Pay to Play Article in Livestock Market Digest by Lee Pitts — USDA allows misuse of beef checkoff cash

How can USDA continue to stand around and do nothing to restore the integrity of the national beef checkoff program?

Pay To Play

Lee Pitts

The last time I wrote about the NCBA and their heist of the checkoff in a story titled "Where Did It All Go?", I reported the news that Forest Roberts NCBA’s CEO, was being paid $550,000 per year. Well, not any more he isn’t. I don’t know if it’s simply a coincidence or not but shortly after our story ran Mr. Roberts tendered his resignation to explore "other opportunities" in the industry. Geez, It must be some kind of opportunity if it pays more than half a million per year!

We reported that 72% of Mr. Robert’s salary was being paid by the checkoff and that NCBA paid out $13 million in yearly salaries. We also noted that 82% of NCBA’s budget comes from your checkoff dollars and that the NCBA was getting 97% of all checkoff contracts from the Cattlemen’s Beef Board.

You’d have thought that heisting the checkoff would have been enough for the greedy NCBA but when they held their annual summer conference they raised the cost of dues to their cattlemen members by 50%! I know about this because two executives from two different state cattlemen organizations contacted me and were madder than a hot-shotted bull about it.

A Road Map To Your Future

Before getting into the money matters we need to clear up just who it is we’re talking about when we say the National Cattlemen’s Beef Association because it’s not just cattlemen. Far from it. There are drug companies, truck and tractor manufacturers, ear tag makers, Canada, Mexico, universities and on and on. They only call themselves cattlemen because of the good reputation you have established. Besides, how would it sound if they more accurately called themselves The National Organization of Big Corporations Who Want To Hide Behind Your Good Name? I think we can all agree that the initials NOOBCWWTHBYGN might be a little too cumbersome.

One of the matters of business at NCBA’s summer conference was the report of the Long Range Planning Committee who "establishes a roadmap" for you and plots the future course of the cattle business until 2020. I got a big kick out of it because on page eight under the heading "Critical Assumptions", the fourth assumption is that, and I am quoting directly now, "Consumers will continue to want to know where their food comes from and how it is produced."

I repeat, "CONSUMERS WILL CONTINUE TO WANT TO KNOW WHERE THEIR FOOD COMES FROM." This from the Long Range Plan devised by NCBA’s best and brightest. How did they acknowledge this fact at the same time the NCBA was trying to get rid of country of origin labeling, otherwise known as COOL? You know, a label that says where food comes from?

Then there is this. In addition to the committee chairmen Don Schiefelbein of Schiefelbein Farms and John Butler of the Beef Marketing Group, the members of the Beef Industry Long Range Task Force include Jerry Bohn, General Manager, Pratt Feeders LLC, Kim Brackett, Owner/Operator, Brackett Ranches, Tom Brink, Owner/Operator, Top Dollar Angus, Inc., Donnell Brown, Owner/Operator, R.A. Brown Ranch, Barry Carpenter, CEO, North American Meat Institute, Lynn Delmore, Ph.D., Meat Safety and Quality Consultant, Adjunct Professor, Colorado State University, Barbara Stevenson Jackson, Owner/Operator, Animal Health Express and Red Rock Feeding Company, Molly McAdams, Ph.D., Retail and Food Industry Consultant, Kevin Pond, Ph.D., Department Head, Animal Sciences, Colorado State University, Bill Rishel, Owner/Operator, Rishel Angus, Brad Scott, Owner/Operator, Scott Brothers Dairy, Eric Smith, Owner/Operator, Xtra Ranch, Tim Starks, Owner/Operator, Cherokee Auction Market, Jay Theiler, Executive Director, Marketing, Agri Beef Company.

Tell me, how many strictly commercial cattlemen do you count in that list of 16? In "establishing a roadmap" for your future it appears that PhD’s, feeders, college professors, and purebred breeders had far more say than commercial cattlemen did.

Reading Their Mail

In a letter from the NCBA that the Digest was able to get its hands on, NCBA President Philip Ellis, and Kevin Kester, 2015 Policy Division Chairman, wrote to all the state cattlemen’s organizations, "As you are aware, the board overwhelmingly approved a new NCBA membership dues structure. With this support, we will start working on job descriptions for the additional positions in the Washington DC office to bolster our efforts immediately. As we discussed in multiple meetings, our needs are immediate and substantial. The top priority for the projected additional membership revenue is the government affairs effort."

