Politico: R-CALF USA Stirs the Beef Checkoff Pot



R-CALF USA Stirs the Beef Checkoff Pot

8/13/14 5:06 AM EDT

The beef industry is talking about big changes to its Beef Checkoff Program, maybe even doubling the contributions made by cattlemen. But R-CALF USA President Bill Bullard first wants more reform.

Bullard created a minor stir this week after reporting to his 5,000 rancher members that representatives from the National Cattlemen’s Beef Association — the organization that manages the checkoff program — and 10 other industry groups serving on an advisory panel were preparing to meet with Agriculture Secretary Tom Vilsack, as early as Friday, to recommend changes. The NCBA and others deny a Friday meeting is scheduled.

One proposed change being discussed, Bullard reported in his memo, is the raising of beef checkoff contributions from $1 per cattle head sold to $2.

"By doubling the size of the tax pool, the proposal ensures there will be enough multimillion-dollar contracts to line everyone’s pockets without unduly affecting NCBA’s major revenue source," he said.

However, Bullard’s report has been roundly dismissed by several of the other groups involved in the panel, who say proposed changes to the Beef Checkoff Program still haven’t been finalized. Ultimately it would require Congress to make a change as substantial as altering the assessment, they say.

At least some of the tension between R-CALF and the other groups dates back to a lawsuit filed in 2012 in a Kansas federal court by the ranchers against the USDA, the Cattlemen’s Beef Board — which oversees the collection of checkoff assessments — and others, charging the groups allowed checkoff money to be used to influence policy.

Between 2008 and 2010, beef producers and importers contributed approximately $81 million to the beef checkoff fund each fiscal year. The money is used to support marketing promotions, research and programs that benefit the beef industry as a whole. It is prohibited from being used for influencing government action and policy.

But therein lies the rub for Bullard, who remains skeptical of the NCBA, which operates as a lobbying group in addition to administering checkoff funds.

The NCBA is comprised of two divisions. The first, its federation division, staffs microbiologists, nutritionists, economists and marketing specialists. That arm is funded with checkoff money, which makes up about 83 percent of the organization’s total funding, according to a 2013 USDA report. The second division is its policy shop, which includes political activity and lobbying. That arm of the NCBA is funded by individuals and supportive organizations.

A 2010 letter from Vilsack to the NCBA stated that any restructuring of the organization should ensure that all funding decisions relating to checkoff activities be made by non-policy players, and that the failure to implement proper firewalls would raise “serious legal concerns.”

Bullard feels like his concerns were validated in that same year, after a third-party auditor found several instances between 2008 and 2010 in which employees of the NCBA’s checkoff division attended revenue development meetings but charged their time to the checkoff program, rather than the policy division. The report also noted and handful of travel expense inconsistencies.

The USDA acknowledged the independent audit in a 2013 report, which disclosed findings related to contractor-submitted expenses, some of which were unrelated to checkoff activity.

“NCBA officials admitted they had mistakenly coded and submitted improper expenses to the reimbursed by the beef checkoff fund,” the report states.

Corrective action resulted in the NCBA reimbursing the checkoff fund to the tune of $216,944. The USDA Agricultural Marketing Service also concluded it, as an agency, needed to strengthen its own oversight of the beef checkoff funds. As recently as January 2014, the USDA deemed the NCBA’s administration of funds were in full compliance.

The firewall between policy and checkoff operations has been strengthened since the audit was released, said Kendal Frazier, NCBA’s chief operating officer. The reliability of the firewall is regularly tested by Cattlemen’s Beef Board audits and the Office of the Inspector General.

NCBA officials say the division is ironclad, complete with separate bank accounts, policies, and a chief compliance officer.

Still, it’s not enough reform for Bullard, whose group remains unwilling to publicly support changes to the checkoff until the Cattlemen’s Beef Board assumes the checkoff role currently carried out by the NCBA.

“This whole thing has just been fraught with delays and stalled action,” he says.

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