The “beef tax” check off program funnels publicly controlled money into an organization that lobbies for the meat-packing industry and fights antitrust enforcement, says Siddhartha Mahanta.
EDITOR’S NOTE: Siddhartha Mahanta of the New America Foundation says one of the reasons the Obama administration dropped antitrust action against meatpackers was because of the political power wielded by the National Cattlemen’s Beef Association, a trade group supported by a federally mandated marketing fee that ra nchers must pay on each head of cattle.
Imagine if the federal government mandated that a portion of all federal gas taxes go directly to the oil industry’s trade association, the American Petroleum Institute (API). Imagine further that API used this public money to finance ad campaigns encouraging people to drive more and turn up their thermostats, all while lobbying to discredit oil industry critics—from environmentalists to those calling for better safety regulations or alternative energy sources.
That’s a deal not even Exxon could pull off, yet the nation’s largest meat-packers now enjoy something quite like it. Today, when you buy a Big Mac or a T-bone, a portion of the cost is a tax on beef, the proceeds from which the government hands over to a private trade group called the National Cattlemen’s Beef Association. The NCBA in turn uses this public money to buy ads encouraging you to eat more beef, while also lobbying to derail animal rights and other agricultural reform activists, defeat meat labeling requirements and defend the ongoing consolidation of the industry.
Like most things that go awry in Washington, this one started out with arguably good intentions. The story begins in the 1980s, a time when the plight of family farmers and ranchers inspired the likes of Willie Nelson and Neil Young to put on benefit concerts and launch the Farm Aid movement. Another, more enduring response to the farm crisis of the 1980s was Congress’s decision to create what’s known today as the beef “check-off” program.
The idea was to help struggling ranchers by creating a program to pool their money and use it to promote demand for beef. Under a bill passed in 1985, cattle producers were required to pay $1 per head to one of 45 “qualified state beef councils.” These councils in turn contributed to a national program supervised by the U.S. Department of Agriculture (USDA) dedicated to promoting the beef industry.
Older readers may recall the first major result of this legislation, which was a $42 million, 17-month advertising campaign launched in 1993 featuring Hollywood screen legend Robert Mitchum, who proclaimed in his gravelly voice, “Beef. It’s What for Dinner.” Over the years, similar federal programs have come to exist for other food groups, from avocados to popcorn, and have produced such memorable marketing slogans as “Milk: It Does a Body Good,” and “Pork. The Other White Meat.”
All along some have questioned whether it made sense for government to sponsor such programs. There’s the libertarian objection to government imposing taxes generally and otherwise trying to change market outcomes. Meanwhile, medical authorities have been warning for decades that Americans eat too much meat for their own good (to say nothing of popcorn). Mainstream economists point to the inefficiency of using tax dollars to promote competing food groups: When people eat more beef they eat less pork and vice versa, for example.
But at least in its early days, the checkoff program for beef arguably served the interest of small-scale ranchers and in ways that were not directly at odds with the public interest. The $1-per-head tax on beef ensured that no rancher shirked the costs of promoting the industry, while control over how the money was spent was widely shared. Today, however, the program couldn’t be more different than originally envisioned.
Nearly 99 percent of all the beef tax dollars collected by the government, some $45 million a year, winds up in the hands of just one group, the National Cattlemen’s Beef Association (NCBA), which relies overwhelmingly on this public money to support itself. Fewer and fewer actual “cattlemen” belong to the organization, while more and more complain that the NCBA presses for policies that undermine their own way of life and the public’s interest by favoring large packers and other corporate giants.
The ongoing fight over so-called country-of-origin labeling for meat provides a case in point. Cargill, Tyson Foods, JBS and National Beef Packing, which together control 85% of the meat-packing business, strongly oppose having to tell you where the different parts of your hot dog or frozen hamburger patty come from. As a practical matter, they say, it could well be that some parts come from imports that have been broken down and blended with fat from U.S.-fed cattle, making it difficult and expensive to determine which parts come from where.
On the other side of the question are independent American ranchers and most of the American public. In May, a poll by the Consumer Federation of America showed that 87% of adult Americans favor mandatory country-of-origin labeling for beef, while some 90% want food sellers to spell out whether the beef was processed domestically. America’s small-scale ranchers, especially those competing to sell beef raised in humane and environmentally sustainable conditions, naturally want such consumers to be able to tell where their beef comes from.
