CattleNetwork: The fork in the road on beef checkoff — What Chandler does not talk about is the “Knife in the back” issue


Former top lobbyist for NCBA, and current VP of government affairs & industry relations at JBS Swift, Chandler Keys offers his view of the beef checkoff: The fork in the road”. What Chandler does not talk about is the “Knife in the back” issue, which is when mandatory non-refundable excise taxes (checkoff dollars) are extracted from U.S. beef producers and then used to finance the very commodity organization that is supposed to stand up for the economic interests of beef producers while systematically working against their interests on behalf of meat packers.

That structurally constructed conflict of interest between the proper operation of the beef checkoff and its primary vendor, NCBA, is the much bigger threat to the beef producers of our nation than any new boogie man scape goat diversion Chandler can manufacture. The meatpackers that Chandler represents want to replace our traditional system of independent, owner operator production agriculture with their own vertically integrated, industrialized international corporate version of the failed former Soviet Union approach to food production. That, is the real threat domestic beef producers face.

All the best,

John K. Hansen, President

Nebraska Farmers Union

1305 Plum Street, Lincoln, NE 68502

402-4476-8815 Office 402-476-8859 Fax

402-476-8608 Home 402-580-8815 Cell

The fork in the road

Chandler Keys | Updated: 07/29/2014

This autumn will mark the 30th anniversary of deliberations leading up to the 1985 Farm Bill. That legislation was noteworthy for several changes in government agricultural policy but most memorable for those of us in the cattle industry was the provision for a national beef checkoff mandated by the federal government.

Beef had taken some big hits in the 1970s – price controls, negative health claims, depressed cattle prices, increased chicken consumption, new environmental regulations – the list went on and on. It was rough times in the beef business. The thought at the time was that the cattle industry needed funds to correct the course of events, and that all producers should contribute to a national promotional effort.

So 30 years later, what do we have? A much better image of beef, without a doubt. The national beef checkoff funds were instrumental in addressing the issues concerning cattle producers at the outset, as well as others that eventually popped up (such as E. coli O157:H7 and BSE). The national beef checkoff also remains extremely popular with producers, and poll after poll prove this. But the real purchasing power of the dollar has eroded over the decades and there is concern that the current $1 per head checkoff amount is insufficient to do all that is necessary for the industry. I wholeheartedly agree the industry needs to find a way to increase the funding. The question is how.

And so, the cattle industry finds itself at a fork in the road.

Some cattle and general farm groups are suggesting we go down the path of increasing the federally overseen national beef checkoff to $2 per head. But I don’t think this is a wise direction.

Here’s my rationale:

First, an increase for the national beef checkoff probably couldn’t be accomplished outside of an omnibus farm bill, which would push it five or six years down the road. The $1 per head assessment rate is rooted in the 1985 law and not something the Department of Agriculture can change through rulemaking or the Cattlemen’s Beef Board can change through policy. My opinion that this change would be years down the road is optimistic given the two year struggle we all witnessed to pass the most recent farm bill.

Second, over time, Washington has played an increasingly participatory role in determining who sits on the Cattlemen’s Beef Board, how the monies are disbursed, and using their authority to subject the industry to costly audits and required releases of information. No rational person can believe this trend will reverse itself given the way the federal government works — it’s just the nature of government. At the same time, beef industry opponents in the marketplace of public opinion are not subject to this oversight. They are free to raise funds without having to hand a portion of them over to the government, and are free to strategize without being required to submit those plans to us. This dichotomy suggests the federally overseen national beef checkoff has outlived its ability to be an efficient tool for our industry to address the real challenges we face today.

The cattle industry over a period of years succeeded in passing the beef checkoff into law, won the producer referendum and ultimately defended its constitutionality in the Supreme Court (the Court ruled the checkoff was a tax, therefore government speech, i.e., a government program). The industry thought they had won a series of major victories during this time period. The hard truth, however, was that we actually had erected a bulls-eye on our industry at which our opponents have taken aim. Through the costly federal Freedom of Information Act (FOIA), interest groups can and do gain access to the intricacies of our research and promotional strategies. And since they have the ability to FOIA the checkoff, beef industry opponents are able to determine how we are trying to respond to their attacks. In essence they can “read our playbook”. A real time example: certain activist groups are combing through industry records they obtained through FOIA to build a case that will question why federal funds are being allowed to promote beef, when they contend that beef has no role in a healthy diet or a favorable place in the federal government’s Dietary Guidelines.

Also understand that the costs associated with fulfilling FOIA requests and government oversight activities are paid for by checkoff dollars – not from general tax dollars. Producers may find this shocking, but over the life of the federal beef checkoff, hundreds of thousands, if not millions, of producer dollars have been spent on providing our opponents a window into our industry’s own strategies.

We are also hamstrung under the federal construct in that if anything we want to do with checkoff dollars runs counter to federal initiatives (like environmental, nutrition or animal welfare policy), the administration of the day can head us off at the pass. Over time the industry has anticipated these conflicts and steers clear before the disagreement becomes public. This is not a healthy relationship.

The road better taken, moving forward, is to seek local solutions. We should focus our efforts to secure (or increase the rates of) as many state checkoffs as we can over the next five years. For instance, Texas producers voted to raise their assessment just last month.

If the states become the solution to our industry’s funding needs, then we would be in a position to jettison the federal program and all its constraints and liabilities. In addition to those states which already have checkoffs, some have a backup assessment apparatus that would become effective if the national program ceases. It is true each state would be different and some states might not make the effort, but so be it. I submit that the industry can manage this and work with individual states to come up with the best solution for themselves. Remember our opponent is not a fellow producer in a neighboring state not paying into a checkoff. This obsession we have with “free riders” just takes us away from confronting our real adversaries. Our opponents are the ones trying to remove beef from the diet of Americans, trying to remove cattle from our farms and ranches, and trying to disrupt our livelihoods.

Under state checkoff models we can still utilize the Federation of State Beef Councils to act as our umbrella organization. As it does now, it would meet on a regular basis to coordinate efforts. Whatever conflict there might be, I think a state-focused approach would be healthy and force accountability, keeping the federal government and our opponents out of our business and away from our dollars. This model would force our opponents to go state by state, denying them the one-stop shop they enjoy in Washington, DC.

We should also request that state programs allow for a refund. Forced association runs counter to our nature. The power for individuals or groups who pay the checkoff to withhold support will force accountability on those who run the programs and give an outlet for constructive dissent and debate.

The fork in the road. I believe the best path forward is to decentralize checkoff efforts, take the control away from the federal government, and get it back where it belongs: closer to those who market the animals, pay the assessments, and are most concerned about handing this industry off to the next generation.