat Board. Common sense would suggest that any organization that can send out statements and a weekly newsletter could have allowed their members to vote by mail, but Paul Hitch summed up NCBA´s attitude when he said at the now infamous San Antonio convention, "The world is run by those who show up."

Not necessarily so, says R-CALF. "Producers have told us they cannot always attend national conventions far from home, but they want their opinions recognized and acted upon. That is just what R-CALF is giving them," says current R-CALF President Leo McDonnell. "Careful thought was given to the way members could participate in forming R-CALF´s agenda. Mail out ballots have enabled R-CALF members from across the country to participate and have their voices heard. We are really proud that our producer members lead and direct our association."

Fast Track to Where?

To listen to R-CALF and NCBA members argue you´d think they were from warring camps: like the NRA and PETA. No question there is a deep divide, as evidenced in their positions on world trade. R-CALF is against the U.S. President being given fast track authority to make more trade agreements like NAFTA. NCBA, on the other hand, supports fast track and NAFTA. On June 18 NCBA President Lynn Cornwell met with George Bush to express the cattle industry´s support for Trade Promotion Authority which would give Bush the fast track he desires. Cornwell said, "Exports are the lifeblood of American agriculture. We may lose our existing share of foreign markets to other competitors if we are not an active player in new trade agreements."

NCBA joined Cargill, Con Agra, Continental Grain, Farmland, General Mills, Nestle and Dreyfus as members in the Ag For Fast Track Coalition that would allow our domestic beef market to be further inundated with beef from around the world. One of Cornwell´s predecessors as NCBA President, George Swan, testified before the U.S. Senate Committee on Agriculture that his organization represented one million cattle ranchers and that the NCBA supported the World Trade Organization and its funding, and the authority given to the International Monetary Fund which is helping other countries expand their beef exports to this country.

The next trade agreement that NCBA is telling Washington politicians that one million cattlemen support is the Free Trade of the Americas agreement. FTAA was conceived at the 1994 Summit of the Americas where the leaders of 34 nations agreed to a hemisphere-wide trade pact that would be the most far-reaching trade and investment agreement ever signed. It would create the largest free-trade zone in the world and would grant big beef producing countries like Brazil and Argentina the same rights to ship their beef to this country that Canada and Mexico currently enjoy.

R-CALF USA vehemently opposes FTAA, as it does NAFTA, and points out that the United States has not produced enough beef to meet its own demand since the 1950´s. Today imports represent nearly 16% of total U.S. supplies. R-CALF USA has continually warned about the dangers of artificially cheap imports on the domestic market and has raised issues of food safety with imported beef. One of the resolutions passed by R-CALF USA at this year´s convention was their support for a moratorium on all imports of live cattle, beef, precooked beef and all beef products for three years: Until importers can prove the cattle and beef are free of Mad Cow disease and foot and mouth disease for the protection of the American consumer.

As Different As Black And White

The NCBA faces a daunting task: trying to be all things to all people. Their dilemma is trying to satisfy packers, feeders and ranchers at the same time while their objectives and needs are so different. "It is time for cattle producers to step to the plate and direct their own future through a national organization that concentrates only on market issues and trade," says McDonnell. "The fact we haven´t had representation is not a good guy/bad guy issue. It is the realities of business. The major cost for packers and large formula feedlots is cattle. Why would any rational business support the cost of their major input going up? Once people understand that, then they understand why it´s critical the cattle industry has a strong independent national voice, separate from the beef industry on these issues."

Here are a few more major differences between the two organizations:

• R-CALF USA supports aggressive action against any further concentration in the beef processing and retail sales sectors. NCBA opposed legislation that would have halted temporarily the biggest agricultural mergers.
• R-CALF USA supports a ban on the packer ownership cattle for more than 14 days prior to slaughter, with the exception of plants that slaughter less than 100 head per day. It is official NCBA policy that they oppose any legislation that would restrict packer ownership of livestock. After a vote at their Shareholder´s Congress that included a total of 191 votes the NCBA advised Congress that the million cattlemen represented by the NCBA are AGAINST any legislation that would prevent packers from controlling the market through direct ownership of cattle.
• R-CALF USA wants stricter enforcement of anti-trust laws and more transparency in the market place. They are in favor of the interstate shipment of state inspected beef. NCBA chief economist, Chuck Lambert, wrote a memo to the House and Senate and committees opposing a proposal from the Western Organization of Resource Councils that sought to restore some competition into the pricing of fed livestock. Lambert advised that no action should be taken to alter or halt current trends because that is the direction where NCBA´s a long-range plan said the industry must go. That direction is dramatically clear: Beef producers received 70% of the retail beef dollar in 1970. In 1996 it was below 50% and falling.
• R-CALF USA supported the actions of state attorney generals against the Tyson/IBP merger and supports further actions by them in opposing any further mergers in the ag business and food retail sectors. The NCBA did not support the cattlemen´s lawsuit against IBP and teamed up with them in developing new products financed in part by the checkoff. The NCBA is also on record as favoring a grid pricing structure, much like the way 90 percent of the poultry is raised and sold today.

The Right To Vote

With its plate already full R-CALF USA tried to stay out of the checkoff fight. Although they were asked, they took no position in the court cases seeking to have the checkoff declared unconstitutional. They are on record as favoring a periodic referendum on the checkoff. "It is unfortunate that as an industry that is losing its private property rights, water rights, public land use rights, it is also compromised in its right to vote," says McDonnell. "Whether one supported the referendum or not, is not the point. What is important is that we not trade off certain rights that are dear to this country. When the right to vote is compromised to a privilege to vote, it only serves those who master it. R-CALF memberships supports a periodic vote and we appreciate the dedication the LMA has shown to the U.S. cattle industry."

McDonnell has said that he does not think that most cattle producers had a problem with the original intent of the checkoff. "However, they do have a legitimate concern when the primary contracting agent, NCBA, who has opposed or compromised cattle producers in political arenas in addressing cattle market issues such as concentration, packer feeding, international trade, and country of origin issues that may, or are, suppressing their cattle prices. These are not just political differences, but they are agendas that are in direct conflict to hundreds of thousands of cattle producers. There is something ethically wrong when those who oversee these funds continue to channel these funds through a contract agent who has, and is, working against U.S. cattle producers."

"To merge the checkoff with any association whose political agenda is in conflict to so many producers, compromises the potential goodness of the checkoff," says McDonnell. "Whether the Cattlemen´s Beef Board is truly concerned with pulling this industry back together or not, will depend on their willingness to allow producers to vote on the continued merger. That´s really the problem I keep hearing, and it´s not going to go away. Some will say we did vote through the Beef Board representatives. But I did not, and as a producer I have never been allowed to participate in the nomination or election of our state and national representatives."

