Many of the major American agriculture groups came together earlier this year to sign a Memorandum of Understanding regarding a proposed change to the national beef checkoff. The discussions were contentious at times, and at least two of the groups dropped out of the discussions due to disagreements.
The discussion included more than how to raise the checkoff from 1 to 2 dollars per head sold. Several major proposals to enhance the checkoff came out of the discussions as well.
“We came to a point in the discussions where we wanted to know what else we could do to enhance the checkoff,” said National Cattlemen’s Beef Association Past President Scott George. “It took a lot of compromise across the board to get things done. We focused in on 4 main areas.”
Scott George is a dairy farmer and beef producer from Wyoming, and he served as the President of the NCBA in 2013. (photo from BeefMagazine.com)
“If you debate a hundred different things,” said George, “you’ll never get agreement on all of them.”
The first discussion item was the biggest one, and it was how much to actually increase the checkoff.
“There were people that argued strongly that Australia is charging $5 a head on their checkoff,” said George. “Canada is charging $4 a head. These countries are competitors, and there were people in the room saying we need to collect $5 a head to compete with these folks.
“Others were saying to get back to par we need to collect $2.20,” said George, “but $2.20 is not easy for people to figure out. Let’s say you’re selling 137 head of cattle. A checkoff collector would have to multiply 137 by $2.20, and that’s not simple.”
When the group was putting the proposal together, representatives from the Livestock Marketing Association and the National Livestock Producers Association, which are both auction market associations, were involved in the process. George said they wanted to keep this process as simple as possible.
George said, “In the end, the group said let’s raise it at least a dollar. Let’s go to 2 dollars, because it’s simple and clean. Everyone can understand it. So the group compromised on the money.”
For each head of livestock sold, beef producers currently pay $1 per head to the national checkoff. A new proposal would change that to $2 a head, but have a refund available for producers who don’t want to pay the extra dollar. (Photo from angusbeefbulletin.com)
George said raising the checkoff amount requires an act of Congress. The group came up with an idea to make the process a little simpler.
“We proposed a change in the referendum process,” said George, “in which you can petition to change the checkoff amount in the referendum process, rather than requiring an act of Congress. So, we compromised on the dollar amount, and going forward, if in 5 to 10 years we feel like we need to raise more money, we do it through the referendum process and producers have the final say.”
George said when you talk about enhancing a program like the checkoff, there are a lot of costs that go into it. The idea of cost to producers led to talk of a refund policy.
“We decided the second dollar would be refundable,” said George. “If you don’t like it, you can get your money back. We thought of putting requirements in the agreement, like maybe they should have at least 10 cows. After all, it costs money to do a refund. Someone has to sit down, do the paperwork, and mail the money back to you. We also talked about charging producers a fee, but in the end, we said that’s not fair.”
George added, “If a person wants a refund, they should get the full amount, whether it’s a dollar for 1 head, or 10 dollars for 10 animals. A big selling point to this is we have people in Congress that don’t like checkoff programs, and the fact that constituents can get their money back for any reason might help us with Congress as well.”
He added that the initial $1 collected today would remain as it is with no refund allowed. This would maintain financial stability for the state Beef Councils and at the national level they can plan on a certain amount of money to run a program.
“In this Checkoff Enhancement Working Group,” said George, “some strongly advocated for a mandatory referendum every 5 to 7 years. But to do a referendum would cost the checkoff into the millions of dollars.
“Some members of the group strongly objected, saying they weren’t paying into the checkoff to spend millions of dollars every 5 years to see if they want to keep the program.”
The group then looked at several different checkoff programs as potential models of what they’d like to see. Currently, there are 19 different checkoffs with varied models in use.
“The checkoff that the group liked the most was the soybean system,” said George. “In the soybean model, the Secretary (of Agriculture) designates a certain time period every few years. During a certain month, the Secretary will say everyone can go to their government agency office to verify they are a producer who’s qualified to do this, and sign a petition for a referendum.
