Seven of eight groups sign beef checkoff MOU

WASHINGTON, March 13, 2015 – A group of beef industry stakeholders seeking changes in the beef checkoff program cleared another hurdle today, but the coalition will likely be moving forward without the support of one of its founding organizations and could face an uphill battle in Congress.

Meeting in Denver, seven members of the Beef Checkoff Enhancement Working Group (BCEWG) signed a revised Memorandum of Understanding (MOU) to support their proposed changes to the checkoff, a $1 per head assessment on all cattle sold in the U.S. The group has been working for more than three years on proposed changes to the program, which provides funding for beef promotion and research. Contractors to the checkoff said inflation and increased advertising costs were reducing the potential impact of checkoff funds, already decreasing with a shrinking cattle herd.

 Many different aspects of the checkoff were on the table during deliberations, and the revised MOU accomplishes some of the primary goals of BCEWG members. For example, the MOU would double the assessment to $2 per head of cattle sold and allow qualifying state beef councils to keep up to half of the assessment, as they do now. The MOU also calls for a referendum every five years so long as it is requested by more than 10 percent of payers into the checkoff, and includes changes to the process of selecting the Beef Promotion Operating Committee, the panel responsible for allocating checkoff funds to contractors.

Scott Stuart, president and CEO of the National Livestock Producers Association (NLPA), served as one of the chairs of the committee, a role he likened more to a facilitator. He said the group was “reinvigorated” last year when Agriculture Secretary Tom Vilsack said he really wanted to “see us get the work done.”

“When we first came together, certainly there was a lot of stuff that was talked about over the last three years,” Stuart said. “The most important parts of all of those discussions ended up in the MOU.”

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The NFU and USCA were two groups that originally got the checkoff reform process started. In 2011, they held a meeting with Vilsack where they expressed concerns about the operations and governance of the fund. He understood their concerns, they said, but wanted the industry to tackle the effort, and the BCEWG was formed.

In a statement, USCA said the BCEWG seemed more concerned with increasing the assessment than pursuing governance changes USCA saw as critical to checkoff reform. NFU and USCA both expressed disdain for the arrangement of the Beef Promotion Operating Committee (BPOC) and the State Federation of Beef Councils, a collection of state beef organizations that shares direct ties to NCBA, the largest contractor to the checkoff. They said there was a conflict of interest when Federation members sat on the BPOC, something that they felt wasn’t addressed in this MOU.

“USCA was hopeful throughout this process that the discussions could evolve into meaningful enhancements to modernize the program and make it more efficient,” Jon Wooster, USCA past president, said in a statement. “Our goal was to try and initiate needed structural changes that would give producers confidence Checkoff dollars were utilized efficiently and appropriately and would warrant support for an increase in the assessment.”

If anything, USCA said the MOU makes the conflict of interest concerns worse. Changes to the BPOC involve a newly-formed nominating committee, structured in a partnership with the Checkoff Beef Foard, the Federation, and members of national organizations that represent payers into the beef Checkoff. Wooster said the potential change “looked promising,” but USCA felt that by supporting the MOU, the group would be “compounding the ‘conflict of interest’ concern.”

USCA’s membership in the BCEWG is currently unclear. According to a source close to the BCEWG, the members signing the MOU will have to decide USCA’s role in the working group from here on out, but Stuart said USCA has yet to be voted out or asked to leave, saying that onus is on USCA if they oppose the MOU. Moving forward, Wooster said USCA would like to remain involved in checkoff reform.

“USCA will remain active on this issue and will pursue any effort to bring unbiased and open-minded individuals to the table to discuss substantial enhancements to the Beef Checkoff program,” Wooster said. “Unfortunately, the MOU fell far short of our expectations in the form of structural changes that would warrant USCA’s support for an increase in the assessment.”

With the support of the seven organizations, the BCEWG will now work to develop a legislative strategy to bring the proposed changes before Congress. Because of the nature of the Beef Promotion and Research Act of 1985, the legislation that created the checkoff, any changes to the program will require an act of Congress. The working group appears to be poised to move forward with this legislation, commonly called the “’85 act,” after administrative efforts from Vilsack under the Commodity Promotion, Research, and Information Act of 1996 were halted by Congress last year.

NFU President Roger Johnson said in a release that the MOU is “honestly a waste of everyone’s time,” saying it will “fail to achieve the real reforms that need to be made.” Sources close to BCEWG discussions have expressed skepticism about the MOU’s chances on Capitol Hill because the changes could be viewed as a tax increase on American beef producers.

The NCBA has long carried a lot of clout on Capitol Hill – especially with GOP leaders – and has expressed optimism about its prospects to advance this type of reform. Stuart said the BCEWG members realize the difficult task ahead of them and will continue to keep meeting regularly to devise a legislative strategy.

“Obviously it’s going to be a heavy lift,” Stuart said, adding that group would like to put their proposal before Congress in 2015 to avoid the politics surrounding the 2016 elections. “It will be a lot of work to get it done, but there’s also a lot of enthusiasm and desire among the group to get it done.”

However, sources close to BCEWG discussions have expressed skepticism about the MOU’s legislative chances because there is likely to be an associated budget score of between $100 million to $200 million. To some fiscal conservatives, the measure could be viewed as a tax increase on American beef producers.

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