Deja-vu for Checkoff Legislation: If at first you don’t succeed…
April 6, 2017
In late March, Sens. Mike Lee (R-UT) and Cory Booker (D-NJ) introduced new legislation, hoping to add what they call "much needed transparency and accountability" to checkoff programs.
Opportunities for Fairness in Farming Act of 2017 (OFF Act), along with a companion bill, the Voluntary Checkoff Act, is being praised by R-CALF. According to Bill Bullard, R-CALF CEO, the two bills were introduced too late last session for a full consideration in Congress.
Bullard said his group welcomes both bills because they impart accountability and transparency to the beef checkoff program.
"The bipartisan bill, S. 741, will end that conflict of interest by prohibiting lobbying groups from contracting with the program," Bullard said in a press release, calling the National Cattlemen's Beef Association (NCBA) the largest benefactor of the program. "However, we think the best solution is the voluntary bill, S. 740, that allows producers to vote freely with their pocketbooks regarding whether they are individually satisfied with the checkoff's performance."
“Out of a total of 12,341 pages of financial records from the audit and sought by the Organization for Competitive Markets (OCM) through the Freedom of Information Act, USDA released less than 175 pages, most of which are already public tax forms. The remaining nearly 12,200 pages of checkoff-related records, however, were completely blacked out
— USDA is claiming they are confidential. The bottom line is that USDA is withholding a staggering 98.5 percent of federal Beef Checkoff Program spending records from the cattle producers who are required to pay into the government program.” Organization for Competitive Markets
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The legislation comes amid a deadline for the beef checkoff program.
According to OCM, March 31, 2017 was the USDA's court-ordered deadline to release documents from an audit initiated in 2011. "Out of a total of 12,341 pages of financial records from the audit and sought by the Organization for Competitive Markets (OCM) through the Freedom of Information Act, USDA released less than 175 pages, most of which are already public tax forms. The remaining nearly 12,200 pages of checkoff-related records, however, were completely blacked out—USDA is claiming they are confidential. The bottom line is that USDA is withholding a staggering 98.5 percent of federal Beef Checkoff Program spending records from the cattle producers who are required to pay into the government program," OCM said in a press release.
"NCBA knows it has had its hand in the cattle producers' cookie jar, and is fighting to keep it there while denying the hard-working cattle producers who pay into the Beef Checkoff Program the truth about how it is spending their tax dollars. What is just as alarming is the fact our U.S. government refuses to release government documents related to a government audit report on how our money is being spent," said OCM President Mike Weaver.
But NCBA says the documents not released are private producer information, including addresses and other information that doesn't need to be public.
"As the court records show, the original FOIA request involved in this litigation was made by OCM in 2013, and litigation was filed by OCM against the USDA Inspector General a year later. NCBA did not became aware until August 2016 that certain of its documents were among the documents requested by OCM's FOIA request, and NCBA only became aware the following month that there had been litigation about the FOIA request for two years. NCBA moved to intervene in the litigation because, like most businesses, NCBA normally does not disclose its confidential business information to the public," Robinson shared.
But the argument that NCBA has something to hide, continues to surface, despite the courts contending that they have acted appropriately.
"Like most businesses, NCBA normally does not disclose its confidential business information to the public and, as the court determined, NCBA has a substantial interest in not disclosing such information to its competitors," said Robinson.
The beef is not just with NCBA, as other checkoff programs are also in the hot-seat.
Mike Callicrate, owner of Ranch Direct Foods and member of Humane Society of the United States' National Agriculture Advisory Council, has lobbied against the checkoff program for years. "The USDA's commodity checkoff programs are supposed to work for all farmers and ranchers, but they've been taken over by the largest corporate interests," Callicrate said.
HSUS' Joe Maxwell, a Missouri hog farmer, called the Check Off program a "slush fund for big ag."
"For too long, America's family famers have been forced to fund programs that undermine their efforts to preserve rural communities and to use traditional methods of farming," said Maxwell.
