One year ago in this space I noted that the U.S. Supreme Court had agreed to hear arguments on the constitutionality of the Beef Checkoff Program. It was a positive development, since the lower-court decision would have ended the industry’s only self-help program. But it was also a sad time because the various organizations involved in this issue couldn’t come to a satisfactory resolution without a lengthy court battle. I decided not to write about the checkoff again until the Supreme Court announced a decision.
By now you know that the court, in a 6-3 opinion, upheld the checkoff (Johanns v. Livestock Marketing Association) saying the program does not violate constitutionally protected speech rights. On the surface, the ruling means that the “Beef. It’s What’s For Dinner.” advertising campaign funded by the checkoff will continue. So will the research that has produced more than 2,100 new beef products since 1998. But just as important, the decision, handed down May 23, offers an opportunity for beef producers and their respective organizations to conduct some sorely needed fence mending.
The Beef Promotion and Research Act, established with the 1985 Farm Bill, became mandatory when the program was approved by 79 percent of producers in a 1988 national referendum vote. The revenues from the $1-per-head checkoff are used for promotion, education and research programs to improve the marketing climate for beef. The 2005 Cattlemen’s Beef Board budget expects revenue to total $47.2 million, of which $25.5 million will be spent on promotion.
During the program’s early years, it was deemed successful by supporters, but they struggled to produce hard evidence that the program was having a positive impact. Prices for cattle and beef remained tied to the constant supply/demand struggle typical of commodities. But as checkoff-funded programs began to bear fruit, beef began to shed its image as a variable-quality commodity. By 1998, the 20-year erosion in beef demand had stopped, and every quarter since has shown an increase in demand. Indeed, demand has grown 25 percent since 1998. Cattle-Fax estimates the demand gain since 1998 has added about $250 per head to the value of fed cattle.
Throughout the program’s history, producers have indicated, through independent surveys, their overwhelming support. Independent research announced early this year showed 73 percent of producers support the checkoff, the highest percentage in a decade.
Despite solid evidence of the checkoff’s positive impact on consumer demand and prices for cattle and beef, many producer groups remained unsatisfied with the checkoff. The fact that the program is mandatory sticks in the craw of some, while others believe the money is lining the pockets of a huge staff in Denver. Others hoped to cripple the National Cattlemen’s Beef Association, the checkoff’s largest contractor, by stopping the money stream.
This battle over the checkoff carved some deep wounds into many segments of our industry — wounds that will not heal easily. But the High Court’s decision leaves little, if any, wiggle room for those who would search for new legal challenges to the checkoff. Indeed, it would seem better to now focus our efforts and resources toward unifying our industry and seeking to satisfy our customers.
A year ago I ended this column with a quote from Iowa State University economist John Lawrence, who accurately described why it is important for our industry’s segments to work together. His comments are just as appropriate today.
“Consumers, retailers, processors and society in general are placing more demands on food and people, companies and industries that produce it. Put another way, the demand for beef is increasing, but so are the demands on beef.”