“If 10 percent of the producers sign the petition,” said George, “then the Secretary will hold a referendum.”
One of the big reasons for changing the petition process is consistency.
“There was a petition drive a few years ago,” said George, “and there were 3 different reprimand letters issued by the USDA because people were holding drawings for things like hats and boots. People were signing up thinking they were just registering for a drawing. In reality, there were signing a petition for a referendum.
“The USDA had to go back and hire an outside firm to take all these signatures that had been submitted and verify that they were producers,” said George. “When many of the people were called, they said ‘we don’t know what you’re talking about. We’ve never owned cattle in our life.’
The US Department of Ag had to verify producers knew they were signing up for a referendum when they were told it was just registering for giveaways. (photo from commons.wikimedia.com)
George said, “This is one of the issues we’re trying to address. By having producers go to an FSA office or Extension building, setting aside a set period of time, and having it every 5 years, we thought this would be a good compromise.”
The Checkoff will still bear the cost of the referendum, but the USDA would help bear the cost of gathering the signatures. Producers could petition for getting rid of the checkoff, or even increasing the amount of the checkoff through the process too.
George added, “If, in 5 years, during the month of January 2020, the Secretary will say the beef producers can go in, sign up, and if ten percent of them go in and say they want to increase the checkoff to $2.50 a head, they’ve then petitioned for a referendum. The process allows you to step forward for an increase, or to eliminate the program as well.”
He said this was yet another compromise in the process.
“Under our current law (the 1985 act), if 10 percent of the producers sign a petition at any time, and request a referendum,” said George, “the Secretary of Ag will hold a referendum. We thought that was a good safeguard; so let’s leave that one in there as well. So, if producers get upset with the checkoff for any reason and ten percent sign the referendum, then bang, the Secretary will have a referendum and we’ll have a vote.”
George said it was important to the Group to give the producers the final say in whether or not the checkoff will continue.
“Under this whole process, we’re talking about working through Congress to get it passed, get the President to sign it, and then get the Secretary to write the order,” said George. “But before it would be enacted, it will all have to go before the producers in a referendum. The producers need to have the final say. The Group was unanimous on that declaration. Nobody needs to force this down someone’s throat.”
The last thing the Board did was deal with some confusion over the involvement of industry groups in the checkoff.
“The checkoff benefits every cattle producer in the country,” said George. “I don’t care what segment of the industry, be it cow/calf, stocker, feeder, or dairy. I don’t care if they raise bucking bulls or roping steers. In the end, it brings value to every single segment.”
He added, “It’s not political. Just because NCBA does some of the checkoff programs, it doesn’t mean only buy cattle from NCBA members. It’s fallacy to think that. But there are other industry organizations that want to be involved.”
George said it’s important to remember that the group that has authority over the checkoff is the 20 member operating committee, which has ten Federation seats and ten Beef Council seats.
“Right now, the Beef Board has a separate nominating committee that interviews candidates for the Beef Board seats. The Federation (of state Beef Councils) has a separate nominating committee to interview candidates for their seats. So we came up with a compromise in the interview process.”
He said the Beef Board nominating committee has 7 seats, and the Federation nominating committee also has 7 seats.
“What we’re proposing is 7 additional seats be given to industry organizations that want to participate,” said George. You’ll have a 21-member nominating committee to interview candidates for the Federation and the Beef Board seats. They will have to receive a two-thirds majority vote to move that candidate forward.”
One group in particular didn’t like that suggestion, but George said there were good reasons for it.
“They said ‘we just got all the policy people kicked out of here,’” said George. “But other groups said having industry organizations sitting in the room looking at the quality of candidates and helping with the decision gives them ownership and involvement. It can’t help but educate the people about who they are interviewing and what we’re trying to accomplish with the checkoff.”
The goal of this process is to get qualified candidates for the Beef Operating Committee.
“This idea was a compromise, just like the others,” said George.