Meat Matters

It’s Time To Raise The Checkoff

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Support for the checkoff last year was 78%, the highest approval in 21 years.

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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Discuss this Blog Entry 10

on Jun 27, 2014

I suppose the smallest beef herd in 50 years should be attributed to the failure of the check off as well?

Calvin Christensen (not verified)
on Jun 27, 2014

There needs to be a checkoff levied on beef commodities traders, there are a lot of people making money on cattle that do not pay checkoff, make sure everyone who profits from cattle pays their fair share and you would have less resentment and resistance from me.

Richard Porter (not verified)
on Jun 27, 2014

I guess I'm one of the 13% that thinks this program is poorly managed. The check offf has done nothing but make a few people very rich. Until they get this program doing what it was meant to do there is no need to raise the check off fee.

Casey Story (not verified)
on Jun 27, 2014

The checkoff dollars are primarily paid by those who only receive 10 cents of every dollar spent on beef at the retail level, that would be at the farm gate. I also don't understand this arbitrary value of raising it $1. Why not $0.25 or $0.50? Just because we have a great rate of return at the current level, doesn't mean that adding another dollar would keep that rate constant, certain to decrease. We also shouldn't raise it just for the sake of raising it because of economic factors, such as inflation and value of beef. Many factors outside of the beef checkoff contribution have lead to the increase in the value of beef. Could the reason of the minimal increase of checkoff contribution be the decline in cattle inventory, therefore the decline in opportunity to collect funds? Not totally against it but I don't see the strongest argument. Also these checkoff funds primarily fund an organization, the NCBA. Yes the beef checkoff funds have a strict guidline by what they must be spent on but by NCBA being defined as a "contractor of checkoff funds" I can't see where they don't receive some in operating costs. I have never hired a contractor and have them just charge me for the materials. There is always labor and overhead costs associated with it, which always can be subjective. So when 80% plus of the funds are driven through one contractor, and that same contractor derives much of its funding from the Beef Checkoff dollars, and we know contractors don't just charge for materials, a raise in checkoff dollars, would seem to me to mean a raise in income for the NCBA.

Meamber (not verified)
on Jun 28, 2014

It is time to fold the program, rather than make producers contribute more. Consumers will continue to buy beef and the retailers will still advertise to sell more of their beef. The Checkoff is a tax on the ranchers to help finance the NCBA, the meat packers and the retail stores.

Curtis (not verified)
on Jun 28, 2014

Its easy to be conservative and wish to stand by and do nothing but to put effort towards a program that will keep us in the drivers seat of our Industry. Can we honestly stand by and idle at where we are at and someday look back and say we should of done it, I think that will be too late then. No pain, no gain they say so lets step up to the plate and be players not bystanders.

Meamber (not verified)
on Jun 28, 2014

Yes, I am conservative about continuing the program, because I don't feel there is enough oversight and transparency as to how the money is spent. The funds are being dumped down a rat hole to benefit wealthy people.

JustRanching (not verified)
on Jun 30, 2014

I completely support the check-off and agree that it should be raised. While we the producer can't afford to each individually advertise, research and promote the beef industry a few dollars from each sure can. For instance the new advertisements on pandora reach the millinials in a way we can not. Or the research put into how the money is better used through social media advertisement rather than tv commercials? Yes many of us don't see where the money is being put to use, but then again we aren't the target audience so we really shouldn't. Also nutritional research is funded through this program. Some money is put towards NCBA, which rightfully so... They fight at the national level for our way of life and shut down a lot of things that we do not realize could have became an issue. Each and everyone of us is titled to an opinion but I think that many of you would be shocked at how much the program does for us if you looked further into it.

Tom G. (not verified)
on Jun 30, 2014

NCBA is fighting hard to kill COOL even though all segments of the beef industry are profitable. 82% of the NCBA's operating budget comes from the beef checkoff. Why give the NCBA a raise when they do such a poor job?

maxine jones (not verified)
on Jul 6, 2014

I have supported the Beef Checkoff from the beginning, and will continue to do so.

Perhaps part of the money needs to be spent directly refuting lies so easily claimed about use of the Beef Checkoff dollars. Few ever dispute the lies, so more people with little knowledge of the law and programs tend to believe the lie even when it lacks any common sense!

There are rules in place, strictly followed, to prevent mis-use of funds. Contracts are on a cost recovery only basis. Expenditures must be approved and oversight assures honesty of programs. Those who do not want it to succeed persist in attacks, which is sad considering the number of UNPAID VOLUNTEERS who work so hard to achieve the work of the Beef Checkoff.

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