Vilsack: Second checkoff likely a reality

Farm Forum

Agriculture Secretary Vilsack told beef and cattle groups Sept. 30 that a second beef checkoff will likely be a reality by January 2016.

United States Cattlemen director Chuck Kiker of Texas said Secretary Vilsack told his group and several other members of the Checkoff Enhancement Working Group last week that he planned to leave the current checkoff alone and implement another beef checkoff under the 1996 commodity promotion act.

According to the 1996 language, a checkoff could and likely would be implemented without any vote or official approval from the industry, and a referendum would take place three years after it was implemented.

The current mandatory checkoff, managed by the Cattlemen’s Beef Board and the Federation of beef councils, with the National Cattlemen’s Beef Association as the biggest contractor, has been a hot topic for years, as some livestock groups believe the policy-oriented NCBA uses checkoff funds to offset lobbying expenses.

Three years ago the secretary organized the working group, comprised of many national cattle, beef and farming groups in a last ditch effort to find compromise on the controversial program.

The three main cattle and beef groups in the country responded to Secretary Vilsack’s proposal with a myriad of thoughts.

USCA has remained active in the working group and is excited with the Secretary’s announcement.

“This is the most positive thing for the beef industry in a long time concerning the checkoff,” Kiker said. He said the current beef checkoff will remain “untouched” but that Vilsack’s new checkoff would “put more money into the kitty to promote beef.” Kiker added that the Secretary will be taking comments as he prepares to write the new checkoff language. “I hope the new check-off is done so that everybody supports it, not just NCBA. Hopefully it will not be controlled and manipulated by a policy organization.”

R-CALF USA, which was originally involved in the working group, refused from the beginning to discuss an increase until certain changes took place, and so was asked to leave the group. CEO Bill Bullard said his group doesn’t support the new checkoff concept, as it would create more expense while producers haven’t voiced a desire for added checkoff funds. “The proposal appears predicated on the erroneous assumption that producers want to pay more into the checkoff. Secondly it appears to be a mechanism to avoid making the tough decision to address problems with the current checkoff. It kicks the can down the road for at least three years so we are very disappointed in this proposal.”

Bullard’s group believes that concerns over conflict of interest with the policy-oriented NCBA taking funds from the government-mandated checkoff program must be addressed first and foremost. “They are just acting as if they [the conflicts of interest] don’t exist.”

Minor changes have taken place within the structure of the state beef councils’ roles and in the requirements to be met by potential beef checkoff contractors, said an NCBA spokesman on a media conference call. But in three years the working group members have not found enough common ground to move forward with significant checkoff reforms.

Although National Farmers Union last month withdrew from the working group, saying a positive resolve didn’t appear likely, NCBA past president Scott George said that the working group still exists and will meet later this month. George said the Secretary indicated that if the remaining members of the working group would pull together and find common ground to move forward with changes to the current checkoff, that he may very well put the brakes on his proposed second beef checkoff.

NCBA spokesmen said their group doesn’t believe the secretary’s recommendation is necessary, adding that they are concerned with the ability of USDA to implement a checkoff program with as much efficiency as the current one.

“There are a lot of inefficiencies that we’ve overcome in our current checkoff,” NCBA spokesman Forrest Roberts said.

The organization cited a nearly 80 percent approval rating and an $11-plus return on producer’s dollars. “We are getting all the signals we need, we feel like, to go forward with a program that is going to be more likened to the 1985 Act [the current checkoff] than the idea the secretary has floated out to us,” said Roberts.

Earlier story

During the National Farmers Union Fly-In, the president of South Dakota’s group sat down with Vilsack. The secretary told Doug Sombke and other Farmers Union members that changes to the beef checkoff are forthcoming. Vilsack made a public statement Sept. 8 that the working group has not shown enough signs of forward motion, and he intends to step in and ensure that the beef checkoff is amended.

“Here is what he said, ‘I tried intimidation, tried letting the groups work it out on their own.’” Sombke said Vilsack likened the organizations involved in the Checkoff Enhancement Working Group to bickering children who need an adult to step in with a solution.

According to the Hagstrom Report Vilsack commented on the complexity of the checkoff, “This system is really complicated, I have had staff write me memos, literally draw me pictures. I don’t know how it could be more complicated. In the end my goal is that we have healthy beef industry and that producers of all sizes can survive.”

