The largest contractor of the Beef Checkoff Program, the National Cattlemen’s Beef Association (NCBA), said today that U.S. Secretary of Agriculture Tom Vilsack’s idea to reform the checkoff by creating another beef checkoff fund is dead on arrival with the grassroots organization.
During an exclusive interview with Drovers/CattleNetwork, NCBA President and Texas cattleman Bob McCan said a big majority of producers support the current checkoff structure and that creating a second checkoff is not only duplicative but also potentially risks the future of the Beef Checkoff Program.
“We have a big majority of support for our checkoff that we have now and very good return on investment – it’s been very successful,” McCan says. “The majority of producers in this country feel that way. It’s our obligation at NCBA as a grassroots organization to vocalize that opinion as much as we can.”
Established by the 1985 Farm Bill, the Beef Checkoff Program was created to fund projects related to promotion, research, consumer education and international marketing. Of the $1 per head assessment, which is the same amount as it was in 1985, half is allocated to state beef councils and half goes to the Cattlemen’s Beef Promotion and Research Board (CBB) to administer the national checkoff program according to USDA rules and oversight.
According to the 1985 Act, CBB, in coordination with the Beef Promotion Operating Committee, contracts with established national, non-profit, industry organizations to implement checkoff programs.
For three years, a checkoff enhancement working group comprised of the industry stakeholders has met to discuss potential reform of the beef checkoff in order for it to meet the needs of today’s diverse cattle industry and make it more effective and efficient. Since that time, the group has not been able to reach a consensus.
Calling the process a “waste of time and money” and claiming “there is no willingness from key players within the group to allow real reforms to take place,” the National Farmers Union voted to leave the working group. At the same time, NFU passed a resolution calling for a series of changes to the 1985 Act, which would require congressional approval and a change to the 1985 Act.
The final recommendation called for USDA to place the beef checkoff under the Commodity Promotion, Research and Information Act of 1996 (1996 Act). Unlike the previous recommendations, the final action item proposed by NFU would simply require an act of Secretary of Agriculture Tom Vilsack, as the 1996 Act allows the Secretary of Agriculture to write a rule for a new commodity checkoff program.
During a September 30 meeting of the working group, including NFU despite its decision to withdraw, Secretary Vilsack announced that he is considering creating an additional beef checkoff that would fall under the 1996 Act. A move McCan says could jeopardize the entire national checkoff.
“It gives the federal government way too much authority,” McCan says. “There would be a lot of duplicity and additional bureaucracy. Our current structure is pretty efficient. The state-national relationship is very strong. The CBB utilizes as many of the non-profit entities as they can to implement the authorization requests. We need to capitalize on that, and we don’t see any way that could continue going forward with any type of program under the 1996 Act.”
McCan said NCBA sees this as the current administration taking executive action to achieve its agenda regardless of what the majority of the industry wants.
“This is an unnecessary act that was announced to appease one group,” McCan says.
The new checkoff and the current checkoff would reportedly coexist for a period of three years before a producer referendum would take place. At that point, and under a new administration, a referendum would be held on whether to continue.
Creating a second checkoff would, essentially, result in a doubling of the assessment, from its current $1 per head to $2 per head. NCBA has supported doubling the current checkoff assessment. However, McCan says while the Secretary’s plan may achieve another dollar, a lot of that dollar could be “eaten up in administrative expenses.” Under the 1985 Act, just 5 percent of checkoff funds can be used for administrative expenses; whereas under the 1996 act, that figure increases to 15 percent.
All the talk of reform might lead one to believe the current beef checkoff is not meeting its intended purpose of maintaining and developing markets for cattle and beef through marketing, research and education. According to a recent economic study conducted to measure the return on producer’s and importers’ investment in the national checkoff program showed different results. Specifically, Dr. Harry Kaiser, Cornell University, concluded that each dollar invested in the checkoff between 2006 and 2013 returned about $11.20 to the beef industry.
Additionally, Kaiser concluded that had there not been any CBB-funded marketing from 2006 to 2013, domestic beef demand would have been 15.7 billion pounds less (11.3 percent) and foreign demand for U.S. beef would have been 6.4 percent lower.
McCan says the conclusions of the study are proof the current checkoff structure is working and that there is no need to move ward with Secretary Vilsack’s plan. He added that the working group only lost one member organization, and that NCBA will continue working with the "coalition of the willing."
“We still have a good majority of organizations in this country to come up with a statement of principles going forward – either to enhance the 1985 act or continue as is,” McCan says. “Whatever the consensus of the group is, we can active our goals without having to utilize the 1996 Act.”
Previously, Secretary Vilsack said the checkoff reform process needed to be completed by December 2016. While a specific timeline for his new plan has not been announced, McCan said as soon as USDA finishes putting the details together for the new structure, a proposed rule will be submitted to the Federal Register and then opened for a public comment period, with a 2016 implementation time.