Letter from Langdon: The Beef on Checkoffs

Some cattle producers say a tax that is supposed to promote the U.S. beef market is actually being used to hurt domestic cattlemen. Farmer Richard Oswald takes us on a tour of the current beef checkoff program. Better put on your boots, because this might get messy.

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EDITOR'S NOTE: The National Cattlemen's Beef Association has responded to this column pointing out what it considers to be factual errors. We have posted the response the comments section below and noted in the body of the column where NCBA has responded. 

All the way back in 1960, John F. Kennedy said “The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.”

Truer words were never spoken by a presidential candidate.

But there's another farm expense JFK never thought about.

He left out advertising.

Spandex notwithstanding, food markets are inelastic. People only eat until their hunger is satisfied. That means the best way farmers can protect markets is by opening new ones through exports or by vying for a larger market share at home. And that means promotion.

That's how modern day “checkoff” funded marketing began. They were sold to farmers of corn, soybeans, beef, pork and a lot of other stuff as a way to boost sales through research and advertising.

The checkoff programs impose a tax on producers, and the proceeds go toward promoting the commodities these farmers produce. You’re familiar with these programs through their media campaigns like “Got milk?” “The incredible, edible egg,” and, of course, “Beef. It’s what’s for dinner.”

In the beginning, none of these producer-promotion funds were called “taxes.” But Ann Venneman, George W. Bush’s secretary of Agriculture, changed all that.

When U.S. pork producers realized their checkoff-payments were supporting monopolized pork markets, they wanted to end funding for meat-packer funny business. Their recall vote, originally approved by Clinton Agriculture Secretary Dan Glickman, was held in USDA county offices around the country. It passed.  The pork checkoff was DOA. But when Venneman took over, she invalidated the voting results. She said that as a government tax, the checkoff could not be revoked by the very people who created it in the first place. The program was government "speech" that only an act of Congress could change.

While pork producers fumed, most cattlemen continued to view their beef checkoff program favorably. But that changed a few years ago when country-of-origin labeling became the law of the land.

Country-of-origin labeling, or COOL, requires meat to have a label telling where it was produced. In general, cowboys supported the new law. But the National Cattlemen’s Beef Association and their partners – the largest beef packers in the world – opposed it.

Now, pro-COOL cowboys have a problem with their checkoff tax, because as sole contractor for the national checkoff fund, the National Cattlemen’s Beef Association has been using income derived from administering the checkoff to defeat country-of-origin labeling. (NOTE: See No. 1 in the comments below: NCBA says it has not used checkoff funds to defeat COOL.)

The checkoff program creates marketing campaigns for U.S.  beef. Similar programs exist for other sectors such as milk, eggs and pork.

The National Cattlemen’s Beef Association wants to replace the country-of-origin label with one that just says “product of North America,” bringing Mexican and Canadian beef under the U.S. checkoff-funded advertising umbrella. Problem is, foreign beef producers don't pay the American checkoff unless the cattle cross the border and are processed in the United States. (See Nos. 2 and 3 in the comment below. NCBA says it does not want such a label. Also NCBA says that foreign producers do pay into the checkoff program.)

These beef imports defeat the whole purpose of country-of-origin labeling. It was beef imports from Australia that spurred the idea of COOL in the first place.

So U.S. cattlemen are incensed not only by NCBA’s stance, but by the association’s recent efforts to double the checkoff tax from $1 to $2.

Using checkoff funds to market of foreign beef is the equivalent of AAA telling GM to advertise Toyotas.

Unlike the pork producers, most cattlemen aren't asking that the tax be revoked. What they wanted was for promotion funding to be divided fairly among all cattle producer groups. That’s when NCBA came up with the idea of doubling the tax. They want to keep their $1 cake, eat it, and get a shot at some or all a second dollar in funding. And they want to hand the whole bill to the cowboys.

Secretary Tom Vilsack countered with a tip-of-the-hat to NCBA combined with a poison pill: add another dollar to the tax, but use it to fund alternatives to NCBA. He also proposed that there be no producer referendum on the checkoff for at least three years.  But at the end of three years, maybe there could be something similar to the vote that the pork producers took.

A lot can happen in three years following a presidential election.

The Cattlemen’s members deny using beef-producer tax money to lobby against country-of-origin labeling. But the fact remains that the National Cattlemen’s Beef Association handles $500 million a year in checkoff tax. (NOTE: See No. 4 in the comment below. NCBA says the the checkoff program generates about $80 million a year.) That funding pays for a lot of employees and office space they wouldn't otherwise have, and there’s not much government oversight that comes with that money.

So while they fail to stand up for cowboy members’ rights, NCBA benefits from taxes these same cowboys have to pay.

Soldiers, sailors and Marines wear the flag proudly. There's no doubt in anyone's mind where they come from. But where food choice is concerned, packers and some retailers want to buy cheap around the world and slap on a familiar brand label so consumers can't see a difference.

And, like Jack Kennedy knew, guess who pays the freight?

Richard Oswald, a fifth generation farmer, lives in Langdon, Missouri, and is president of the Missouri Farmers Union.

 

Topics: Ag and Trade
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