R-CALF USA: Checkoff groups misusing funds
October 17, 2014
In swift response to an Oct. 14, 2014 lobbying letter urging Agriculture Secretary Tom Vilsack to abandon his plans to create a new beef checkoff program, R-CALF USA called foul.
The lobbying letter was signed by the National Cattlemen's Beef Association (NCBA) and 45 of its state affiliates, groups R-CALF USA claims are prohibited from lobbying because they receive funds, directly or indirectly, under the current 1985 national Beef Checkoff Program.
Yesterday, R-CALF USA sent a four-page letter to Vilsack alleging that NCBA and its affiliates are inappropriately, if not unlawfully, lobbying for their own self-interests by urging Vilsack to forego his plans for a new checkoff program and that their lobbying letter contains false and deceptive information.
To prove its point that the NCBA and its affiliates are recipients of checkoff funds, and that those funds are being used to lobby, R-CALF USA's letter states that 82 percent of the NCBA's revenues are derived from the national Beef Checkoff Program and the group's CEO, who likely helped draft the lobbying letter, receives a large portion of his salary from the checkoff.
Regarding NCBA's state affiliates, R-CALF USA points out that the Alabama Cattlemen's Association, a signatory to the lobbying letter, "is the state's qualified beef council that directly receives beef checkoff funds." In addition, according to R-CALF USA, several states represented on the lobbying letter are considered "two-hat" states because the NCBA affiliate and the state's checkoff-recipient beef councils share the same physical address and executive employee.
While the 1985 national Beef Checkoff Program sets a five-percent cap on administrative costs, one-half of the approximately $80 million collected each year from cattle producers is retained by state beef councils and that retained money is not subject to the cap. R-CALF USA's letter suggests an audit should be done to determine what amount of checkoff funds are now being used to pay administrative costs to the NCBA's state affiliates under this loophole.
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It is the exorbitant administrative costs the state beef councils pay to the NCBA state affiliates, which R-CALF USA claims are masked as rents, advertising, salaries and other administrative items, that create a violation of the law when the NCBA affiliates engage in lobbying.
R-CALF USA's letter explains how this funneling of money from cattle producers to state beef councils and then to NCBA's affiliates gives the state beef councils undue control over how the money that makes its way to the national Beef Checkoff Program is spent and gives the NCBA affiliates more financial resources and funding to lobby on behalf of the NCBA.
"The current national Beef Checkoff Program constitutes an impenetrable, quasi-governmental bureaucracy controlled by the NCBA," states R-CALF USA's letter.
R-CALF USA also takes issue with the lobbying letter's assertion that the Office of General Counsel (OIG) had concluded that the NCBA, the principal contractor of the program, is in compliance with the law. "That claim is blatantly false," wrote R-CALF USA stating that the OIG not only made no such finding, but also, the OIG determined the program lacked adequate oversight by the Secretary and that the auditors could not conclude that checkoff funds were being properly collected, distributed, and expended in accordance with the law.
R-CALF USA's letter states that the U.S. Supreme Court had determined that the national Beef Checkoff Program is a program that disseminates government speech paid for by mandatory assessments (i.e., taxes) imposed on cattle producers and cattle and beef importers.
"Producers deserve to know that the assessments they are required to pay under this government program are being used effectively and in accordance with the Act and Order. The OIG report reveals that producers have no such assurance," The group wrote.
In their lobbying letter, the NCBA and its affiliates claim the current beef checkoff provides a substantial return per producer-dollar invested. But R-CALF USA claims that return actually demonstrates the beef checkoff program is less effective and less efficient than the pork checkoff program. A recent study by Cornell University found the pork checkoff program returned $17.40 per dollar invested by U.S. pork producers, "which is a full $6.20 more per dollar invested than the beef checkoff study concludes is returned to cattle producers." R-CALF USA wrote.
R-CALF USA's letter concludes: "Mr. Secretary, without the reforms previously recommended by R-CALF USA and the 35 other organizations that wrote you on September 11, 2014, the current national Beef Checkoff Program will continue to finance the growth of NCBA's sprawling empire that is being built on the backs of hard-working, independent U.S. cattle producers. It is the government-mandated assessments that have not, as the OIG confirms, been subjected to adequate control or oversight that first created this deplorable circumstance and is now sustaining it.
"We respectfully request that you conduct an investigation into our concerns that the NCBA and its affiliates have violated both the spirit and intent of the 1985 Act and Order and that the NCBA and its affiliates have attempted to mislead and deceive you, the public and members of Congress by distributing their deceptive letter to the media for widespread distribution. If you are able to validate our concerns, we ask that you take the decisive action we and others recommended to you on September 11."