Until R-CALF USA came along, that is.

A New Chapter

R-CALF USA became the first cattle organization in history to propose a comprehensive Cattle Chapter for the nation´s farm bill. Their proposal includes a market oriented safety net that would NOT require any federal expenditures. The safety net provision recommends the use of variable import quotas that would be triggered when imports exceed a preestablished, market depressing level. During those times when domestic beef producers are hurt by the dumping of foreign beef, tariffs on imports would be filtered back to ranchers whose market was hurt.

R-CALF USA´s proposed Cattle Chapter in the Farm Bill also includes an eight-step plan for the enforcement of antitrust laws. But R-CALF´s highest priority for the farm bill is a country of origin labeling law that requires an animal to be born and raised in this country in order to carry such a label. They also support restrictions on the use of the USDA grade stamp for imported beef.

Other public stances taken by R-CALF USA include support for legislation which would prohibit slotting allowances, display fees, presentation fees, pay-to-stay fees and failure fees in the retail grocery business. Or kickbacks, as you and I might call them. They believe our government should encourage the U.S. cattle industry to provide hormone-free beef to those countries that oppose the importation of hormone produced beef and they support government incentives for improving the environment. One reason you always hear for not abandoning the NCBA in favor of R-CALF USA is the NCBA´s more established presence in Washington DC. But listen to what U.S. Senator Tom Johnson had to say about that: "We in Washington D.C. need the vision and passion that comes from R-CALF to get things done. R-CALF is widely respected in DC and across party lines. More Congressmen are looking to R-CALF for direction."

Evidently so are more cattlemen. New affiliates like the Wyoming Stockgrowers, Kansas Cattlemen´s Association, South Dakota Stockgrowers and Missouri Stockgrowers Association have all joined up. "A lot of people think R-CALF just represents Montana, Wyoming and the Dakotas. It doesn´t," says John Lockie, executive Director of R-CALF USA. "The group now has members in 38 states and affiliate organizations that include local state cattle associations and general farm organizations. R-CALF USA represents producers from Hawaii to New York and has tremendous support from Southern States like Texas, Florida and New Mexico," says Lockie. "More people are signing on all the time. This is a bunch of fiercely independent people. They know something has to be done."

If you are a cattleman and like what you have just read you can join up by sending $50 to R-CALF USA, P.O. Box 30715, Billings, MT 59107.

It´s getting downright dirty out there.

On July 5, the judge in the federal district court in South Dakota hearing the Livestock Marketing Assn.´s case dropped a bombshell. You´ll recall the LMA is challenging the validation process used by the USDA to verify the 145,000 signatures gathered up by the LMA for a referendum. After the mushroom decision, the judge in that case, Judge Kornman, in effect said, why should I rule on whether there should be a vote on the checkoff if it is unconstitutional in the first place?

So, Judge Kornman asked all sides in the case to address the impact of the mushroom decision on the beef checkoff. "In response to the July request," says LMA President Pat Goggins, "attorneys for the LMA, USDA and the Cattlemen´s Beef Board submitted a joint statement informing that court that the parties are in agreement that the issue regarding the constitutionality of the beef checkoff called into question by the Supreme Court´s recent decision needs to be resolved prior to proceeding.´"

That bears repeating. The Beef Board and the LMA both agreed that the constitutionality issue concerning the checkoff needs to be resolved. So why have the CBB, NCBA, state beef councils and state cattlemen´s associations launched a full-scale assault on the LMA for calling for the constitutionality issue to be resolved?

A Campaign of Coercion

Shortly after the NCBA and CBB held their mid-year meeting in Denver, a carefully orchestrated campaign of coercion and intimidation began to get auction market owners and operators around the country to put pressure on the LMA to drop their suit. NCBA´s Cow/Calf Caucus circulated a letter that was sent to the LMA and signed by representatives of 24 state cattle associations: Arizona, Colorado, Georgia, Idaho, Iowa, Michigan, Missouri, New York, North Dakota, Oregon, South Dakota, Washington, Arkansas, Florida, Hawaii, Illinois, Louisiana, Minnesota, Montana, North Carolina, Oklahoma, South Carolina, Utah and Wyoming. The letter read in part: "It is our understanding that Judge Kornman invited the parties to the referendum litigation to address the constitutionality of the checkoff. We believe that this request provides a unique opportunity for LMA to demonstrate its commitment to the beef industry by filing briefs in support of the constitutionality of the program.

Such a position would give credibility to the often stated objective of LMA to give producers a voice in their program. Unfortunately, the position that LMA has assumed in amending its complaint to challenge the constitutionality of our producer-funded program gives credence to the belief that LMA´s real objective has been termination of the beef checkoff. We strongly concur with the recent statement by NCBA President Lynn Cornwell that this action raises the lawsuit to a destructive new level.´"

How can a ruling on whether the beef checkoff is constitutional or not be destructive? Sometimes I get the feeling that beef industry organization employees and officers riding the checkoff chuck line believe they are above the laws of these United States. I realize Supreme Court decisions are open to some interpretation, but how could anybody read the mushroom decision and not conclude the beef checkoff is unconstitutional? That´s the opinion LMA attorneys came to, and they had no choice but to respond to Judge Kornman the way they did.

The NCBA and CBB know that even if LMA´s suit went away tomorrow, there are several others already in place to take out the checkoff. But that didn´t stop them or others from doing their bidding. The following letter was sent out by Agri Beef of Idaho on August 15, 2001, to auction markets throughout the West.

"This letter is being written in regards to the Livestock Marketing Association´s attack on the Beef Checkoff program. We at Agri Beef Co. firmly believe in and support the Beef Checkoff program, and want to do business with people who also believe in and support the Beef Checkoff program.

"Although we may not always agree on all issues, we can agree that the Beef Checkoff program has benefited our industry. The numbers below reflect the progress we have made due to the implementation of this proven program.

"This country´s beef demand was on a downhill slide from 1980 to 1987. The downhill slide was mediated with the creation of the Beef Checkoff program in 1988. Our industry´s goal of stabilizing beef demand by 2002 became a reality well before its time, due to the tremendous success of the Beef Checkoff program. If people don´t believe that the Beef Checkoff program has helped beef demand in this country, they should look at the increase of beef consumption over the past twelve (12) quarters. Beef demand has increased ten (10) of the past twelve (12) quarters to date. A three-percent increase in beef demand in 2001 over the same period in 2000, can be credited to the Beef Checkoff program. Second quarter of 2001 had an even larger increase in beef demand, a five-percent increase from second quarter of 2000. Surveys over the past eight (8) years revealed 72 percent of beef producers have been in support of the Beef Checkoff program.