I just have to ask, after watching the NCBA lead the charge to get rid of COOL and steal your checkoff dollars from a USDA program, do we really want the NCBA to have more power and influence in Washington DC?

Pay Me Now or Pay Me Later

The state cattlemen groups were given two options in paying the 50% increase in NCBA dues for cattlemen members. They can either pay it all on October 1, 2015, or pay half on October 1, 2015 and half on October 1, 2017. Please note that the NCBA leaves it up to the states to do their dirty work and collect the increased dues from ranchers. We were told that one of the biggest cattle states tried to put together a coalition to defeat the increase but were unable to acquire enough votes to stop it.

Under Option A, regular members, described as, "cattle owners or persons actively engaged in live cattle production in the United States," shall pay a membership fee based on one of the following dues schedule options: Option A: a 50% one time increase in dues in 2016, For 0-100 cows, yearly dues will be $150; 101-250 cows, $300; 251 to 500 cows, $450; 1,000 -1,250 cows, $1,150; Over 2,000 head $150, plus 38 cents per head."

Stocker feeder shall pay $150 plus 38 cents per head. Unified feeder affiliate 19 cents per head marketed.

Option B is similar except if the state affiliates select this version to delay some of the pain the cost of dues actually goes up even more over the long term.

Let’s cut to the chase. According to my math a rancher with 99 cows pays $1.51 cents per cow to be a member of the NCBA while a rancher with 2,000 cows pays forty six cents per cow. And who says the NCBA doesn’t care about the little guy? And please note that a unified feeder affiliate pays nineteen cents per head marketed, or 12% the cost of the cow calf man or woman with 99 cows. Considering that the NCBA pushes the agenda of the big feeders and packers more than it does the cow/calf man or woman, that nineteen cents sounds like a real bargain.

Joining The Country Club

The NCBA has come up with all sorts of creative ways that individuals and corporations can buy NCBA’s influence. If you are considering becoming an NCBA member I thought you might like to meet a few of your fellow members.

• "Affiliate Organization members are state or regional associations of cattle producers or feeders that meet such other requirements established by the Board. Affiliate Organizations earn Board and committee representation on each policy committee based on the following formula: General Rule – 1 board seat for minimum of $10,000. Each additional Policy Division Board seat shall cost $35,000."

That’s as straight forward as the NCBA gets. Want to be on their Board, then flash the cash.

• "Allied Industry Council Members are entities that engage in activities which support or are associated with, but do not constitute the production and/or feeding of cattle, including but not limited to: feed companies, distributors, pharmaceutical manufacturers, financial institutions. Annual dues: $25,000. Board and committee representation to be based on an aggregate of the Council’s investment."

Want 2 Board seats? That will cost $200,000; four board seats costs $300,000; six board and committee seats costs $400,000; eight Board and committee seats costs $500,000 and 10 Board and committee seats costs $600,000.

$600,000? That’s a rounding error for a multinational drug company who might want to hide behind the cattlemen name and use the NCBA’s Washington influence.

• "Allied Industry Partner Members are entities that engage in activities which support or are associated with the cattle industry, but support at a lesser level than the Allied Industry Council. Annual dues: $3,000. Board and committee representation to be based on an aggregate of the Partner’s investment. $100,000 equals one Board and committee seat; $200,000 equals two Board and committee seats."

• "Product Council Members are entities that operate beef or veal packing or processing facilities or market beef or veal. Beef packer/processor pays $.09/head in FY16." A retailer pays $3,000 up to $25,000 for membership. Foodservice, $3,000 up to $25,000. Beef wholesale/manufacturer, $10,000 to $25,000. Supplier $10,000. "Each Council member investing greater than $10,000 may select an individual to serve on the Policy Division Board and policy committees in a voting capacity. Council members investing greater than $150,000 will automatically earn an additional Board and committee seat."

• "State and National Industry Organization Members are general farm, CattleWomen, commodity and livestock marketing entities that represent producers or processors of one or more agricultural commodities. Annual dues: $5,000 This entitles the organization to one Policy Division Board and committee seat."

• "Beef Breed Organization Members are national and regional breed registry organizations that represent individuals or entities actively engaged in the production of cattle. Annual dues: $3,000 This entitles the organization to one Policy Division Board and committee seat."