USDA's Agricultural Marketing Service (AMS) operates 22 checkoff programs for commodities including pork, eggs and dairy. Producers pay a fee on each sale, the money going to promote the commodity or pay for research or education. The programs and associated boards have received criticism in the past for a lack of transparency, conflicts of interest, misuse of their funding and anticompetitive behavior.
"A recent FOIA request uncovered some troubling emails between the American Egg Board and top executives in the egg industry," Sen. Lee said. "This was a classic case of Big Government and Big Business working together to squeeze out smaller rivals and squelch innovation."
The "Beef, It's What's For Dinner," "The Other White Meat," and the "Incredible, Edible Egg," campaigns, are approved by USDA, but not by all producers. But supporters of checkoff programs say they work and are a benefit to both producers and consumers.
"The program is funded by producers, for producers," said John Robinson, National Cattlemen's Beef Association's (NCBA), Executive Director, Organizational Communications.
On the Beef Checkoff program, the Cattlemen's Beef Board (CBB) and USDA oversee all collection and spending of funds.
"The Beef Checkoff Program is a producer-funded marketing and research program designed to increase domestic and/or international demand for beef. This can be done through promotion, research and new product development, and a variety of other marketing tools," Robinson said.
Checkoff dollars are mandated by law to be invested in programs that increase consumer demand and create opportunities to enhance producer profitability. The Beef Checkoff Program has six categories it reaches: promotion, research, consumer information, industry information, foreign marketing and producer communications.
According to a 2014 Beef Producer Attitude Survey, by Aspen Media & Market Research, of 1,200 random beef producers, the majority of beef and dairy producers feel the checkoff adds value in many ways:
• 78 percent of producers currently approve of the Beef Checkoff Program — the highest level in 21 years.
• 80 percent of producers continue to believe that the checkoff has contributed to a positive trend in consumer demand for beef.
• 71 percent believe that the checkoff has, over the year, contributed to the profitability of their cattle operation.
• 79 percent of producers believe the Beef Checkoff Program does a good job of representing their interests.
• 65 percent believe the Beef Checkoff Program is being managed well.
But the charges against checkoff programs have been ongoing, with some unusual partnerships.
In 2012, the Organization for Competitive Markets (OCM) formed a partnership with HSUS, attacking the Beef Checkoff Program with the aforementioned lawsuit.
Some producers found fault with the team effort. "HSUS is an organization going state by state vowing to end production agriculture by outlawing scientifically validated production practices in animal agriculture. Their efforts put people out of business and often jeopardize the well-being of livestock," said NCBA's 2012 President, J.D. Alexander.
A recent scandal with the American Egg Board (AEB), drew more attention to the commodity checkoff programs, questioning the actions and use of funds.
AEB ran an ad that targeted a specific competitor, Hampton Creek, a vegan sandwich spread, and USDA found the ads "inappropriate" use of checkoff funds, which are designated to promote the commodity as a whole rather than target the competition.
According to the Senators, the legislation would reform the federal programs, and prevent misuse such as the egg scandal.
"By cracking down on conflicts of interest and anti-competitive practices, and bringing additional oversight and transparency, this bill will help to level the playing field for small family farmers and entrepreneurs," Booker said.
To improve the practices of checkoff programs, OFF of 2017 would:
• Clarify and fortify the prohibition on checkoff programs from contracting with organizations that lobby on agricultural policy
• Establishes program standards that prohibit anticompetitive behavior and engaging in activities that may involve a conflict of interest
• Requires transparency through publication of checkoff program budgets and expenditures, and means for audits of compliance
Colin Woodall, NCBA Vice President of Government Affairs, says the Senators don't understand how well the federal Beef checkoff program is working and that their measures aren't needed.
In a radio interview at WNAX, Woodall said NCBA is operating the Beef Checkoff properly and the recent government audits have provided confirmation. Woodall says it's important to keep the Beef Checkoff under producer control and out of the hands of Congress. He says NCBA will try to convince lawmakers to vote against the reform bills.
In response to the legislation, National Pork Producer Council CEO Neil Dierks also defended the checkoff. "The National Pork Producers Council is a voluntary funded association, representing U.S. pork producers."