"Agri Beef Co. believes the Beef Checkoff program has been very positive for the beef industry and will continue to support the program. Please complete the following survey and fax 208/338-2650, Attn: Julie Penny) or send it to us at your earliest convenience. It will be assumed that unreturned surveys imply support for the LMA´s actions.

"I DO NOT support the LMA´s decision to dispose of the Beef Checkoff program.

"I do support the LMA´s decision to dispose of the Beef Checkoff program.

"If you do not support LMA´s decision, we strongly urge you to contact LMA´s Board of Directors and voice your opinions about the Beef Checkoff program. Together we will make a difference and benefit from our efforts in this fight.

"Livestock Marketing Association, 7509 Tiffany Springs Parkway, Kansas City, MO 64153, 1-800/821-2048, www.lmaweb.com.

"We want to be sure we understand your stance on this issue so we can continue to do business and support those people who share the same ideals and principles as we do. It will be our direction to support those Livestock Auction/Dealers/Buyers that support the Beef Checkoff Program.

"Thank you for your cooperation. Signed by Robert N. Rebholtz, Jr., President/CEO, and Scott Lindsay, Vice President Cattle Procurement."

This editor has a high opinion of Agri Beef and has written favorably of the company in the past. The company´s founder, Robert Rebholtz Sr., now deceased, was an industry stalwart and a guiding light of the checkoff in its infancy. Agri Beef is a first-class organization, and they are certainly entitled to their opinion. But they clearly shot themselves in the foot with this missive. It clearly did NOT have the desired effect: The California Livestock Auction Markets Assn. sent a letter back informing Agri Beef they would not be participating in the survey.

I wondered what I would do if presented with such a letter. I´d probably do one of two things: I´d either send a letter back asking Agri Beef to check one of two boxes. "I support the Constitution of the United States," or "I don´t support the Constitution of the United States." Or I might have sent back a letter saying while I may or may not support the checkoff, I do NOT support the theft of the cash by the NCBA and its underhanded actions and that I too am allowed to have my own opinions without threat of coercion or being put on a blackball list.

Out in the Open

If you think this letter-writing campaign was spur of the moment, consider that a nearly identical letter was sent by Beef Northwest. And then there was this letter sent by the Texas Cattle Feeders to auctions in Texas, Oklahoma and New Mexico:

"As you no doubt know, the Livestock Marketing Assn. (LMA) recently asked a South Dakota federal district court to rule the beef checkoff unconstitutional. The Texas Cattle Feeders (TCFA) has received numerous requests recently from members and other agricultural organizations, asking if a list has been compiled of auction markets that do or do not support LMA´s efforts to declare the beef checkoff unconstitutional.

"To respond to these requests, TCFA asks that you please return the enclosed postage-paid card so we receive it before August 29, either by mail or faxing to 806/352-8028. TCFA will compile a list of auction markets that do and do not support the effort to declare the checkoff unconstitutional and publish it in our weekly newsletter on August 31.

"TCFA strongly supports the beef checkoff. In fact, the original idea for the beef checkoff began in a TCFA feedyard manager´s meeting in 1974. Since then, TCFA and its members have worked hard to ensure that the beef checkoff fulfills its mission of increasing beef demand. While any program can be improved, we believe the beef checkoff has played an important and indispensable role in our industry and that losing it would be disastrous.

"Please return the enclosed card to TCFA before August 29, so your position on this important issue can be properly reported. If you have any questions, please feel free to call Richard McDonald at TCFA. Signed, Jim Waterfield, Chairman of the TCFA."

At presstime, 42 of the markets that had responded told TCFA they opposed the LMA, and only 14 said they agreed with the LMA and opposed their biggest customers who comprise the TCFA.

The Texas Cattle Feeders first took control of the NCA and then the checkoff with the merger in 1996. Clearly they have a lot to lose, but this is a new low point for them. The letter-writing campaign is desperate attempt to save, for the moment anyway, the NCBA budget, which is nearly 90-percent derived from the checkoff.

Blackballs and Backfires

Speaking on a panel discussion, Monte Reese, representing the Beef Board, said in defense of the letter´s authors: "That sounds to me like an individual exercising his rights in a free market economy." To this reporter, it looks like an organized campaign designed to intimidate and blackball. It has shades of the McCarthy era. There are other such letters in circulation. Many of the letters are of similar language, and the LMA attorneys are looking into whether these actions raise antitrust and collusion issues. I wonder, did Agri Beef, Beef Northwest and the Texas Cattle Feeders send the same letter to Steve and Jeanne Charter or to Jerry Goetz, who have challenged the constitutionality of the checkoff? The NCBA seems intent on taking someone down with them when they go, but if they are looking for the real villain in this drama, they´d best look in the mirror. They put the checkoff at risk when they plundered the checkoff loot and forced the merger down our collective throat.

The campaign does not seem to be working and may be backfiring. The LMA has received few letters or calls from markets wanting them to back down. They have no inclination to alter their course in waiting for a trial date with Judge Kornman in mid-October. We could see a ruling before the end of the year. We do know that Judge Kornman is following the action closely, and judging from previous rulings, I don´t think he is going to take too kindly to the recent blackballing effort.

The NCBA may have hurt their cause in their desperate attempt to keep the organization together by hiding behind the checkoff. At some point, the state beef councils must think about going back to their state legislatures and attempting to get a voluntary checkoff installed to replace what I believe is a soon-to-be unconstitutional one. When that happens can they expect the support of auction markets?

Truth Burnout

The NCBA and CBB say the LMA is no longer interested in a vote on the checkoff, but just wants to kill it. LMA´s president, Pat Goggins, says that´s not true. "We have not abandoned the idea of the producer vote. If the checkoff is declared constitutional, we will proceed with our original suit, aimed at overturning USDA´s petition validation decision and getting that vote."

The NCBA is sending out mixed signals in their own press releases. "NCBA is NOT against a producer´s right to call for a vote," says an NCBA release. Later on in the same press release, the NCBA says, "In a July 2001 independent survey, 72 percent of producers said they support the checkoff. Rather than being strong-armed into an exercise in duplication, it´s NCBA´s position that it´s better to spend producer dollars to continue the upward trend in demand."

