Showing Their True Colors

Showing Their True Colors
— by Lee Pitts

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,

“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?