Vilsack steps into checkoff battle
September 19, 2014
During the National Farmers Union Fly-In, the president of South Dakota's group sat down face to face with U.S. Secretary of Ag Tom Vilsack. The secretary told Doug Sombke and other Farmers Union members that changes to the beef checkoff are forthcoming. Vilsack made a public statement Sept. 8, that the working group has not shown enough signs of forward motion, and he intends to step in and ensure that the beef checkoff is amended.
"Here is what he said, 'I tried intimidation, tried letting the groups work it out on their own.'" Sombke said Vilsack likened the organizations involved in the Checkoff Enhancement Working Group to bickering children who need an adult to step in with a solution.
The secretary told the group that he "has to do what he thinks he has to do," and that they "might like him" and they "might not," said Sombke.
According to the Hagstrom Report Vilsack commented on the complexity of the checkoff, "This system is really complicated, I have had staff write me memos, literally draw me pictures. I don't know how it could be more complicated. In the end my goal is that we have healthy beef industry and that producers of all sizes can survive."
Sombke, who had represented the NFU on the CEWG confirmed news reports that the group voted yesterday to withdraw from further participation in the group.
In its resolution to withdraw from the goup, the NFU board said:
Recommended Stories For You
"The following reforms are necessary:
• The CBB [Cattlemen's Beef Board] must have the authority to carry out checkoff projects on its own, similar to other checkoff oversight boards.
• The CBB must be allowed to enter into checkoff contracts with non-policy organizations and private companies, such as ad agencies and public relations firms, in order to prevent policy-driven organizations from using checkoff dollars to fund overhead for political activity.
• The beef checkoff must be completely refundable.
• A referendum on the continuation of the beef checkoff must occur every five years."
The board recommended that USDA "consider rewriting the beef checkoff program" under the the generic Commodity, Promotion, Research and Information Act of 1996," rather than going through Congress to make changes as has previously been discussed.
The secretary said during his presentation to NFU, "We're all about executive action," apparently meaning he approves the concept of bypassing Congress and going through the 1996 act.
Some organizations involved in the working group are adamant about a checkoff increase – a doubling of the current $1 per head has been discussed at length – Sombke said, and others are more concerned about making changes to the program. "NCBA and some of the other groups are not willing to move off of status quo. They want to see the money before they see the change and we want to see the change before we see the money. This is a standoff that has got no good resolve," Sombke said.
Continuing to attend the working group meetings is not a wise use of NFU resources, Sombke said.
The CEWG now consists of:
• Livestock Marketing Association
• National Livestock Producers Association
• U.S. Cattlemen's Association
• American Farm Bureau Federation
• American National CattleWomen
• Meat Importers Council of America
• National Milk Producers Federation
• National Cattlemen's Beef Association
• Federation of State Beef Councils
• Cattlemen's Beef Board
The status of the working group is now unclear said the Hagstrom Report. A knowledgeable source from one of the groups told The Hagstrom Report that a proposed meeting in September has been canceled and efforts are under way to set up a meeting in October.
R-CALF USA was originally a member of the group but was reportedly “thrown out” of early meetings when their representative refused to discuss a checkoff increase.
Other groups are also considering pulling out of the group, Sombke said.
R-CALF USA and 35 additional groups, including several state Farmers Union organizations sent a letter on Sept. 11, outlining their joint suggestions to Secretary Vilsack, in partcular for dealing with conflict of interest concerns on checkoff contracts.
The joint letter states that the two most offensive and glaring conflicts of interest in the Beef Checkoff Program are that the decision-making Federation is "housed, administered, owned and controlled," by the NCBA and that checkoff funds strengthen the NCBA's advocacy efforts because they offset, "if not directly subsidize," the NCBA's administrative costs. The letter refers to this offset as cross-subsidization.
The joint letter calls the working group's proposal "unacceptable," and urges Vilsack to:
Enforce the prohibition against conflicts of interest in contracting and all other decision-making operations of the Beef Checkoff Program
Enforce a prohibition against contracting with organizations that engage in policy-oriented activities.
Require a legally independent Federation, without affiliation to NCBA or any other private entity.
"The Secretary had suggested that if the industry groups could not come to an agreement, then he would take unilateral action to fix the broken checkoff program," said Fred Stokes, in a joint news release. Stokes is the spokesman for the Organization for Competitive Markets, who signed on to the letter.
Stokes said NFU's withdrawal demonstrates there is no agreement even among the self-selected industry groups.
"Our joint letter is intended to provide the Secretary with a much better alternative that will immediately address the most egregious problems with our current checkoff program," said R-CALF USA Beef Checkoff Committee Chair Joe Pongratz.
"The Beef Checkoff Program was never intended as a vehicle to strengthen the political voice of NCBA or any other policy organization above the voices of any other organization or above the collective voice of the producers funding the program," the joint letter, also signed by several state cattle organizations, states.
The U.S. Cattlemen's Association, who remains a member of the CEWG, said they believe cattle producers seek substantial change to current checkoff policy. "Today's remarks from Secretary Vilsack indicate the Administration is committed to seeing this process through. We certainly look forward to engaging fully with USDA in revising the beef checkoff in a manner that addresses long-standing issues with the program and in ways that serve the interests of all U.S. cattle producers," said their president Jon Wooster on Monday.
Bob McCan, NCBA president said his group, as contractors to the checkoff believes producers receive $11.20 return on the $1 per head they pay.
"For the past few years we have met with other industry groups in an effort to find ways to enhance the program to be an even better tool for producer profitability," he said in an e-mail. McCan mentions grassroots involvement via state beef councils and a 4-1 vote supporting the checkoff in the 1980s that served to put the law in place. He went on to praise the checkoff's role in developing strong demand for beef and said 78 percent of producers support the checkoff program.
"We will continue to work with other industry organizations to look for ways to maximize the efficiency and effectiveness of the program. However, we should be careful about jeopardizing a beef checkoff that has overwhelming support from producers, and is having terrific success domestically and internationally," he said.
Sombke said income from the administration of checkoff programs helps free up financing for NCBA's policy side where they work on specific ag issues that advance interests of corporate-owned feedlots and promote vertical integration of the beef industry.
"At the CEWG meetings I sat across the table from the lawyer who helped develop this checkoff. I said, 'it looks to me like this thing was designed to always come back to NCBA's control.' He winked at me and he said, 'You got it.'
"The Cattlemen's Beef Board has to have more authority to do things. They need to represent the producers and not just a non-profit lobbying group.” F