Nonetheless, the NCBA has joined with other trade groups representing meat-packers, including foreign groups, in suing to block the USDA’s full implementation of country-of-origin labeling. Such a regulation, they argue, would amount to “unduly compelled speech” in violation of the First Amendment of the Constitution. So far, a federal judge has rejected their argument, and the NCBA and its allies are appealing.
Yet independent ranchers complain that they are the ones being compelled to pay for speech they do not believe in. In 2004, they even got a ruling from the U.S. Court of Appeals for the Eighth Circuit, which declared that the taxes the cattlemen have to pay the NCBA are a form of compelled speech that violates their constitutional rights. But the Supreme Court reversed the lower court’s decision in 2005, with Justice Antonin Scalia holding that checkoff-financed speech is “government speech.”
This leaves ranchers like Fred Stokes of Mississippi fuming. The rancher’s own money, he says, is “being used to put him out of business, with government complicity.” Meanwhile, the consumer may ask, “Why is my government turning over tax dollars to a trade group that’s in court trying to keep me from knowing what I’m eating?”
The NCBA argues that it keeps the money it collects from the beef tax strictly separate from the money it spends on lobbying. But this has not always been true. In 2010, the NCBA returned $216,944 to the government after a spot audit revealed that it had misappropriated check-off funds. More recently, an investigation by the USDA’s inspector general initially did not turn up any ongoing examples of illegal use of funds for lobbying purposes. But following charges that the USDA investigation did not meet the inspector general’s own “Information Quality Guidelines,” the investigation report has been withdrawn and is currently, according to the USDA, “undergoing a review.”
Regardless of how the final report turns out, the scandal here doesn’t necessarily involve illegality or how the books are kept, but rather what the law itself allows. Would you be happy if the government gave the National Rifle Association a dollar for every gun sold in the United States on condition that the NRA spend the money strictly for promoting the use of guns and no other purposes? Perhaps you would, but either way, such a flow of public money would without a doubt make the NRA more powerful in everything it did, and with the inherent complicity of the government. If nothing else, the NRA could put the money toward covering its current overhead costs, thereby freeing up resources for other purposes, like, say, opposing background checks.
Conservatives often make a similar charge against Planned Parenthood. They complain that the government funding the organization receives for delivering health services to women, like cancer screenings, increases its capacity to provide services generally, including abortions, even though by statute those dollars can’t be spent directly on abortions. Regardless of your cause, whether it’s gun rights or family planning, it’s nice when Uncle Sam writes you a check.
And in the case of the NCBA, the degree of subsidy is particularly extreme. With its membership having shrunk from 40,000 in 1994 to 26,000 today, only 7% of the NCBA’s revenue comes from membership dues. That means that most of the cost of its overhead, from the $434,477 it paid its chief executive in 2010 to the cost of keeping the lights on and maintaining its web site, comes from public money. As such, the commingling of its public money with lobbying activity is inherent and of great value. If the NCBA didn’t have those check-off funds, says rancher Steve Charter, “they would have a pretty tough time keeping going.” Put another way, without the public money it receives, the NCBA might not even exist, and certainly would not have the lobbying clout it has today.
As it is, the NCBA uses its power to lobby on a broad range of issues besides meat labeling that benefit meat-packers and other concentrated interests in agriculture. Most dramatic has been its successful effort to sabotage the Obama administration’s high-profile campaign to use antitrust law to limit the power of the big packers.
During the initial stages of the antitrust review, the NCBA laid low, saying little over the course of 2010 when the administration held five big hearings on concentration in livestock, dairy and other agricultural sectors. But once the ranchers and other farmers had returned home, the NCBA hit hard, starting with a full-page ad in the Dubuque Telegraph Herald in August of 2011, timed to run when the president was in town for an economic summit. The ad claimed that the administration’s effort to enforce antitrust law would kill 114,000 jobs across the country, cost Iowa’s economy over $630 million and send food prices up by $46 million in the first year alone. “That’s something this country and Iowa just can’t afford,” the ad read.
The NCBA also assembled talking points for Big Ag’s allies in Congress to help them oppose the administration’s efforts. The result: In the heat of the 2010 midterm campaign, 115 lawmakers wrote to the USDA requesting that the agency perform a more rigorous analysis of the reforms in an effort to stymie them. Ultimately, the NCBA’s friends in the House voted to defund the USDA’s ability to enforce the reforms, at which point the agency abandoned the effort.