Did they say strong-armed? If anyone is getting strong-armed here, it is the auction markets. One wonders, where are the boycotting feeders going to get their cattle, if not from the auctions?

From strategic alliances, Canada, Mexico and who knows where else! And that finally gets us to the real reason for this war over the checkoff. Do we want a free and independent industry with real price discovery, or do we want a vertically integrated one that boycotts and bullies, and is controlled by the big feeders, packers and their checkoff-financed organization . . . the NCBA?

Whether you like your beef with or without mushrooms, a recent decision by the Supreme Court is going to leave a decidedly toadstool taste in the collective mouth of the beef industry for a long time. In upholding a previous ruling by the Sixth Circuit Court the Supremes ruled the mushroom checkoff´s advertising program violated the free speech rights of mushroom growers. In doing so it struck down the mushroom checkoff and opened the door to a challenge of the beef and pork checkoffs.

A Lot To Lose

In a landmark 6 to 3 decision the Supreme Court ruled June 25, in the case titled United States vs. United Foods, that a mandatory mushroom promotional campaign violated the First Amendment rights of mushroom producers because it forced all mushroom handlers to pay for generic advertising whether or not they agreed with the message. United Foods had argued that the mandatory promotional campaign forced it to pay for ads that also helped its competitors. The Supreme Court agreed with United Foods and ruled against the government and the checkoff.

In writing the majority opinion Justice Kennedy wrote, "Just as the first Amendment may prevent the government from prohibiting speech, the amendment may prevent the government from compelling individuals to express certain views." Four years ago in a case brought by tree fruit growers Wileman and Elliott the Supreme Court ruled that the forced tree fruit advertising program WAS constitutional. The Justices made the important distinction in the United Foods case that tree fruits are part of an overall regulated marketing program whereas mushrooms are not.

"Most of the funds at issue are used for generic advertising; and there are no marketing orders regulating mushroom production and sales, no antitrust exemption, and nothing preventing individual producers from making their own marketing decisions," wrote Stevens. "Mushroom growers are not forced to associate as a group that makes cooperative decisions."

The same could be said of both pork and beef.

So, it seems the only chance for beef and pork producers to save their checkoffs is to convince the court that their industries have a cooperative marketing program that is heavily regulated by the government. Although the dairy people might be able to prove it, it´s a hard stretch to make the same argument for beef.

Despite protestations to the contrary from the NCBA and the National Pork Producers Council, this Supreme Court ruling may spell doom for most agricultural checkoff programs. Although the CBB and NCBA may currently be in denial about this prospect, the NCBA admitted as much in their friend-of-the-court brief in siding with the government versus the mushroom growers. The NCBA lawyers wrote that a decision in favor of United Foods threatens the numerous other agricultural commodity programs established pursuant to federal and state law, including the beef, soybean, dairy and egg promotion programs.

The importance of the mushroom case to other checkoff programs is evidenced by the organizations that paid to file friend-of-the-court briefs on behalf of the government and the USDA. Included in this group are the American Mushroom Institute, the American Soybean Association, the National Milk Producers Federation, the Milk Industry Foundation, the United Egg Producers, the United Egg Association and NCBA. All beneficiaries of current checkoff programs, by the way.

One of the big winners in the case was the Western Organization of Resource Councils who joined in a friend-of-the-court brief on behalf of United Foods. John Smillie, WORC´s Program Director, said that the Supreme Court´s decision "should provide a basis for challenging the constitutionality of the beef and pork checkoff programs as unconstitutional forced speech, because of the similarity of these programs to the mushroom checkoff program."

The Higher Court

United Foods Inc. is a large agricultural enterprise based in Tennessee that grows and distributes mushrooms. Until the recent Supreme Court decision there had been a checkoff on mushrooms not to exceed 1 cent per lb. of mushrooms produced or imported. The mushroom checkoff was established, just like beef, with an Act and Order of Congress and the assessments were earmarked for mushroom promotion, research, consumer information and industry information.

United Foods has refused to pay its mushroom checkoff assessments since 1996. The USDA and federal government responded to United Food´s civil disobedience by using the 1990 Act and Order which formed the Mushroom Council and also authorizes the collection of checkoff money. The USDA filed an action in the U.S. District Court for the Western District of Tennessee seeking an order compelling United Foods to pay up.

United Foods refused to pay the checkoff because they had been spending their own advertising and promotion dollars to convey the message that its brand of mushrooms was superior to those generic mushrooms grown by producers and advertised by the Mushroom Council. It strongly objected to being charged for a message that devalued its own mushrooms.

In preliminary legal jostling an administrative law judge dismissed United Food´s petition and a judicial officer of the USDA concurred that United Foods should be forced to pay its assessment. (This has been a similar response to beef checkoff challenges.) However, United foods did not let it drop. They appealed those decisions in District Court and, they too, agreed that United Foods should be forced to pay. With seemingly the last bullet in their gun, United Foods appealed the District Court decision to the Sixth Circuit Court which finally ruled in their favor by reversing the earlier decisions. This time it was the government´s turn to appeal, which they did to the U.S. Supreme Court. After all, the USDA knew that if United Foods was allowed to win their case it threatened all other checkoff programs which it oversees.

The Supreme Court agreed to hear the case and after considering all sides of the argument ruled that United Foods did NOT have to pay the checkoff because it DID violate their First Amendment rights. There can be no further appeals.

People For The Ethical Treatment of Mushrooms

United Foods argued forcefully that the checkoff assessment was a forced subsidy for generic advertising and as such, violated their First Amendment rights. In agreeing Justice Steven wrote: "The First Amendment values are at serious risk if the government can compel a citizen or group of citizens to subsidize speech on the side that it favors." The majority of the court felt that the United Foods case was different than the earlier Wileman-Elliott case in which the justices ruled 5-4 that the tree fruit checkoffs were constitutional. Wrote Stevens, "The California tree fruits were marketed under detailed marketing orders that had displaced many aspects of independent business activity."

Although Justice Kennedy delivered the opinion of the court it was Justice Scalia who probably put it in more understandable terms. During the trial he asked the USDA to pretend he were a member of a fictitious group called People For The Ethical Treatment of Mushrooms. And that he, as a grower, enjoyed raising and selling mushrooms but did not want people to eat the poor little creatures. How could he be compelled, as a member of the People for the Ethical Treatment of Mushrooms, to pay a fee to promote the eating mushrooms when he disagreed with that? Likewise, why should a producer of natural beef be forced to pay for generic beef ads when most of the beef being advertised is produced in a way that producer does not agree with?

