It’s Almost Over

It´s Almost Over
— by Lee Pitts

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.