Meat Matters
raise the beef checkoff

It’s time for industry leaders to call these groups’ bluff and initiate an increase. 

It’s Time To Raise The Checkoff

Doubling the $1/head national beef checkoff should be a no-brainer. But perceptions about “control” of the checkoff and its spending continue to stymie efforts by various groups to do what should be obvious.

It’s high time that certain other groups realize that all they’re doing is hobbling the industry’s ability through research, beef promotion and other efforts to support all producers and enhance their incomes.

The rationale to increase the checkoff to $2/head is compelling. Just under 79% of all beef producers voted on May 10, 1986, in favor of the checkoff’s introduction. This was after Congress in late 1985 passed legislation to establish the program.

Support for the checkoff last year was 78%, the highest approval in 21 years. A large majority of producers said they see the checkoff as well-managed, representing their interests and contributing to their bottom line. Only 13% last year disapproved of the checkoff. This flies in the face of critics who claim producers are unhappy with how the program is administered, and who is contracted to spend the money.

Consider also that the first full year of the checkoff, the industry raised $36 million, while 2013 revenues were $39.7 million. The checkoff collected $1.212 billion from 1987 through 2013. More important than this number, however, is the fact that return-on-investment studies, required by USDA every five years, have consistently shown a return of about $5.50 for each $1 invested.

Assessments this fiscal year are on target to meet revenue projections of $39 million. Taking inflation into account, this total will be only $17.16 million, compared to the value of a dollar in 1987. Today’s dollar is worth only 44¢ in 1987 terms. This should be reason enough to double the amount levied per head.

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There’s another compelling reason — the vastly increased value of cattle over the life of the checkoff. All beef cattle in 1986 sold for an average $52.60/cwt. and calves for $61.10/cwt., according to USDA data. In 2012, they sold for $113.25 and $168.00, respectively. They sold for even more last year and will do so again this year, as calf prices are currently at $200/cwt.

The $1/head is also paltry compared to what producers pay in other countries. Canada has a national $1/head mandatory levy, while British Columbia, Alberta, Saskatchewan, Manitoba and Ontario raise another $1 or $2/head. These are mostly mandatory but refundable levies.

Meanwhile, New Zealand producers pay $3.60/head, and Australian producers top everyone by paying $5/head. They’ve done this since 2006, so it’s little wonder Australian beef has such a strong presence in Asia.

Individual states have attempted to rectify the absurdly low U.S. assessment. Eight states have an additional assessment. Ohio started its own $1/head collection on June 2, and Alabama and North Carolina also collect an additional $1/head. Idaho, Oregon, Tennessee, Utah and Washington collect an additional 50¢/head. On July 1, Georgia started to collect a $1/head state assessment, and Texas producers likely will implement a $1/head state assessment after a vote in early June. This would generate an extra $8 million to promote beef in the Lone Star State.

Raising the checkoff dues will require an amendment to the 1985 act, affirmed by a referendum. That’s the easier part.

The continued barrier is that several groups insist they will only support an increase if certain conditions are met. In particular, they want the influence they perceive the National Cattlemen’s Beef Association as having over the checkoff to decrease.

It’s time for industry leaders to call these groups’ bluff and initiate an increase. Producers can certainly afford to pay $2/head into the industry’s most valuable research and promotion program.

Steve Kay is editor and publisher of Cattle Buyers Weekly. See his weekly cattle market roundup each Friday afternoon at beefmagazine.com.

Steve Kay's opinions are not necessarily those of beefmagazine.com or the Penton Farm Progress Group.

 

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