The NCBA’s assault on agriculture reformers also includes attacks on activists and writers who promote alternative, non-corporate forms of farming and ranching. For instance, according to the Associated Press, Wall Street Journal, and Mother Jones, the NCBA’s “masters of beef advocacy” program has trained more than 2,000 students and farmers to use Facebook, Twitter and YouTube to target people like author Michael Pollan, author of The Omnivore’s Dilemma and other books on the food supply. As one young master of beef advocacy explained in a 2010 interview with Mother Jones, Pollan’s really the “enemy right now.”
The NCBA also does not hesitate to crack down on the free speech and eating habits of government workers who dare to go a day without beef. Last August, the NCBA unleashed an assault on USDA staffers who had sent around a newsletter encouraging their colleagues to participate in “Meatless Monday,” a well-regarded program run by the Johns Hopkins School of Public Health to promote healthy living. “This move by USDA should be condemned,” NCBA president J. D. Alexander said, “by anyone who believes agriculture is fundamental to sustaining life on this planet.” Their allies on the Hill supported the assault: Iowa Republican lawmakers Chuck Grassley and Steve King took to Twitter to gleefully double down on their personal commitment to eat meat. Cowed, the USDA revoked its support for Meatless Monday.
More disturbing is the support of the NCBA’s state affiliates for what’s known as “ag gag” laws. These measures make it a felony in a growing number of states to gather information on inhumane and unsafe practices on farms and processing plants, even prohibiting taking photographs of the facilities from nearby roads or other public property.
The NCBA has also worked tirelessly to prevent states from acting on popular demand for higher standards in the treatment of animals. In 2010, for example, California Governor Arnold Schwarzenegger signed a law mandating that eggs could not be brought in or sold in the state unless they came from hens housed in humane facilities. The NCBA threw itself behind federal legislation, sponsored in reaction to the law by Representative King, that prohibits California and other states from imposing any conditions on the import of food produced beyond their borders. In an op-ed published in June, King singled out the staff of the NCBA for their “tireless efforts” in promoting the measure, boasting that it would offer a stiff rebuke to the Humane Society and its fellow “radical animal rights organizations.”
The NCBA reliably attacks the Humane Society even when doing so puts it crosswise with other Big Ag interests. In 2011, the Humane Society came together with the United Egg Producers, an organization representing the ownership of approximately 95 percent of the nation’s egg-laying hens, to work toward enactment of federal egg production standards. The NCBA slammed the deal, stating that “[c]attlemen are rightfully concerned” that the agreement would “seek unprecedented federal legislation to mandate on-farm production standards.” The bill never made it out of committee.
The NCBA’s hostility to the Humane Society also puts it at odds with many independent ranchers. To be sure, ranchers and animal rights activists have stood for decades on almost entirely opposite sides of all farming issues. But that is changing, as consumer awareness and concern grows over the ethical and public health issues raised by confined animal feeding operations and other forms of industrial agriculture. Ranchers who treat their animals well want the public to know their story, and don’t want to be forced to subsidize a trade group that vilifies their potential customers as animal rights “radicals.”
At the heart of the new alliance sits Joe Maxwell, a hog farmer and former lieutenant governor of Missouri. In 2011, the Humane Society hired Maxwell to work with independent farmers and teach members of the animal rights community that their interests and those of the ranchers are one and the same—sustainability, animal welfare and resistance to the continued monopolization of agriculture by giant agribusiness. Recently, the Humane Society has been providing legal assistance to the Organization for Competitive Markets, a group representing independent ranchers and farmers that has been working to terminate the NCBA’s control over the beef checkoff program.
In doing so, they have picked up the support of Dudley Butler, a lawyer appointed to the USDA by Obama in 2009 but who left in 2012. “This administration is well aware that the NCBA has misappropriated producer contributions,” Butler wrote in a letter to the president last year. “The administration is also aware that the NCBA’s control over the beef checkoff program has helped it and the meat packers defeat major policy reforms sought by independent producers.” Butler’s solution is simple: stop collecting the beef tax.
Even in this era of political gridlock, that may just be possible. In 2012, before leaving to head up the Heritage Foundation, Tea Party firebrand Senator Jim DeMint attached an amendment to the farm bill that would make all the checkoff programs voluntary. Writing in support of the amendment, the Heritage Foundation blasted the checkoff as a flat-out compulsory tax—not an unusual stance for a movement committed to zeroing out government involvement in private enterprise.
With liberals and conservatives for once in agreement, it’s time to have a barbeque. Big Beef subsidies. It’s what’s for dinner.