My View From The Country

Two Views On The OIG’s Checkoff Audit

The OIG report proves that producers’ money is being spent according to the act and order, and being overseen tremendously well.

The recent Office of the Inspector General (OIG) report on the national beef checkoff was much anticipated – by everyone on both sides of the program. Essentially, OIG found what everyone already knew – that the program is operating according to both the law and USDA regulations, and there are no compliance issues. Thus, there was no evidence of any misuse of funds, which opponents of the checkoff have been insinuating for years.

I suppose there are two ways to look at the report:

• The industry should be both proud and relieved that there was absolutely no improper use of funds. The processes that had been so painstakingly developed to ensure that dollars are spent wisely and effectively are working.

Not only did the audit validate the processes and the efforts of all of the industry’s leaders who worked so diligently to make the checkoff successful, the report even provided much-needed recommendations to USDA’s Ag Marketing Service to help improve the processes.

• The second way to look at the OIG report is with a real sense of disappointment. How could we have wasted so much time and effort on this issue? How did such a vocal and radical minority create so many problems? This was an indictment of the selection process that failed us miserably and hasn’t been corrected.

Everyone believed that the OIG report would be political and that, by its nature, would have been influenced by the administration and the USDA Secretary, but that doesn’t appear to have happened. I think both sides were shocked that the outcome was so universally favorable.

The checkoff has been a great help in stabilizing beef demand and a tremendous investment for producers, but everyone also knows that we are doing far too little as an industry to build beef demand. Supplies become less relevant in times with growing demand, and all-consuming in times of falling demand. Supplies are economic drivers primarily in the short term.

Do you want to know the future of the beef industry? All you really need to know is what future beef demand will be. Demand should and must be the industry’s primary focus, and nobody would argue that we’re doing enough to ensure that beef is competitive.

A Closer Look: Raise The Beef Checkoff

The obvious conclusion is that we must invest more dollars, and invest them more wisely, if we’re to enjoy sustainable success in the future. That seems to make the case, as many in the industry are, that it’s time to raise the checkoff assessment. Declining numbers and declining purchasing power are shrinking the impact of the checkoff almost on a daily basis.

The OIG report proves that producers’ money is being spent according to the act and order and being overseen tremendously well. The OIG report didn’t address the fundamental problem with the checkoff, which is that it’s severely limited on what aspects of the demand equation it can address. Governance and administration has proven itself to reflect the very worst side of political gamesmanship, where sides elect to fight their battles using the checkoff as a tool because of the potential to manipulate the system.

Many industry leaders believe that the checkoff has avoided that and worked perfectly since its inception, and that the last several years of political chicanery were an anomaly we likely won’t see again. The more cynical of us recognize the checkoff has traditionally risen above the political gamesmanship based on the strength and commitment of the volunteer leaders. However, we also recognize that the political gamesmanship occurred despite the fundamental structure that underpins the checkoff. The utter failure to address and fix the nomination process makes it clear that the checkoff will always have the potential to take its eye off the prize of building beef demand and be a tool to try to shape policy.

Nobody who has looked at the history of the checkoff has any concern about whether the dollars will be spent appropriately or toward building beef demand. Yet, many remain concerned that the governance structure that allowed the problems to occur hasn’t been addressed. Thus, there’s little impetus to increase funding when it could once again be hijacked by those with a political ax to grind.

 

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I’m convinced the industry’s leaders are 100% correct in seeing the necessity to increase the amount of dollars this industry invests in building beef demand. They’re also correct that the checkoff and the structures created to build beef demand have far exceeded anyone’s expectations.

The question seems to be – what is the best way to move forward and increase our investment in building beef demand; it’s not whether our investment should be increased. Is the checkoff the correct vehicle? Do we need to address the limitations of the checkoff, or do we allow the checkoff to continue as it always have and develop a new entity that will be better able to focus on building beef demand?

With the accusations and innuendos finally put to rest, it’s probably time for the industry to have this debate. It’s likely to be the most important decision that the industry will make.

 

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Discuss this Blog Entry 2

check off supporter (not verified)
on Apr 5, 2013

If all people who pay the check off truly understand how this sometimes confusing system works, it is an excellent tool for its intended purposes. Since however it is complicated, then some may be confused or worse, misled. With the latest events an attempt to file a lawsuit was initiated by habitual nay sayers of this successful program that was funded and pushed by none other than HSUS. Any one involved with animal agriculture ought to immediately recognize this isn't going to be good for our industry. Any one left cheering for that action better find a new vocation as HSUS could care less about them, but was only involved as it was a wedge to divide and conquer. Fortunately, even the attorneys could see the end result and managed to wiggle out of this fiasco.
I encourage anyone with questions to go directly to the horses mouth and find the answers your own self, do not rely on someone else's opinion.

W.E. (not verified)
on Apr 5, 2013

The best way to decrease demand for any product is to tell customers what they should want instead of listening to what they really want. The beef industry continues to insist that the following chain of production is the most "efficient" way to produce quality beef, and that cattlemen must follow this process to produce quality beef that will meet customer demand: 1)raise calves to weaning on local farms around the country; 2)bunk-break and precondition calves after weaning, administering a battery of respiratory vaccines to prevent shipping fever; 3)ship calves halfway across the country to feedlots that are losing $100 per head feeding grain; 4)feed antibiotics, implant hormones, and use steroids, to push calves to finished weights quickly, before they die of acidosis; 5) process the calves in large centrally located packing plants; 6)ship the meat back halfway across the country for distribution through retailers.
The best way to increase demand for beef is to listen to what customers want and then provide it. What parents want, for example, is beef that is unequivocally safe to feed to young children. Most beef customers who buy direct-marketed meat want it to come from locally produced cattle that are naturally free of hormones, antibiotics and steroids, raised humanely on grass. Grass farmers and ranchers can actually do that locally, saving transportation costs, and drastically lowering the risk of death loss by keeping their calves at home. Their customers generally don't care if finishing the calves on the farm takes a few months more than feedlot finishing. A farmer or rancher can afford to take a little extra time if he gets to pocket some extra income for his trouble. The checkoff hasn't focused its resources on re-building local markets, nor spent much to determine or confirm what consumers really want.

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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.

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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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