So What Does It Mean?

The USDA and NCBA probably did not expect this outcome. Now, seemingly their only hope is to say that the beef industry is regulated by the government so that it qualifies under the Wileman decision instead of United Foods. In other words, they must prove that promotion of beef is part of a government marketing program. How they square this with previous comments that the CBB and NCBA are producer run and producer driven organizations will make for some interesting press releases.

Although the Supreme Court mushroom decision does not, by itself, put an end to the beef checkoff it is probably the beginning of the end. Even if a voluntary program results, the NCBA with nearly 90% of its budget coming from the mandatory checkoff, could vaporize in a mushroom cloud.

After the USDA ruled there were not enough valid signatures on the Livestock Marketing Association´s petitions for a referendum on the beef checkoff the Cattlemen´s Beef Board and the NCBA said in a press release that the checkoff issue was now "behind them." In reality, the battle for beef bucks is just now beginning.

There are still two court cases that could have a big impact on how long the NCBA can live in the comfort to which it has become accustomed. Like United Foods, Steve and Jeanne Charter in Montana refused to pay the beef checkoff to force the USDA to come after them. The Charters vehemently objected to the NCBA merger and their arrogant acts. The USDA did come after the Charters, and Steve and Jeanne have spent nearly $25,000 holding them at bay. The judge in their case said he wanted to wait until after the Supreme Court ruled in the mushroom case before he made his decision in the Charter´s case.

Immediately following the Supreme Court decision in the mushroom case the Charter´s lawyer was ready to seek an immediate dismissal of their case, but the federal attorney prosecuting the Charters asked them to delay their petition to dismiss for one week because the USDA was holding extensive meetings on whether or not to throw in the towel.

We would be very surprised if that happens. The checkoffs are USDA´s baby. They get paid for administering them and often point to the checkoffs as their version of what a good government can do for farmers and ranchers. There are also some people who believe USDA´s support has been bought and paid for by special interest groups represented by the checkoff boards themselves.

One of the big questions remaining is how much money the CBB, NCBA and NPPC will be able to stuff in their sock before they are stopped and before some judge demands that all future moneys be placed in an escrow account. The Sheep Industry Association has remained in business long after its checkoff was halted. The beef checkoff collects close to $1.7 million per week or nearly $7 million per month. Assuming they can´t use the money for advertising and other causes with free speech considerations, how will they spend the money?

The other white meat´s checkoff program was standing on wobbly legs anyway. Given last fall´s vote by producers to do away with the mandatory pork checkoff, and the fact that the USDA is already under fire from producer groups, and at least one lawsuit has already been filed against USDA for arbitrarily disregarding the producer vote, this Supreme Court decision could be the straw that breaks their back.

The Judges Aren´t Done Yet

In view of a decision by Federal District Court Judge Charles Kornmann in a suit brought by the Livestock Marketing Association, the Western Organization of Resource Councils and three South Dakota producers, the CBB and NCBA had better be very careful of any further producer communications spinning this recent Supreme Court decision in their favor. Judge Kornmann was sharply critical of the CBB and NCBA and issued a preliminary injunction against any further producer communications that are persuasive or political in nature. Kornmann decreed that such industry information was done to "perpetuate the existence of the CBB and the checkoff itself." He also said, "I believe that these producer communications violate the Beef Promotion and Research Act itself."

On August 14 the LMA will be back in court in front of Judge Kornmann who will now have the most recent Supreme Court decision to consider. If the USDA does not throw in the towel there will probably be a parade of lawsuits and challenges to the beef checkoff at both national and state levels. One argument checkoff supporters may use in a desperate attempt to sway public opinion will be the depressing effect the Supreme Court´s decision could have on the beef market. On the day the United Food´s decision was announced a beef market that had been drifting lower, ended higher. A day later August live cattle made new yearly highs. Slapped on the wrist by Judge Kornmann for their industry propaganda campaign, the NCBA and CBB will have a difficult time swaying the court of public opinion. Even if they do, that court won´t matter because a higher court has already had the last say.

Mushrooms can be grown by throwing them manure and keeping them in the dark. As the implications of this Supreme Court decision sink in it will become more difficult for checkoff organizations to treat their producers in the same manner.

Prior to the National Cattlemen´s Beef Association summer conference in Reno, they put out a press release announcing a new wrinkle. According to the release the NCBA officers would host an open microphone forum in Reno and be available to respond to member´s questions and receive input on issues. In other words, they decided to let their members voice their own opinions at a meeting. What´s newsworthy is the organization had to put out a press release to let people know they´d have a chance to express their opinions at an NCBA meeting. Lest you think the NCBA has seen the light they also announced that the gripe session would be followed by a panel discussion between NCBA council leaders and representatives from McDonald´s, the Chicago Mercantile Exchange and Farmland National Beef.

Now that´s more like the NCBA we´ve all come to know.

The NCBA also announced recently that they will be holding a series of town hall meetings "to listen to and understand your needs. We also want you to call or write us if you have a concern," said the release. "We will respond. This is your organization and we intend to represent you and implement the policy you have developed."

What´s going on here? Is this the same NCBA who refused to let members vote by proxy on the merger in 1996 that created the NCBA? Is this the same organization that fought a referendum on the checkoff that would have given those who pay a say? Is this the group critics are calling the Non-Cattlemen´s Beef Association?

Don´t get your hopes up that this cat has changed its spots. Unfortunately the NCBA´s new-found willingness to listen doesn´t mean they´re going to forsake packers and processors for independent feedlots and ranchers. They just need your money.

A Day Late and A Few Dollars Short

In another surprisingly frank admission by Jon Ferguson, NCBA´s treasurer, he admitted they´re in a financial bind. Many in the old NCA thought that easier access to checkoff dollars would be their salvation. How ironic it may yet lead to their demise.

The NCBA is facing troubled times because of a backlash from the merger and because of their recent positions on important issues. As a result the NCBA has lost 19 percent of its members in just the past two years. From June of 2001 to June of this year the NCBA lost 10 percent of its members, going from 32,470 members to 29,428. Their membership ranks still includes untold thousands of members who are forced to join NCBA through their state associations and also some passive cattle feeders who have NCBA dues tacked on to their first feed bill. The decline in dues money created a deficit of $676,000 for the first nine months of NCBA´s fiscal year. At this point they are anticipate losing three-quarters of a million dollars this year alone. NCBA has spent $250,00 on the checkoff battle so far and expects to spend another $70-80,000.

