Just a few days ago, the Ag Marketing Service proposed a rule change that would greatly expand the number of organizations that could do business with the beef checkoff. The old rule set a 1985 date – “active and ongoing” after that date? OK. Otherwise, you had to press your nose against the glass and wistfully wish you could get in on the game.
The new rule would open the door to many more organizations, in effect introducing more of a free market situation to what some might call a staid and true group of good friends going back over 25 years. J.D. Alexander, the new president of the National Cattlemen’s Beef Association, quickly issued a press release that enthusiastically backed the proposal.
Changes to the status quo are not easily accepted by most groups, especially to cattlemen who tend to be conservative minded people who like to move forward carefully and with due consideration. I wondered why the NCBA was so quick to voice approval so I posed a few questions to Mr. Alexander.
Q. The NCBA is supporting an Agricultural Marketing Service proposal that would expand the contracting authority as established under the Beef Promotion and Research (Order) by eliminating the requirement that only allows organizations active and ongoing since 1985 to contract with the checkoff. NCBA is a long time contractor of the beef checkoff and this proposal could bring a lot more competition to the forefront. Why the support? What advantages does it bring to the table?
A. NCBA’s policy is set by all dues paying members. Our grassroots policy process is truly producer-driven. Almost all national policy is a product of county or state cattlemen’s meetings and worked its way up to the national scale. This policy is no different. Our policy supports five very specific modifications to the Beef Checkoff Program. The policy position that guided us to support this rule states: “Any reference to the charter date of an established national non-profit industry governed organization should be eliminated.” For years, we have provided a very professional staff to carry out the wishes of the Operating Committee and also provide progressive ideas towards demand building. We welcome the possible competition, which will simply make our people work even harder. This will also assure producers are getting the best return on their checkoff dollar as the operating committee chooses the best contractor for various authorization requests.
Q. The Act limits contracting to ‘national nonprofit industry governed organizations,’ but does not define the term. It does state that these organizations must be governed by a board of directors representing the cattle or beef industry on a national basis and that they were active and ongoing prior to enactment of the Act. There might not be a legal definition but there is a history that has helped define qualifying organizations. What groups are part of the program now? What groups might become part of the program in the future?
A. NCBA has a history of more than 100 years and is the largest national cattle producer organization today. There are approximately 60 organizations that could contract with Cattlemen’s Beef Board (CBB), of which only about five elect to do so. By changing this rule, it would allow others to possibly contract if they would wish. I would not speculate on what groups might elect to do so. It really depends on what organizations meet the requirements of the Operating Committee and USDA.
Q. In the press release, you said "the rule is good for the industry and good for the checkoff, ensuring cattlemen are getting the best return on their investment." Tell me about their investment today. What are they getting for their money?
A. Several studies over the years have measured the return on investment of the checkoff dollar. These studies done by land grant universities have consistently shown around a five-fold return on investment. These investments of checkoff dollars are in promotion, research, foreign marketing, consumer information, industry information and producer communications.
Q. Let’s talk about funding. We’re still at the same dollar check off that we started with on day one and the herd is at its lowest since the mid twentieth century. Can the checkoff accomplish anything near what it was able to do during those first years? Is the need to do much more with a lot less one of the drivers behind this proposal?
A. There is absolutely a need to do more with less. Producers are getting as much as they can with the limiting buying power of the dollar per head checkoff. The dollar has not changed but the buying power has. The dollar simply cannot purchase what it did in years past. That is why it so very important that only the best projects are funded and in a very efficient way to build and maintain demand.
Q. You said, “We support a competitive checkoff contracting system that ensures producers are getting the absolute best return on their investment.” How will a new, larger group manage more creative inputs?
A. The operating committee will remain the same size. The only change is there would possibly be additional contractors bringing more ideas for them to select from. This would assure producers are getting a variety of creative ideas from which the Operating Committee can choose the best contractor to carry it out.
Q. A bit of good news - independent research conducted by the Cattlemen’s Beef Board released in January 2012 shows that beef producer support for the checkoff is higher than it has been in 18 years. To what do you attribute that success?
A. Good markets certainly help to an extent but I feel it is bigger than that. I believe more and more producers are paying attention to how checkoff dollars are being spent and on what items. We have 45 Qualified State Beef Councils doing what is important in their respective states and determining what is the best way to spend their allocated 50 cents. By utilizing strong state and national partnerships, we are parlaying the dollar to the best advantages we can. We are directing the money to where the people are and getting results in the marketplace. It is all about putting beef in the center of the plate when determining protein needs. In an ever growing world population this is going to be extremely important for our future.
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