• "Livestock Marketing Council Members are livestock market operators and livestock marketing professionals involved in the business of marketing live cattle and livestock. Annual dues: Minimum $200, Maximum $2,000. One Board and committee seat costs $10,000 while each additional one costs $35,000."

• Supporting Members is a catch phrase for everyone else who wants to put an NCBA decal on their Dodge Ram bragging about being a member of a "cattlemen’s" organization. I met a pharmacist last year who bragged about being a member even though the closest he ever got to a cow is a beefsteak. Supporting members annual dues for individual are $150; Student membership costs $50; All corporations, $1,000; and get this, Canada and Mexico can join the NCBA for $250 while other foreign individuals must pay $400.

All this selling of seats and memberships begs the question, how does one serve that many masters?

After reading all the ways the NCBA can grab more cash I was thinking that perhaps a billionaire with several million dollars who believed in COOL and was against the NCBA getting 97% of all checkoff contracts could just buy off the entire NCBA and impose his or her will. Ah, but there is this little kicker in the NCBA rules: "All interested parties will submit an application expressing interest in membership, and appropriate background information. The Membership Committee and Policy Division of the Board of Directors will review and take appropriate action."

In other words, it’s an expensive country club. A cowy one at that.

I’m just guessing, but I seriously doubt they’d let a certain writer join who keeps opening up their mail and making the contents public.

Selling Your Soul

I thought you might also be interested in which companies have invested heavily in the NCBA. At a minimum investment of $100,000 we have Allied Industry Gold Level Sponsors including Bayer, Boehringer Ingelheim Vetmedica, Inc., Caterpillar, Central Life Sciences, Dow AgroSciences, LLC, John Deere, Merck Animal Health, Merial, Micro Technologies, New Holland, Purina Animal Nutrition, LLC, Ram Trucks, Zoetis.

• The Allied Industry Council includes AgriLabs, Animal Health International, BASF Corporation, Elanco Animal Health, Ritchie Industries Inc., and Y-Tex.

• I counted 68 Allied Industry Partners including the likes of Bank of America, Merrill Lynch, BEEF Magazine, CME Group, The Hartford Livestock Insurance, Meat & Livestock Australia, Ltd., Monsanto, Rabo AgriFinance and several ear tag manufacturers.

• Product Council Members include American Foods Group, Arby’s Restaurant Group, Inc., Cargill Meat Solutions, JBS, McDonald’s Corporation, National Beef Packing, Preferred Beef Group Safeway, Tyson Fresh Meats and Wendy’s International.

I could go on and on like this but I think you get the picture. After reading about all this payola and remembering that it’s called the National Cattlemen’s Beef Association, whose phone call do you think has a better shot at being answered by the big shots at the NCBA: a call from a rancher with 100 cows who has helped to keep the NCBA from going broke by contributing checkoff dollars, OR, a call from an Allied Industry Gold Level Sponsor who has contributed over $100,000, like Bayer, Boehringer Ingelheim Vetmedica, Inc., Central Life Sciences, Dow AgroSciences, LLC, Merck Animal Health, Merial, Micro Technologies, Zoetis and the maker of Ram Trucks who, if I’m not mistaken is Fiat/Chrysler, headquartered in London?

Following A Different Road Map

Just for the heck of it I got in touch with Bill Bullard, the CEO of R CALF, and I asked him who his members are and what they pay to join. Here’s Bill’s response. "Members of R-CALF USA are predominantly family-owned, owner-operators of commercial cow/calf operations. Many, if not most, of R-CALF USA’s members are full-time cattle producers who rely on their ranching operations for most, if not all, of their income. Though fewer in numbers, some R-CALF USA members operate purebred operations and others are engaged in backgrounding and stocker operations. Some R-CALF USA members also own feedlots that range in size from the very smallest to some of the nation’s largest. R-CALF USA does not receive any government funding nor does it rely on corporate contributions for its operations. Instead, R-CALF USA relies exclusively on its membership dues of $50.00 per year and voluntary contributions made by its members over and above their dues. The only exception to this are the few corporate sponsors that have made modest contributions to help support R-CALF USA’s annual membership conventions."

After seeing the NCBA’s "road map" it’s clear that R CALF needs to get on its bike and start peddling influence much faster if they are to have any chance of competing for cash in our currently corrupt cattle business.