My View From The Country

Ominous Warnings In The Midst Of Good Times

Our competitors are charging full steam ahead in their attempts to capture market share from us.

Setting aside the short-term conditions where some areas are too dry and some too wet, cattle prices overall are historically high and market analysts expect prices to be steady to higher for a long time. Now, if Mother Nature just begins to cooperate, the future does indeed look bright!

Everyone recognizes that beef demand is the engine for growth, sustainability and profitability. The checkoff and the merged industry structure created to build demand have largely been a huge success, but the industry’s engine is running on fewer cylinders than in the past. Checkoff revenue is falling, not only from a dollar value standpoint, but also in non-inflation adjusted terms.

Tight cattle supplies are a wonderful thing in the short term, but as packing plants are mothballed, feedlot capacity shrinks, per-capita consumption hits new lows, and cow numbers decline, the industry is losing market share at a precipitous rate. Our competitors are charging full steam ahead in their attempts to capture market share from us.

The vast majority of beef producers support the checkoff, but even its most avid supporters recognize that the declining revenue is becoming a major issue in regard to the program’s effectiveness. The bottom line is that fewer dollars means good programs are being cut, staff reductions are taking place, and valuable infrastructure is being lost.

However, it’s generally understood that the political climate right now isn’t conducive to raising the checkoff assessment. While the enemies of the checkoff are a very small minority within the industry, outside entities aligned against the industry would actively oppose it as well. In addition, there doesn’t seem to be a lot of political will right now to fix the checkoff from either side of the aisle.

For instance, Democrats generally question the whole concept of checkoffs, while Republicans are in the minority and not nearly as friendly as they once were. So if raising the checkoff at the national level is largely off the table at this point, it appears the industry must develop and implement ways to increase spending. If it’s done at the state checkoff level, or on a state by state basis, the same political dynamics exist as on the national level, but probably to a smaller degree.

Many states had state checkoff programs in place, or voluntary ones, prior to the coming of the mandatory national program. However, voluntary checkoffs have always been an issue because of some folks won’t contribute to a voluntary program.

And governance is always an issue, because checkoffs need widespread support. A successful program must find that unique balance between ensuring that those who contribute the most are comfortable with how the money is spent, as are the numerically larger group of smaller contributors.

Still, in general, producers seem more comfortable with more local control, and a say in how the money is spent. Additional state dollars would go toward supporting the programs currently being conducted at the state and national levels, but those states would demand more say in determining the programs.

The industry went through a lot of pain and hardship to unite the industry under one umbrella in its aim to increase checkoff efficiency and effectiveness. And the positive results are obvious. But we also know the issues that accompanied that initiative.

 

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I always find it surprising that the public opinion of Congress hovers close to single digits, yet voters tend to like their own individual representatives. In that same fashion, there tends to be a lot of trust in state beef councils and state representatives, but less for the larger national program. As a result, it appears some sort of state by state response to raising checkoff revenue may be the answer.

That isn’t without its challenges, but there’s a growing sentiment within the beef industry that the clock is ticking on finding a solution and taking action. Considering that almost any solution will require not only building consensus but moving through a slow political process, time is even more critical as you can’t develop and implement a strategy overnight.

In the meantime, our competitors are pushing forward aggressively to capture market share. Building demand is the best way to slow industry consolidation and concentration, but the size, geographic diversity, and sheer number of participants in our industry compared to the more concentrated dairy, pork, and poultry industries also means we’ll have a less focused, slower moving process. 

 

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Discuss this Blog Entry 5

Horral Jones (not verified)
on Jul 7, 2013

I would support a $ 2.00 Ck. off ,we must keep our beef Ck. off Program financial strong .

Bob Voegeli (not verified)
on Jul 8, 2013

I too, would support a $2.00 check off.

Tad (not verified)
on Jul 8, 2013

I prefer not being a slave to government tyranny.

Anonymous (not verified)
on Jul 10, 2013

why should we support $2 when the imported cattle do not, if we do not have sufficient numbers of cattle to sell perhaps the industry should figure out why nobody is rebuilding the herds. If there is no profits in the industry there will be less cattle. less cattle less people needed. NO there should not be $2 check off

Anonymous (not verified)
on Jul 22, 2013

FACT: the importers DO pay the beef checkoff at the same rate as producers in the USA pay!

I would support an increase ONLY if the second dollar could go to the Federation of State Beef Councils because they are less political than is the CBB (due to fact that USDA has often overridden the proposed members presented by state beef councils and named others to that board, particularly during this administration).

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What's My View From The Country?

As a fulltime rancher, opinion contribur Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

Contributors

Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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