Farm and Food File for the week beginning Sunday, Oct. 12, 2014
Want reform? First audit
Secretary of Agriculture Tom Vilsack stunned the cowboy crowd Tues., Sept. 30, when, in a one-sided meeting in his office, he told seven members of the nearly three-years-old beef checkoff reform effort that if they didn’t find common ground soon he might impose a second beef checkoff that would double the annual, non-refundable collections of the now-$80 million federal program.
The Secretary’s out-of-the-blue idea is rooted in two recent developments.
First, the reform effort, composed of 11 farm and livestock groups with either a passive interest or an active role in the 28-year-old beef checkoff, failed to offer Vilsack one solid idea to reform the long-controversial checkoff.
The key reason, say several members, was the National Cattlemen’s Beef Association, the checkoff’s biggest contractor, that blocked any proposal that might loosen its grip on the $40 million in checkoff contracts it handles most years.
Secondly, Vilsack’s second dollar idea comes on the heels of a Cornell University study that claims beef checkoff spending produces enormous benefits for cattle producers and importers who pay the vast majority of it.
At least that’s the way the “Return on Investment” report was presented to cattlemen by the checkoff’s Cattlemen’s Beef Board, CBB, when rolled out last July 31. (Links to sources posted at http://farmandfoodfile.com/in-the-news/.)
“In the most comprehensive study ever rendered about the Return on Investment (ROI) of beef checkoff assessment,” crowed a CBB press release, “Dr. Henry Kaiser of Cornell University concludes that each dollar invested in the Beef Checkoff Program between 2006 and 2013 returned about $11.20 to the beef industry.”
Cattle-ranching members of the CBB that commissioned it immediately derided the study and several of its conclusions.
“When you dig into this,” explains Chuck Kiker, a CBB member from Texas, “it’s not clear if the study only looks at the federal side—half—of the spending across those years. Does that mean what the states spent doubles the impact? I don’t know.”
David Wright, a CCB member from Nebraska, is more direct: “Can anyone believe every dollar the checkoff spent for eight years returned $11.20? That’s an incredible number so my question is, if so, who got the money? Ranchers? Feeders? Packers? The study doesn’t say.”
Wright is right; so is Kiker.
The study’s author, Cornell’s Harry Kaiser, when reached by telephone Oct. 7, explained that, indeed, only the CBB’s national half of total checkoff expenditures from 2006 through 2013 were examined for market impact. The other half, or about $325 million over the eight years studied, was not included in the analysis.
When asked how the analysis was able to determine the “economic effectiveness” of the broad, national checkoff programs when dozens of state programs were operating at the same time in local markets all around the U.S., Kaiser admitted that local checkoff “noise” was “a little bit of a problem.”
“If you added in the state dollars,” Kaiser noted, “you’d get a similar impact. It’s not much of an issue.”
In the report, Kaiser also explains that key elements of his analysis relied on data from both the CBB, who paid for the study, and NCBA, the chief contractor of CBB.
C. Robert Taylor, the Alfa Eminent Scholar and Professor of agribusiness structure and concentration at Auburn University, sees both as yellow flags. “Independent studies, by their very name, suggest independent sources, not in-house numbers,” noted Taylor by telephone Oct. 8.
A spokesperson for the CBB, when asked if he saw a conflict of interest in the CBB supplying its data to its contractor to write a report on the effectiveness of its programs through another contractor—who also supplied data for the report—offered no answer.
Yep, year-in, year-out, meeting after meeting and report after report, nothing ever changes in the beef checkoff.
Here’s an idea that might change it: Rather than double the checkoff, the Secretary should order a thorough audit of its books–audit the same years studied by the Cornell ROI report for contrast—to, finally, answer every question anyone in beef biz ever had of the checkoff.
Audit. Now. Please.
© 2014 ag comm
The Farm and Food File is published weekly through the U.S. and Canada. Past columns, events and contact information are posted at www.farmandfoodfile.com.