FERN News | Big Beef targets Virginia ranchers with increased checkoff tax

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FERN News
By Leah Douglas

Virginia State Sen. A. Benton Chafin last week introduced a bill that would significantly hike “checkoff” taxes that cattle growers in the state must pay. The move follows efforts in other states — including recently in Oklahoma — to increase or introduce state-level checkoff taxes, which are charged in addition to the $1-per-head tax collected at the federal level. Many local ranchers oppose both the tax and the idea that it will be imposed by the legislature, saying the process effectively shuts independent cattle producers out of having a say in this sector-specific levy.

The bill would quadruple the amount that Virginia beef growers must pay every time they sell a head of cattle, from 25 cents to $1. The bill would also reduce the size of the state’s Beef Industry Council, the group that implements programs funded by the cattle checkoff, from 15 representatives to seven, and alter the makeup of the council substantially. Historically, the council has been a mix of cattle producers, dairy farmers, and packers. Now it would be made up of six cattle producers and one dairy farmer.

The federal checkoff program collects mandatory taxes from producers of 22 specific commodities, ranging from milk to soybeans. The national beef checkoff program currently collects $1 per head of cattle sold in the United States. Checkoff funds are used to market specific farm products, such as through the “Got Milk” advertising campaign, ostensibly to benefit all producers of that commodity. But producers in many states have argued that federal and state checkoffs benefit only the largest, most conventional producers. Half of the money collected by the federal government is allocated to agricultural groups in the state where the cattle was sold, while the other half is allocated toward the federal checkoff pool.

In some states, a state checkoff is levied in addition to the federal checkoff. In many states, ranchers and farmers have strongly opposed the tax. Last October, the Oklahoma Cattlemen’s Association introduced a ballot initiative that would have required the state’s cattle producers to pay an additional $1 as a state checkoff tax. Independent producers campaigned against the bill, and the state’s ranchers ultimately voted against the increase.

Joe Maxwell, a Missouri rancher and president of the Organization for Competitive Markets, notes that unlike other state checkoff expansion attempts, Virginia’s will be considered in the legislature rather than through a ballot referendum. Consequently, he says, “the cattle producers of Virginia will not be given an opportunity to vote” directly on the proposal, even though they face “a 300 percent tax increase.”

The Virginia bill is supported by the Virginia Cattlemen’s Association (VCA), a local affiliate of the National Cattlemen’s Beef Association. Both groups lobby on behalf of conventional beef producers. The VCA estimated in its 2017 report on expanding the state checkoff tax that there are 850,000 cattle in Virginia that are eligible for the tax. That means that if new legislation is passed, the VCA will be managing an additional $850,000 on top of the existing federal funds it handles.

The bill would also give the VCA even greater power to select who serves on the Beef Industry Council. Historically, the VCA, along with other livestock organizations in the state, would recommend appointees to the governor. But the new composition means that the VCA would control nominations for all but the one council seat allocated to dairy farmers. Maxwell says this would allow the VCA to “stack the deck” with its members.

Dr. John Boyd, a Virginia cattle rancher and president of the National Black Farmers Association, says reducing the size of the board would especially disadvantage minority and small farmers. He says that to his knowledge, no black farmer has ever served on the state’s cattle checkoff board, and the proposed changes would make that even more unlikely in the future. “These types of boards should be made up of area producers that represent [Virginia’s] makeup,” he says.

Checkoff programs have been challenged in both state and federal court. Last June, after a lawsuit was brought by independent ranchers in Montana, a District Court judge placed an injunction on the collection of that state’s checkoff tax. There have also been lawsuits brought against the federal checkoff program. Last March, Sen. Cory Booker (D-NJ) and Sen. Mike Lee (R-UT) introduced the Opportunities for Fairness in Farming Act, which would bring more transparency and accountability to the federal checkoff program.

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