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USDA Secretary folds on second checkoff; now what?

Troy Marshall

December 24, 2014

4 Min Read
USDA Secretary folds on second checkoff; now what?
<p>By: <span id="spanArtist">David Becker / Getty Images </span></p>

As expected, USDA Secretary Tom Vilsack announced this week that he won’t pursue a second checkoff. The combination of an appropriations bill passed by Congress specifically directing USDA to not pursue a second checkoff, coupled with strong opposition from the industry and a retreat by the National Farmers Union (NFU), left Vilsack with little choice.

Vilsack accomplished what few people thought possible – he unified the cattle industry and got Congress to act in a bipartisan fashion. So where does that leave the discussion regarding the current checkoff program?

First off, the U.S. beef industry is seemingly united around several key factors:

  • The industry wants to control the checkoff and mitigate the influence of government, which has resulted in appointees who have championed political agendas over the best interests of the cattle industry.

  • The industry strongly supports the current program and believes it has been very successful in accomplishing its mission of building beef demand.

  • The industry largely believes that the $1/head assessment in place since 1985 is woefully inadequate almost 30 years later and should be increased.

  • And there is industry consensus that the task of building beef demand is a more complex issue than it was in 1985. Thus, the industry needs a checkoff that can nimbly respond to new challenges moving forward.

Lots of consensus, so why no agreement?

With that much in agreement, one would think that a consensus solution could be advanced and supported. However, there’s one big fly in the ointment – politics.

There is one big issue that resists resolution. That is that the policy side of the National Cattlemen’s Beef Association (NCBA), which is totally separate from the checkoff side of NCBA, tends to espouse positions contrary to those of such groups as NFU and R-CALF.

While R-CALF’s influence is ebbing, both in Washington and in the country, the whole philosophical divide between free market, free trade, and free enterprise vs. the protectionist, pro-government intervention, ant-capitalist view is alive and well. These aren’t views that can be easily reconciled. They especially become problematic when one considers that it is widely believed that these opposition groups believe the best way to affect NCBA on the policy side is via the checkoff.

There is almost universal agreement among naysayers to NCBA that the organization gets too large of a proportion of the checkoff dollars. But that’s a difficult problem to address as virtually everyone also believes that the money should continue to be spent in the most effective manner possible to build demand.

For instance, the vast majority of research dollars go to a handful of land-grant universities. That isn’t because these institutions have excessive influence but because they’re best positioned to do the needed research.

Likewise, when it comes to building domestic beef demand, NCBA’s checkoff side gets the lion’s share as well. The reason is that NCBA’s checkoff side simply has the expertise and infrastructure to conduct these programs. When the cost/benefit analyses are run, NCBA tends to come up the winner.

The same is true on the export front. The U.S. Meat Export Federation (USMEF) garners the lion’s share of checkoff dollars in this venue. And the reason is simply because USMEF was created, and has the expertise and infrastructure, to do this kind of work.

In all three of the above cases, cattle producers are spending their money where it will have the most positive impact. No one disputes that; they just dislike the lack of competition.

One of the big ironies of this whole discussion hails to the creation of the checkoff program. The checkoff caps administrative expenses and puts such tight restrictions on the money that it can’t be a profit center. Thus, only certain groups have developed the infrastructure to accomplish these goals. There is no incentive for other organizations to recreate the wheel and make the investment that these entities have made; and that makes it very difficult for these other groups to compete.

The question is: How does the industry effectively spend its limited resources to continue the stellar job it’s doing with the checkoff, and not continue to allocate the bulk of the dollars to the most effective contractors? As long as groups disagree with NCBA’s policy side, there will continue to be resentment that NCBA’s checkoff division garners the lion’s share of the dollars.

There’s no denying that producers’ overwhelming support of the checkoff is due to the fact that it is highly efficient and effective. But as long as the checkoff is perceived by some as a tool to potentially affect policy issues, it will continue to be caught up in a political battle.


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