Food & Power: Big Beef Seeks to Expand its Tax on Oklahoma Ranchers

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Big Beef Seeks to Expand its Tax on Oklahoma Ranchers​

Big Ag is back on the offensive in Oklahoma, less than a year after voters defeated a bill that would have stripped the state’s residents of their ability to regulate corporate farming. The Oklahoma Cattlemen’s Association wants ranchers to pay an additional $1 tax per head of cattle sold in the state, and will hold a November 1 vote on the tax for Oklahoma cattle producers. Family farm advocates say that much of the money collected under such checkoff taxes is funneled to private industry groups that use it to promote the interests of corporate agriculture over independent farmers.

According to Oklahoma state law, the November 1 vote is open to “any beef producer, regardless of age,” if they would be required to pay the checkoff tax. The Oklahoma state law also allows out-of-state producers who sell or own cattle in Oklahoma to vote. To bring the vote, the Oklahoma Cattlemen’s Association collected 5,150 signatures from cattle producers, some of whom live in other parts of the country. Supporters of expanding the checkoff tax program in Oklahoma include the Oklahoma Farm Bureau, the Oklahoma Cattlemen’s Association, and American Farmers and Ranchers.

Joe Maxwell, executive director of the Organization for Competitive Markets, says that allowing “outside interests” to vote on expanding a tax that applies to Oklahoma producers is “just cheating.” He says that the rules allowing such a broad scope of voters are “really against farmers and ranchers in Oklahoma.” This week, OCM filed a complaint with the Department of Agriculture against the checkoff expansion, and requested an audit of the state’s beef checkoff program.

The Oklahoma checkoff program is administered by the Oklahoma Beef Council (OBC), a group that is affiliated with the National Cattlemen’s Beef Association, the national beef industry trade association. The OBC collects the $1 assessment that each rancher pays per head of cattle sold as part of the federal checkoff mandate. The group then sends fifty cents of each dollar to the national beef checkoff, and retains the remainder for, it says, state-specific “promotion, consumer information, research, and education.” Currently, the OBC retains around $800,000 each year from the federal checkoff tax. The proposed additional $1 per head tax would go entirely to the OBC, thereby tripling the amount of money the group controls.

The vote comes just months after the former accountant of the OBC, Melissa Day Morton, pled guilty to embezzling over $2.6 million from the checkoff program between 2009 and 2016. Morton faces over 30 years in prison. This recent scandal and a reported lack of transparency from the group about how the scandal was handled have left some wondering if the expanded tax effort is meant to patch the budget hole left by the organization’s fiscal mismanagement.

The national beef checkoff program was approved by Congress in the 1985 Farm Bill, and was conceived as a way for ranchers to promote consumption of beef. Yet in the years since, farmers and ranchers have repeatedly fought checkoff programs in court, in statehouses, and on Capitol Hill, arguing that the monies end up being spent in ways that mainly benefit large-scale farms.

Last November, the Ranchers-Cattlemen Action Legal Fund filed a lawsuit against the Montana state checkoff tax. They argued that the Department of Agriculture was not appropriately overseeing the use of checkoff funds for advertising and promotion, and as such the Montana Beef Council’s use of checkoff money to fund promotions that benefit industrial beef production amounted to “private speech governed by the First Amendment.” In June, a U.S. District Court passed an injunction against the collection of the state beef checkoff tax, ruling that the mandatory tax did indeed violate ranchers’ First Amendment rights.

Paul Muegge, vice-chair of the Oklahoma Stewardship Council, says he has “grave concerns” about how the Oklahoma checkoff program has been managed. He notes that as the economic context of ranching has changed dramatically with the rise of consolidated, multi-national meatpackers, checkoffs have become tools of the largest meatpackers.

In November 2016, Oklahomans voted on State Question 777, another attempt by corporate agriculture to increase its power in the state. The bill would have expanded the state’s so-called “right-to-farm” legislation, which would have made it much more difficult for the state to pass new environmental, animal welfare, and water regulations in the state. Supporters of SQ777 included the Oklahoma Farm Bureau, Oklahoma Pork Council, and Oklahoma Cattlemen’s Association. Voters defeated SQ777 by 60 percent to 40 percent.

Maxwell says that the victory over SQ777 has emboldened advocates and ranchers in the fight against corporate agriculture in the state, including the current fight against an expanded checkoff tax. “That win gives us confidence and evidence to tell others, you can take a stand and you can win,” he says.

In March, Senators Mike Lee (R-UT) and Cory Booker (D-NJ) introduced the Opportunities for Fairness in Farming Act, which would require audits of federal checkoff programs and prohibit checkoff tax funds from being used by large corporations to promote anticompetitive behavior.

Ranchers in several other states, including Alabama, Ohio, and Idaho, have approved state-level checkoff programs in addition to the funds collected from the federal checkoff tax. But not all efforts to bring a new state tax have succeeded; in 2016, 75% of ranchers in Missouri voted against an expansion of that state’s checkoff tax. Beef producers in Minnesota also voted down a state beef checkoff in 2014.

What We’re Reading

· Syngenta settled a lawsuit with 22,000 Minnesota farmers, who claimed the company marketed its genetically-modified corn seed before it was approved for import by China. Around 350,000 corn growers across the country are involved in lawsuits against the company, alleging that the company’s rush to get its seed to market depressed corn prices for five years, after China wouldn’t accept imports of the corn. In June, Syngenta lost its case with Kansas farmers for $218 million.

· An annual ranking of the top 40 U.S. pork producers reported that those companies are raising over 250,000 more hogs this year than last year. Two-thirds of the ranked producers grew in size, including JBS-affiliated Iowa Select Farm and Smithfield. The jump in production has amplified producers’ concerns about price collapse and a declining labor pool.

· Beginning in early 2018, Whole Foods will no longer allow brand representatives in its stores, one of the first major changes to come to the chain grocer since its acquisition by Amazon. The company will also continue centralizing its once-regional purchasing practices, a move that was already underway before the acquisition, as we reported in January.

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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