According to their treasurer, Jon Ferguson, a non-nonsense businessman by all accounts, NCBA dues, sponsorship, advertising and affiliate revenues have all gone down causing the organization "financial stress." To make up the shortage the NCBA plans to use reserves that were created when the NCA merged with the Meat Board. At the time there was two million dollars in the kitty and that grew by nearly a million dollars when the NCBA sold its Denver headquarters in 2001.

Jon Ferguson said that the NCBA must diversify its revenue base and can no longer depend on the pharmaceutical industry for revenue. They plan on cutting costs by reducing the frequency of their two publications and by reducing travel expenses.

Sticks And Stones

One reason for NCBA´s sudden interest in the cow-calf man is that for the first time the NCBA has serious competition for the title of being the voice of the rancher. When NCBA looks around they surely must see R-CALF gaining on them. If you´ve been to any meetings where R-CALF and NCBA representatives debate the issues you know the NCBA reps are getting lambasted. It almost makes you feel sorry for NCBA officers who must stand up and defend their positions. I said "almost."

On top of the bad financial news there has recently been a full frontal assault on the NCBA from a variety of sources. In an article that must have made NCBA supporters wince, David Kruse wrote in his CommStock Report that "NCBA has become the cattlemen´s enemy. A 19 percent drop in membership is serious but NCBA leadership has the opinion they are right, the membership is wrong, and the rebellion will play out," said Kruse. "The NCBA is planning 14 town hall meetings as part of its new "reach out to fool the members" campaign. It took a major crisis of membership and finance to motivate them to leave Denver to host town meetings. CEO Terry Stokes says he´ll put a stethoscope to membership. He´s a quack. A real doctor doesn´t wait until after the patient is half dead and in crisis before he listens to him."

Kruse continued: "I believe the NCBA has become one of rancher´s and independent cattlemen´s greatest enemies. In my opinion, membership with the idea of change from inside is unrealistic. The only way to register an impact is to resign, which droves of cattlemen are doing, hitting the NCBA in the pocketbook. State cattlemen association members have a choice whether to belong to the NCBA. I believe they should have a real choice of which organization they should be affiliated with, including R-CALF, whose membership has been surging."

The town hall meetings and new-found interest in your problems are also a direct result of recent criticism by long time NCA members getting frustrated enough to quit their old organization. And those members are not going away quietly. Count John Stiefvater of Salem, S.D. as another defection. "I served on the NCA board of directors and on the S.D. Beef Council six years: three years on the National Livestock and Meat board; two years as president of S.D. Cattlemen´s and eight years as an officer of SDCA," said Stiefvater. "What you are reading is not the ranting of a cattle feeder that never participated. I´m just tired of seeing our national organization leading us down the road into the fold of the packer-retailer domination. They no longer represent my point of view, so I will no longer be a dues-paying member."

It´s one thing to have a member call you names but when Iowa Senator Chuck Grassley starts calling you a "lackey for the packers" you know your tarnished image is in need of some serious polishing.

Drowning In A Think Tank

If you think the NCBA is turning over a new leaf their actions speak otherwise. According to Kruse, "81 percent of NCBA membership reporting in a recent survey said that the Association doesn´t represent their interests. That´s eight out of ten, yet NCBA has not one intention of changing anything substantive. They are the most arrogant, we´re right-you´re wrong, bunch of hat-over-their-ears cowboys ever to ride sidesaddle over a national commodity organization," said Kruse. "The cattle industry is not losing money. The U.S. consumer is paying plenty for beef. The problem is not the consumer, it´s not beef demand. The problem is the distribution of beef dollars."

NCBA President-elect Eric Davis says things will work out and that "NCBA strives to be a catalyst for positive change. We believe in free market forces," says Davis, "but they can be a little slow in getting profits back in producers´ pockets, and it is NCBA´s objective to help improve this situation." That´s a common NCBA theme. They repeatedly say they don´t want our government interfering with free market forces, yet what was one of their first reactions to the current price crises? They called upon the House and Senate Agriculture and Appropriations Committees "to find funding for research that would get to the bottom of volatile markets and low prices for cattle producers." In a June letter to the committees, Wythe Willey, current NCBA President, asked that funding be provided to USDA to "contract with an unbiased independent consortium of several preeminent business schools to conduct a thorough analysis of the entire livestock, poultry and meat protein complex."

If all this sounds familiar that´s because it is. When things get uncomfortable the NCBA relies on college professors to back their hand. But it´s getting a little old.

While the NCBA wants to pay some packer´s professors to tell us what is wrong with the industry, 28 different local, state, regional and national cattlemen and industry organizations called on Congress to convene hearings into the anomalies of the current cattle market. The NCBA wasn´t one of those groups.

And they Wonder Why they´re Losing Members?

The NCBA also formed a Price Discovery Think Tank to develop "new pricing models, improving price reporting from packers and retailers, and to work with Chicago Mercantile Exchange to provide appropriate risk management tools." The NCBA says "these are complex, difficult issues that will not be solved by a snap of the fingers or a quick legislative "fix" that could haunt the industry for years."

One of the ways the NCBA is going to fix things is to "inform producers of marketing options available to them and how they can participate. While it is not NCBA´s role to advocate one market option over another," they say "producers should be aware of options that may fit specific needs." Will they never learn? The whole fight with the LMA over the checkoff started because the NCBA was urging ranchers to bypass auctions and strike up some sort of strategic alliance with a packer.

The NCBA´s proposed solutions are laughable. NCBA President Wythe Willey says, "NCBA looks forward to engaging the intellectual capacity of government and the industry in investigating solutions to the marketplace problems." You know we are in trouble when the NCBA wants to "engage the intellectual capacity of government."

In a press release the NCBA said it was also "continuing aggressive work towards developing a more acceptable definition of captive supply." Cattlemen are currently receiving the same prices they were twenty years ago for their calves, feeders are bleeding red ink and the NCBA´s answer is to come up with a better definition of "captive supply." Memo to the NCBA: We already know what it is. What we´d really like is for you to do is do something about it!

Keeping The Government At Arm´s Length?

If the NCBA is wondering why they´re losing members they only have to look at their recent policy positions. They were adamantly against mandatory country of origin labeling, preferring instead a voluntary country-of-origin labeling program. Do they think we´re stupid? Voluntary country of origin labeling is what we already have. Do you see packers rushing to put "Made in the USA" stickers on their beef now?

The NCBA bragged they were "successful in getting Trade Promotion Authority for the President which gives him authority to negotiate a strong trade policy." In other words . . . the NCBA wants our President to create more NAFTA-like agreements.

