Working group has beef over checkoff reform

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Aug. 27, 2014 - While the cattle industry's well-known slogan may say “Beef: It's What's for Dinner,” it looks like beef checkoff reform is still struggling to stay on the menu.

After more than three years of meetings, emails, and conference calls, a facilitated working group seeking reform on the beef checkoff has yet to come close to a consensus, forcing some to wonder if it's worthwhile to continue the effort or best to scrap it entirely.

A legislative committee of the National Farmers Union (NFU) last week recommended to the NFU board that the panel withdraw from the working group as talks seem to be going nowhere. The board will meet Sept. 6 to make a decision on the issue. Other members of the working group include the National Cattlemen's Beef Association, the American Farm Bureau Federation, U.S. Cattlemen, the Meat Importers Council of America, the National Livestock Producers Association, the Livestock Marketing Association, and the American National CattleWomen.

With working group negotiations at a standstill, some involved in the talks are worried the opportunity for real change in the checkoff system may be fading away.

“If we don't get some type of wiggling this logjam free, the discussion… will probably cease, and I don't see how we move forward after that,” a source familiar with the discussions told Agri-Pulse. “This is one of those defining moments. It really, truly is. “

Lets Talk Food

The need for checkoff reform - which could include doubling the assessment of $1 per head of cattle sold, in place since the 1980s  -  is increasing as the nation's cattle herd declines, many say. In January, USDA's National Agricultural Statistics Service said in a report the nation's herd was at 87.7 million head, a 63-year low. Spring calving increased the herd to 95 million as of July 1, but that was the lowest inventory for the date since July inventory reports began in 1973, according to a separate NASS report.


When a shrinking cattle herd is combined with the diminishing purchasing power of a single dollar, the cattle industry could be in dire straits if the checkoff is left unchecked.

From FY 2009 through 2013, the beef checkoff allocated between $34.4 and $38.7 million each year to its contractors. The money is reimbursement for projects completed in the previous fiscal year related to promotion, research, consumer information and overseas marketing. Promotion accounted for almost half of the more than $181 million spent those years.

The very nature and operation of the beef checkoff creates a complex working environment for the working group, which includes members and staff of livestock and agricultural groups from across the country. One group's non-starter may be another group's ideal outcome, so the struggle for middle ground is often difficult to resolve.

One of the major hang-ups within the group has been the federal legislation governing the beef checkoff. It is governed by the Beef Research and Information Act of 1985, while the many other checkoff organizations are covered by the Commodity Promotion, Research, and Information Act of 1996. The '96 act is seen to have many of the reforms that are called for by members of the working group, but the desire to change still isn't unanimous.

Other proposed reforms involve the Beef Promotion Operating Committee (BPOC), which selects projects financed by checkoff funds. The State Federation of Beef Councils and the Cattlemen's Beef Board (CBB) each are allocated 10 seats on the panel. Many feel the checkoff's primary contractor, the National Cattlemen's Beef Association (NCBA), may have too much control over the State Federation of Beef Councils.

Calling the NCBA the elephant in the room might be an understatement when looking at how checkoff funding has been distributed. According to CBB financial reports, since fiscal year 2009, just over $182 million in checkoff funding has been allocated to different contractors; NCBA has received $179.1 million of that funding. The next highest recipient of funding is the Meat Importers Council of America (MICA), which has received a little more than $2.1 million.

 

As the biggest contractor involved in the negotiations, NCBA likely has the most to lose - or gain - from checkoff reform. NCBA President Bob McCan said he hopes the negotiations will allow the program to continue to be successful.

“(NCBA) will continue to work with other industry organizations to look for ways to maximize the efficiency and effectiveness of the program,” McCan said in a statement. “However, we should be careful about jeopardizing a beef checkoff that has overwhelming support from producers, and is having terrific success domestically and internationally.”

 

The cattle industry as a whole is also grappling with how to coexist with the Freedom of Information Act (FOIA). Since the checkoff was ruled government speech - and therefore a tax - in a 6-3 Supreme Court decision in 2005, it is subject to FOIA requests. As former NCBA staffer Chandler Keys put it in a July 29 op-ed, this gives those seeking to do the beef industry harm access to “the intricacies of our research and promotional strategies,” or in a sense, the other team can read the beef industry's playbook.

As a way to keep more money closer to the beef producers that pay the checkoff, some in the negotiations have suggested moving toward state-by-state checkoffs with the hope those states would contribute some of that money to a national fund. Washington, Idaho, Oregon, and Texas are among states that already have their own beef checkoffs that go above and beyond the $1 per head in the federal checkoff.

Many familiar with the negotiations have told Agri-Pulse the proposition to encourage states to form their own checkoff is an interesting one, but one source reported that a move in that direction doesn't change the need for reforms at the federal level.

“The discussions on the checkoff have been tied to the national program and the states are going to do what the states are going to do,” a cattle industry source close to the negotiations said. “That doesn't predicate what we're sitting down to work on. Ours is tied strictly to the federal side of things.”

Discussions of the ability to “refund,” or allow producers to request to receive back the money they paid into the checkoff, have also been on the table. There are many different ways to make a refund work; NFU said the checkoff “must be completely refundable,” but some say producers should be able to only refund the additional dollar, if the increase is approved.

NFU also recommended a producer referendum be conducted every five years to give producers the opportunity to vote whether or not they want to continue the checkoff. While there's a sense of agreement on this proposal, how the referendum would be conducted is still in question. Some have suggested using local USDA Farm Service Agency offices, while others want a mailer.

The years of meetings and discussions are also starting to take their toll on the working group itself. Multiple sources have said the group is suffering from a case of meeting fatigue, but one source said it's important to keep communicating.

“No, we don't need to go into a conference room for another three days and talk about having another meeting about another meeting about a meeting,” a source told Agri-Pulse. “We need to get on a phone call and say, ‘Look, we're going to get some things hammered out here.'”

Exact details are still up in the air due to the ongoing nature of negotiations and the reluctance of participants to air their differences publicly.  But it seems that, as long as negotiations have taken thus far, they may still have a long way to go. A draft memorandum of understanding (MOU) was presented to the working group recently, but members requested additional changes. Lawyer Wayne Watkinson, a principal at McLeod, Watkinson and Miller, has since delivered the second draft of the MOU. Even if the working group approves changes, it will still have to gain Congressional approval, which sources have told Agri-Pulse could take three to five years.

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