Sombke, who had represented the NFU on the CEWG confirmed news reports that the group voted to withdraw from further participation in the group.

In its resolution to withdraw from the group, the NFU board said:

“The following reforms are necessary:

• The CBB [Cattlemen’s Beef Board] must have the authority to carry out checkoff projects on its own, similar to other checkoff oversight boards.

• The CBB must be allowed to enter into checkoff contracts with non-policy organizations and private companies, such as ad agencies and public relations firms, in order to prevent policy-driven organizations from using checkoff dollars to fund overhead for political activity.

• The beef checkoff must be completely refundable.

• A referendum on the continuation of the beef checkoff must occur every five years.”

The board recommended that USDA “consider rewriting the beef checkoff program” under the generic Commodity, Promotion, Research and Information Act of 1996, rather than going through Congress to make changes as has previously been discussed.

The secretary said during his presentation to NFU, “We’re all about executive action,” apparently meaning he approves the concept of bypassing Congress and going through the 1996 act.

Some organizations involved in the working group are adamant about a checkoff increase – a doubling of the current $1 per head has been discussed at length – Sombke said, and others are more concerned about making changes to the program. “NCBA and some of the other groups are not willing to move off of status quo. They want to see the money before they see the change and we want to see the change before we see the money. This is a standoff that has got no good resolve,” Sombke said.

Continuing to attend the working group meetings is not a wise use of NFU resources, Sombke said.

The CEWG now consists of: Livestock Marketing Association, National Livestock Producers Association, U.S. Cattlemen’s Association, American Farm Bureau Federation, American National CattleWomen, Meat Importers Council of America, National Milk Producers Federation, National Cattlemen’s Beef Association, Federation of State Beef Councils and Cattlemen’s Beef Board.

R-CALF USA was originally a member of the group but was reportedly “thrown out” of early meetings when their representative refused to discuss a checkoff increase.

R-CALF USA and 35 additional groups, including several state Farmers Union organizations sent a letter on Sept. 11, outlining their joint suggestions to Secretary Vilsack, in particular for dealing with conflict of interest concerns on checkoff contracts.

The joint letter states that the two most offensive and glaring conflicts of interest in the Beef Checkoff Program are that the decision-making Federation is “housed, administered, owned and controlled,” by the NCBA and that checkoff funds strengthen the NCBA’s advocacy efforts because they offset, “if not directly subsidize,” the NCBA’s administrative costs. The letter refers to this offset as cross-subsidization.

The joint letter calls the working group’s proposal “unacceptable,” and urges Vilsack to:

• Enforce the prohibition against conflicts of interest in contracting and all other decision-making operations of the Beef Checkoff Program

• Enforce a prohibition against contracting with organizations that engage in policy-oriented activities.

• Require a legally independent Federation, without affiliation to NCBA or any other private entity.

“The Secretary had suggested that if the industry groups could not come to an agreement, then he would take unilateral action to fix the broken checkoff program,” said Fred Stokes, in a joint news release. Stokes is the spokesman for the Organization for Competitive Markets, who signed on to the letter.

Stokes said NFU’s withdrawal demonstrates there is no agreement even among the self-selected industry groups.

“Our joint letter is intended to provide the Secretary with a much better alternative that will immediately address the most egregious problems with our current checkoff program,” said R-CALF USA Beef Checkoff Committee Chair Joe Pongratz.

The U.S. Cattlemen’s Association, who remains a member of the CEWG, said they believe cattle producers seek substantial change to current checkoff policy.

Bob McCan, NCBA president said his group, as contractors to the checkoff believes producers receive $11.20 return on the $1 per head they pay.

“For the past few years we have met with other industry groups in an effort to find ways to enhance the program to be an even better tool for producer profitability,” he said in an e-mail. McCan mentions grassroots involvement via state beef councils and a 4-1 vote supporting the checkoff in the 1980s that served to put the law in place. He went on to praise the checkoff’s role in developing strong demand for beef and said 78 percent of producers support the checkoff program.

“At the CEWG meetings I sat across the table from the lawyer who helped develop this checkoff,” Sombke said. “I said, ‘it looks to me like this thing was designed to always come back to NCBA’s control.’ He winked at me and he said, ‘You got it.’”

“The Cattlemen’s Beef Board has to have more authority to do things. They need to represent the producers and not just a non-profit lobbying group.”