The NCBA also joined forces with The Nature Conservancy in creating the Grassland Reserve Program in the new farm bill. The GRP is a project the two groups have been working on together for about two years. The farm bill authorizes up to 2 million acres to be enrolled in the program, at a cost of up to $254 million. Doesn´t it sound like the NCBA is trying to keep the government at bay? And hopping in bed with the Nature Conservancy no less!

The NCBA says they don´t want government involvement in our business while at the same time in a court of law they were telling a Judge that the beef checkoff is, and always has been, a government program. And speaking of the checkoff, the NCBA still contends that two thirds of ranchers approve of the current beef checkoff. While in California ranchers recently voted 65 percent to 35 percent NOT to increase their state checkoff by fifty cents. The NCBA says they expect to win the legal battle over the checkoff. When asked about a contingency plan if they lose, Beef Board CEO Monte Reese said, "Our plan is to prevail." Proving that the NCBA may still be in a state of denial.

Perhaps the NCBA is counting on the USDA to somehow bail them out of their cash crunch. And perhaps that is why they didn´t pursue monetary damages for cattlemen who lost millions after the USDA´s mandatory price reporting fiasco.

The NCBA was right when they said there are two camps with "competing visions for the industry." According to David Kruse, "The current beef industry represents their vision. It is their model. It represents the industry structure that they want. How do you like it?" Judging by their membership roles, evidently not too well.

The NCBA says that a philosophical divide has grown between producers because of hard times. "It is localization versus globalization," they say. "NCBA has become a pawn in the political games. We call on all industry organizations to work together to increase profitability and viability for all beef producers. We will lead the way."

But as cattleman and longtime NCA and NCBA member Tom Spencer wrote, "At one time you were asked to lead the industry; later you were asked to follow since you couldn´t manage to lead. Today I´m telling you to get the hell out of our way."

Because it has become a litmus test for its diehard supporters, I am often asked to clarify my position on the beef checkoff. It seems you are either friend or foe; you are either in the fraternity or you are not. But I didn´t quit their club . . . they quit me.

Before the vote on the third attempt to pass a beef checkoff I wrote in this very newspaper that I was going to vote yes, albeit with some reservations. My primary concern was that so much money would be raised that someone would try to get their grubby hands on it who had no business doing so. After the checkoff became law I paid it like everyone else and waited to see results. Occasionally when I saw something I didn´t like I said so. Then one day after having a very memorable lunch with All-Star pitcher Nolan Ryan, and his lovely wife, I suggested in print that he would be a great television and print spokesman for beef. Nolan told me, and I know he meant it, that he would have pitched beef for free. When I suggested to the Beef Board that Nolan would be a great spokes-man I was told to, more or less, mind my own business and leave beef promotion to the professionals. I was also told that Nolan would not be an adequate spokesman to reach our "target audience."

In the year after my suggestion was rejected Nolan pitched another no-hitter and was on the cover of every major newspaper in the country. A little later he was hired as a pitchman for Advil (I guess he hit their target audience). Later he was voted into the Hall of Fame with one of the largest vote totals ever and again his face was seen on TV and newspapers all over the place. He is truly an American treasure . . . and a real cowboy to boot.

After that I was a little more vigorous in my criticism of the Beef Board. I did not understand how Cybill Shepard, James Garner and that vegetarian model, (what was her name again?) could be good spokesmen but not one of our own who had no dirty laundry in his closet, was a real rancher and wanted to help the beef business any way he could.

Even though I continued to criticize the Beef Board I always felt, and still do, that the state beef boards do a good job for the most part. I also think the checkoff played a role in stopping the slide in beef consumption. But when the Beef Board merged with the old NCA I could envision my initial concerns coming true. I questioned at the time if such a move was even legal or constitutional. I feel, and will to the day I hang up my pen, that the NCBA stole the beef checkoff and both it and the Beef Board will be punished for having done so. Sometime within the next two years, I think. When that happens let it be said that Lee Pitts did not kill the checkoff . . . it will have died from self- inflicted wounds.

When given the chance I tell state beef boards these days that if they were smart, instead of fighting the inevitable and possibly alienating some supporters, they ought to be thinking of the next step. But oh no, it seems they are quite willing to go down with the ship. What a shame.

As long as the NCBA is the primary contractor for checkoff funds I believe the money will be used to help the packer and retailer, while turning the rancher into nothing more than a contract producer. Even if they are helping promote beef and increasing its value, none of that extra money will trickle down to the people who pay the bill as long as we have the current industry structure. And the worst part is the packer isn´t required to pay the buck a head . . . yet they and the retailers are receiving the benefit.

In other words, we are currently buying the bullets for them to shoot us with. We have been giving money to people who oppose all efforts to make our markets function more competitively. We´ve been checking-off, thinking we were solving our problems, at the same time concentration and captive supplies were destroying the foundation of our free market system. Packer and retail margins were steadily increasing to record levels while the rancher´s share of the beef dollar was decreasing dramatically. With the left hand university professors were handing over studies that claimed we all loved the checkoff, at the same time they were accepting beef bucks with the right hand. Beef Board sitters were traipsing around the country, at your expense, to paint anyone who didn´t see things their way as enemies of the beef industry.

Let there be no mistake, yes, I am for a beef checkoff . . . but not this one as it is currently being implemented! We never voted for this current version, did we? Had the current structure been what we initially voted on it NEVER would have passed.

The Organization For Competitive Markets

It´s about time someone came up with a better idea.

A few years ago I got a call from a man named Fred Stokes from Mississippi. At the time I got a lot of calls like Fred´s: ranchers who were fed up, people who were smart enough to see the way our industry was headed and wanted to stop it. Fred wanted to form an organization to do something about it. I remember thinking to myself at the time, after a few setbacks he´d grow tired and give up. But Fred didn´t.

Fred was soon joined by people I respected. Men like Clay Daulton, a longtime NCA leader who saw the folly of the merger a long time before it happened and wasn´t afraid to give up his membership in the "good old boys club" in order to do the right thing. It wasn´t long before their group, The Organization for Competitive Markets was making noise. Loud noise. Instead of just complaining about the lack of competition in markets OCM turned captive supplies into a front page issue. Through their good work, and that of R-CALF´s, for the first time ever a Competition Title was proposed for the Farm Bill. It was the first time in history that competition has been addressed in the Farm Bill. Due to the efforts of many supporters, some elements of that bill passed -- but not enough.

