Dueling Beef Taxes, By Gilles Stockton
Dueling Beef Taxes
I have been trying to wrap my mind around Secretary Vilsack’s proposal for dueling beef taxes – a new tax running in parallel with the old beef tax and producers paying twice. I have a problem with the old NCBA run beef tax. It is not that I oppose the goals of that tax but rather that I object to funding the NCBA through that tax. If the members of the NCBA want to oppose Country of Origin Labeling (COOL) and are in favor of non-competitive monopolized livestock markets, then that is their business. They may be misguided and doing the livestock industry a major disservice, but it is their constitutional right to be wrong. I just object to them being wrong on my dime.
I know that there are many many producers who are just sick and tired of this controversy and would like for the Beef Tax to be reformed and everybody just get on with the job at hand. The trouble is that it is not possible to reform the beef tax because the 1985 Beef Act that authorizes the beef checkoff is written in such a manner that it gives the NCBA the right to control the operating committee. It is this committee in turn, which decides how to spend the money. Ninety seven percent of the time they decide to fund projects through the NCBA. It is all one big conflict of interest.
In my reading of the Act, neither USDA nor, for that matter, NCBA can alter how the beef tax funds are administered. The only mechanism for reform written into the Act is for 10% of producers to request a referendum and then for more than 50% of producers to vote to repeal the entire program. We would then all need to vote in a new beef tax.
This is where Secretary Vilsack’s proposal for a new beef tax comes into the picture. His proposal is to set up the new tax under the 1996 Generic Checkoff Act. This Act is more flexible and allows the industry discretion on how the tax funds are administered. The most important change needed to make any checkoff tax honest is to prohibit any policy advocacy organization from being qualified to receive funds from the beef tax. The problem I see with the Working Group’s proposal for a “non” reform of the Beef Tax Operating Committee is that they all want into the gravy train. This Working Group has been wasting these past 3 years having meetings to come up with this grand non-solution. None of them, not Farmers Union, Farm Bureau, US Cattlemen’s nor NCBA, should be allowed a dime of beef tax money. Farmers Union, to their credit agrees with this sentiment and has backed out of the so called deal. Note that R-Calf was never a party to this nonsense.
All mixed in with this complicated turmoil of accusations and counter-accusations is NCBA’s desire to double the Tax to two dollars per head. The problem NCBA has is that the 1985 Act does not allow for increases in the levy. Their tactic is to do it state by state. Having a dueling Checkoff, one under the 1985 act controlled by NCBA and another under the 1996 Act going to the other members of the Working Group, seems to be Secretary Vilsack’s compromise solution.
To bolster their case for doubling the checkoff, NCBA’s propaganda division has been working overtime telling us that a majority of producers favor the Tax and point to a study, that the checkoff paid for, which concluded that for every checkoff dollar spent, the industry got eleven dollars in return. Given NCBA’s record of truthfulness I tend to not believe a word of it. I know enough to know that an economic study is only as good as the assumptions that go into it – garbage in garbage out.
Then we have the claim that a majority of producers overwhelmingly favor the beef tax. Why wouldn’t they – they don’t pay it. The owners of the one third of the cattle raised in the western brand states pay twice as much as the producers in the other two thirds of the country. We pay every time a cow changes hand because the brand inspectors collect the money. In the rest of the country only the cattle going through auction barns ever get levied for the beef tax because there is no mechanism to collect the tax on private treaty sales. If the NCBA wants more money, get the free riders to pony up and leave us westerners alone.
There is one thing that Secretary Vilsack can do that would help. He can invalidate the merger between the National Cattlemen’s Association and the Beef Federation that happened back in 1996 on the obvious grounds that it is a conflict of interest. The NCBA would still have inordinate influence over the disposition of the beef tax funds but at least the non-NCBA members on the Beef Board would not feel so out gunned. What the rest of us can do is sign a petition to request a vote on the beef tax. After all we now have a whole generation of cattlemen and women who are too young to have ever voted for the tax. They should have the right to say if they wish to continue the program. If the younger generation wants to continue the program as is, then so be it.
Grass Range, MT