Guest Opinion by Chuck Kiker: It’s Time the Cattle Industry Takes Their Checkoff Back
I never thought I’d see the day that an amendment concerning the Beef Checkoff would make its way to the floor that didn’t originate from the Senate Agriculture Committee. But that’s just what happened when the Booker/Lee amendment was introduced during the floor debate during the run-up to the vote on the 2018 Farm Bill thanks to lobbying efforts of the Human Society of the United States (HSUS) and the Organization for Competitive Markets (OCM.)
Though the amendment was ultimately defeated, the vote was far too close for comfort and posed grave danger to all twenty-two federal checkoffs, from beef to Christmas trees. While I can’t speak with any authority on the other checkoff programs, what I can discuss is the value of the Beef Checkoff, having served on the Cattlemen’s Beef Board for 2 six-year terms from 2004 to 2017. I was very fortunate on the CBB, eight of the years I served on the Joint Operating committee that decided how the CBB money was allocated.
During my time with CBB, I heard what really bothers most producers about the Beef Checkoff: how the National Cattlemen’s Beef Association (NCBA) controls it. Before we can even begin to defend the Beef Checkoff from the growing onslaught of attacks from outsiders—we have to get our internal house in order first. And we better do it quickly.
The Beef Checkoff, which assesses a mandatory one dollar each time cattle are sold or the equivalent value in the case of imported beef or beef products, was established under the Beef Promotion and Research Act of 1985. In 1986 the now Federation of State Beef Councils was the Beef Industry Council and was part of the National Livestock and Meat Board. The National Livestock and Meat Board included the Beef Industry Council, the Pork Council and the Lamb Council. The National Livestock and Meat Board carried out Checkoff program activities and was not involved in policy activities. The National Cattlemen’s Association (NCA), by contrast, was strictly a policy organization when the Beef Promotion and Research Act of 1985 was voted on and implemented.
In 1995 with a new rally call of “One industry, One Voice,” the leadership of NCA promoted a merger of four groups; NCA, United States Meat Export Federation (USMEF), Beef Industry Council, and the CBB. In reality this merger wasn’t about having one voice and was instead about bolstering NCA’s diminishing funding sources. This notion was contentious, and despite the majority of producers not having a say in the decision—the merger was approved by a narrow margin.
After the dust settled following the vote USMEF decided to opt out of the merger and remain a stand-alone organization. USDA ruled the CBB could not legally be part of the merger because the Beef Promotion Act and Order would not allow it. So, when all was said and done, NCA merged with the Beef Industry Council to form the NCBA and the National Livestock and Meat Board was dissolved. The Pork and Lamb Councils went their separate ways.
Thereafter, NCBA was composed of a policy side and Federation side. Though a “firewall” was set up to ensure that the rules under the Beef Promotion Act and Order would be adhered to, in reality, the Beef Checkoff became the foundation upon which NCBA operated. The CBB had an annual budget of around fifty million dollars, not including the Federation budget, which was generally between ten and twenty million dollars a year.
The efficiencies that developed because of the merger were predominately efficiencies that benefited NCBA as a policy organization. But the leadership justified this by saying that NCBA represented the entire beef industry, from the cow-calf producer to the packer; and updated the old rally call of, “one voice, one vision!” The different segments started jockeying for position within this new all-encompassing organization. Sadly, the more money you raised as an organization or a major “stakeholder” (corporation) for NCBA, the more voice you had as a member.
The cow-calf sector involvement at the national level had been weakening for years due to really low cattle prices and fewer full time cattlemen. The older generation was retiring and the younger generation had to get jobs to raise their families. Raising cattle became secondary and producers weren’t joining and engaging in any cattle organizations like they had in the past.
The feedlot sector was a little more enthusiastic about membership and participation at the national level. They built a per head dues structure where a percentage of the dues collected were designated for NCBA. The three major feeding states were represented by Texas Cattle Feeders Association (TCFA), Kansas Livestock Association (KLA), and Nebraska Cattlemen’s Association (NCA). With the number of seats these three organizations had from the money they generated for NCBA, they could pretty much control any vote in any committee at NCBA.
The packer sector was a little more nonchalant about their monetary support of NCBA. In the 2000’s, I had a reliable source on staff with NCBA tell me the three largest packers were paying in around a million dollars each and the fourth largest packer was contributing a little less than a million.
As the lobbying machine grew, so did the need for more funding, and NCBA set up sponsorship programs that generated even more money from allied industry organizations. Under this structure, NCBA’s lobbying efforts were essentially “for sale” with whoever paid the most money having their issues addressed the most fervently. The lowly cow-calf producer’s voice was diluted to a mere whisper.
Meanwhile, NCBA has around an 80 million dollar budget, over 170 employees, and a lot of influence in Washington D.C. So how is NCBA so dependent on the Beef Checkoff? Over seventy percent of everything NCBA does is Checkoff which means over seventy percent of NCBA’s overhead is paid with Checkoff dollars. All of NCBA’s administrative staff’s salaries; the CEO, CFO and others, are subsidized by Checkoff dollars.
I could write a book on the abuses and unethical things done to ensure NCBA maintained that level of funding of Checkoff resources. Authorization requests (ARs) presented by NCBA were developed around NCBA policy. The Operating Committee would routinely debate a fifty thousand-dollar AR from an outside contractor while easily—and without any discussion—approve the million-dollar NCBA ARs. Trying to question an NCBA implementation AR was like head butting a wall. The ten members of the Operating Committee from the Federation side are well vetted for loyalty to NCBA long before they get to the Operating Committee, leaving only four NCBA biased votes needed on the CBB side to fund any AR.
All said, the Beef Checkoff has carried the heavy burden of NCBA policy since 1996. NCBA has become a detriment to the Checkoff and it’s time to free this program so that it’s no longer attacked as a result of anti-NCBA sentiment. The arrogance and greed of NCBA has blocked all efforts to make changes to the Checkoff that would result in a more effective program for all stakeholders. We need Congressional members with a little integrity along with USDA to stand up for all the cattle producers who didn’t get to vote in 1996.
First, the Federation of State Beef Councils needs to be a stand-alone organization working hand in hand with the Cattlemen’s Beef Board. All funds from the Federation and the CBB need to be allocated by the Beef Promotion Operating Committee. Second, the five percent cap on the CBB administrative expenses needs to be removed so that it can employ the experts needed to develop and administer projects that benefit all cattlemen and women. Further, like other checkoffs, the CBB should be able to contract directly with venders and implement Authorization Requests without NCBA’s undue influence.
I believe in the Beef Checkoff and I believe with the right changes it can rival other successful Checkoff programs. Several years ago, the Pork industry made these kinds of changes and today has a 91 percent approval rating and a $25 to $1 return on investment. The approval rating of the Beef Checkoff is around 70 percent and has a return on investment of $11.2 to $1. Without these changes, I fear our Checkoff will not be strong enough to defend ourselves against attacks from the outside—and will continue to minimize the voices of our own producer stakeholders. In short, it’s time the cattle industry takes their Checkoff back.