Today OCM is a nonprofit, charitable group dedicated to reclaiming competitive markets for farmers and ranchers. OCM engages in research, education and advocates changes in state and national policy to promote a market environment that provides opportunity, competition and fairness to independent producers. Members include farmers, ranchers, professors, state legislators, rural leaders and business persons. Only individuals may be members, not corporations or associations.

Early on the OCM attracted the attention of college professors who could see that some of their cohorts traded their support for checkoff research dollars. They didn´t like the way some professors were selling out, but they had no forum. OCM provided that soapbox and now we have studies of our own, written by respected professors to combat those written by the packer´s professors. OCM has developed a network of academic experts, attorneys and rural leaders that work for solutions to our problems. OCM, its staff and collaborators, write issue papers and scholarly articles which have been published in book form, in the media, and in professional journals. OCM has become a force to be reckoned in an amazingly short period of time for one simple reason: they have focused all their attention on competition in the marketplace at a time in our nation´s history when a lack of it is crippling many of our major industries.

A Real Steer-ing Committee

Recently OCM came up with an idea that, this observer feels, has the potential to cure many of our current ailments. OCM´s idea is a checkoff of sorts, but before you nonbelievers quit reading, please know that this is a checkoff that is built the way one should be. OCM´s idea is called the The Cattlemen´s Competitive Market Project (CCMP). What OCM is doing is signing up auction markets and feedlots on yearly contracts to work with their consignors and feeders in collecting a VOLUNTARY assessment of 30 cents, 50 cents or $1 per head. The rancher can participate at any of the three levels or not at all. Auction yards are entitled to receive five percent of the CCMP funds to defray the costs of collection and remittance, but this reporter would hope that they remit 100 percent of the funds collected like they do now with our current checkoff. And I think they will.

The money would be sent to OCM to be used for education, communication, research and policy advocacy on market competition issues relating to concentration, captive supplies and retail supermarket power. The group is currently developing a "Rapid Response Network" of individuals and organizations throughout the nation to respond to crisis and opportunity in support of state and federal policy change.

OCM, as administrator of the project, is a nonprofit, charitable organization under section 501(c)(3) of the Internal Revenue Code. Contributions to CCMP will be tax deductible because OCM is a nonprofit, charitable organization. Annual audits will be conducted and will be subject to disclosure to all contributors.

The CCMP is not a mandatory checkoff program nor is it controlled and run by the USDA, as the NCBA claims the beef checkoff is in recent checkoff court cases. Also unlike the current beef checkoff, it is entirely legal for the CCMP money to be used to lobby Congress, in a limited manner, and to actively engage in the war in Washington in lobbying on behalf of more open markets. Here´s the best part: If the CCMP does not perform like you´d hope or they do something you don´t like, just don´t send them any more money. I believe that´s called "accountability" and it´s something our current beef checkoff lacks.

The CCMP will be guided by a Steering Committee that knows a thing or two about steers: feeders, ranchers and auction market operators, all of whom derive a majority of their income from the cattle business. It will be administered by OCM. The CCMP Steering Committee includes Tom Spencer, Circle T Cattle Company, Pueblo, CO; Brett Gottsch, Gottsch Feeding Corp., Elkhorn, NE; Randy Stevenson, Double S Livestock, Wheatland, WY; Korley Sears, Ainsworth Feedyards, Ainsworth, NE; and Jerry Adamson, cattleman, Valentine, NE.

Challenging The Status Quo

According to Adamson, CCMP will bring together the brightest minds and the best ideas to solve the issues of reduced competition and market fairness. "Those who so adamantly oppose competition and the enforcement of antitrust laws have full time staff, legions of attorneys and researchers working day in and day out to protect their interests," says Adamson. "The USDA has FAILED to protect competition claiming that doing so will harm meat packer efficiency. Cattlemen´s interests are virtually lost in an orchestrated attack, whether that´s from the well-heeled American Meat Institute, the Food Marketing Institute or misguided producer organizations. CCMP has been established with a singular purpose in mind . . . to win the ongoing war against competition, giving grassroots producers an effective voice."

Brett Gottsch says a CCMP Research Advisory Committee has also been established, that will function in tandem with the Steering Committee to help identify research needs, oversee research projects, provide for data analysis and engage in writing and presentation of white papers. The Research Advisory Committee includes Dr. Neil Harl, Agricultural Law, Iowa State University; Dr. Ron Cotteril, Agricultural Economics, University of Connecticut; Dr. Roger McEowen, Agricultural Law, Kansas State University; and Dr. Peter Carstensen, Antitrust Law, University of Wisconsin. "These individuals represent some of the finest minds in academia today," says Gottsch. "They´ve been asked to serve in a capacity that will provide the intellectual and analytical horsepower cattlemen need to make their economic and policy cases."

"In the past, we have given money to those who claimed to be strong advocates of our interests, only to find that they opposed our efforts to make our markets function competitively and fairly, " says Korley Sears, Ainsworth Feedyards, Ainsworth, NE. "We cannot make that mistake again. CCMP will be fully accountable and those who pay the bills will be in control. Those of us who have already signed on with the project have made accountability and effectiveness our primary goal."

Because this initiative challenges the status quo there may be retaliatory measures taken. Remember when an attempt was made to coerce auctions to forsake the LMA over the LMA´s petition for a vote on the checkoff? That effort largely failed and any such effort this time probably will too. If retaliation is experienced, OCM has a project entitled the Competitive Markets Litigation Project that is a network of attorneys that is able to help fight for the producers that have been harmed economically. In other words, next time someone tries blackmail or legally questionable tactics they face the prospect of being slapped with a lawsuit. The feedlots that are already participating in the program report nothing but praise from their customers for standing up for free and open markets. They have neither experienced any loss of customers, nor have they experienced retaliation or boycotts by meat packers.

A Call To Arms

I first learned of this project from a longtime friend and a man I have a great deal of respect for, Steering Committee member Tom Spencer. Tom is definitely one of the good guys. He brings a lot of credibility to the project because for many years he was a staunch and extremely active NCA member. With reluctance, he stayed with the NCBA until it got so bad he could no longer stand it. He has been brave and vocal in telling it like it is. Spencer says he´s thrilled at the opportunities CCMP presents. "Finally, cattlemen have the chance to get behind a program that will be responsive to their interests and one that will, in turn, be responsible to them. I´ve chosen to support this program because I believe in it and I intend to do everything in my power to see it succeed."

And let´s hope it does. After all, this is what a real checkoff ought to look like. Michael Stumo, attorney for the OCM, says this initiative is "a call to arms." If you´d like to answer the call and join in the battle give him a call at 860/379-6199.