Livestock Market Digest | Lee Pitts: Or So We Were Told

First printed in the Livestock Market Digest
By Lee Pitts

Ever since the beef checkoff went into effect on July 18, 1986, we could count on regular “independent survey results” informing us that 70% or more of all cattlemen approved of the beef checkoff.

Typical of such glowing report cards was the one that told us that for every beef checkoff dollar collected, cattlemen were receiving back $11.20 in revenue. You’d have to be a complete, knuckle-dragging ignoramus to not want to invest one dollar to get back eleven. No wonder that between 2010 and 2015 we were told 69% to 78% of ranchers were in favor of the checkoff.

Approval of the checkoff peaked in the early 1980’s when four out of five ranchers were in favor of continuing to pay it. At its worst the highest number of ranchers I could find that disapproved of the checkoff was 27%.

Or, so we were told.

It’s Hillary In A Landslide

Some of the oldest and most highly circulated livestock periodicals got so used to printing positive stories about the checkoff through the years that they may have started believing their own BS. Perhaps it’s my cynical nature but I never did believe the glowing poll results about the checkoff because, after all, the checkoff was paying for them. Or rather, you were. You don’t have to be a genius to figure out that reporting a negative opinion of the checkoff would be a sure-fire way for a polling company to lose the lucrative beef checkoff account.

A wise author told me years ago that you may have lost your touch as a writer when you start believing the blurbs on the covers of your books. Perhaps Drovers may be guilty of believing their own blurbs because on November 13, 2018, they boldly asked their readers if they believed the checkoff was helping to stimulate beef demand and supporting their cattle business?

Surely Drovers was confident that their results would echo those obtained by the polling outfits hired by the Beef Board. After all, Drovers has gone gaga for the NCBA from day one and has been in a war recently with R CALF, the anti-NCBA of the beef business. If Drovers had any idea the results would be so bad we’re confident they’d have never asked the question to begin with. Imagine their surprise when 54% of those responding to the Drover’s poll said, “No” the beef checkoff WAS NOT stimulating demand or helping their business!

How could this be? Weren’t we regularly told 70% of those paying the checkoff were in favor of it? Who knew that Drovers readers were such a bunch of anti-NCBA’ers and radical R CALF members? How else could you explain why 54% of Drover’s readers did not believe the checkoff helped their business or increased demand for beef? Who did the polling for the Beef Board and the NCBA, was it the same outfit that said Hillary would be elected in a landslide?

Could the disparity in the results be explained away by a large difference in the sample size? Not really. CBB sponsored polls typically polled 1,000 to 1,200 while 926 Drovers readers responded to their poll. Statistically, the 10 to 15% difference in the sample size would not explain such contrasting results.

That’s not even the worst news. At one point during the poll as many as 70% rejected the notion that the checkoff was helpful to their ranch. But even more harmful to the NCBA, the CBB and the checkoff were the comments left by those responding to the Drover’s poll. But then you probably didn’t see them because they were removed by Drovers on the same day they first appeared. Just for fun, go to Drover’s web site now and see if you can find them. If so, you’re a better computer hacker than I am.

Deleted But Not Forgotten

Lucky for us someone at the Organization for Competitive Markets (OCM) captured a screen shot of the comments before they were deleted. Here are just some of those comments that no one at Drovers wanted you to see.

Jay Platt: “When the beef checkoff was inaugurated in 1988 per capita beef consumption was 72.5 pounds. It has steadily declined nearly every year since. In 2016, per capita consumption was 56.5 pounds, a decline of 22%. Were the checkoff stimulating demand we should not have seen a steady decline in per capita consumption, which is the true measure of demand. Simply stated, it is a failed program, unless of course, one happens to be the NCBA.”

K. Hawkins: “Too much for NCBA and not enough for promotion. I straight up asked a NCBA representative in a question and answer section of a speech at a cattleman’s meeting about their position on COOL and got, “No comment.” Enough said.”

Theresa Fox: “The beef checkoff has provided a large slush fund of monies for those stakeholders who run the organization. No checks and balances, no accountability, plenty of fraud and embezzlement.”

Tom Fichti: “Answer me one question. Why am I spending money to maintain a product when the packers for the past six months have been making $300 per head and I’m losing $85 per head?” (By the way, packers aren’t required to pay into the beef checkoff. Talk about a return on YOUR money!)

Bonnie: “The checkoff is important but it needs to be spent promoting USA beef, not foreign beef or going for the lobbying of the NCBA.”

Rick Kiekow: “For too many years the NCBA  has manipulated the checkoff funds to support the beef packer interests instead of supporting cattle producer interests.”

Mike: “NCBA has stolen the checkoff tax and used the money and political power it buys to promote a more and more concentrated marketplace that has left cattle producers bankrupt.”

Scott: “If there is going to be a checkoff every nickel should be taken out of the crooked hands of NCBA. One of the real solutions for the beef industry would be to show how few cattlemen NCBA really represents.”

Donna: “I believe the checkoff dollars are helping fund the NCBA’s agenda, and helping fund demand for imported beef. Bring  back COOL, take the checkoff out of NCBA’s hands and maybe then the checkoff will help the American cattle rancher again.”

Do those sound like satisfied check-off payers to you?

Something’s Rotten In Denver

According to OCM, “The overwhelming majority of Drovers’ commenters stated that it is not the Beef Checkoff Program they opposed but rather how it is being administered amidst concerns that the program’s largest contractor, NCBA, is mismanaging the lion’s share of the beef checkoff funds.”

According to OCM, “The comments deleted by Drovers are the same sentiments that the OCM has held for nearly a decade.”

Along with words like “sustainable” and “paradigm” another one of the magic words these days when referring to any company or organization is “transparency.” More is good, less is worse. A company is being transparent if it makes financial information readily available. An organization is NOT being transparent if it tries to hide how much its President or CEO is being paid. The beef checkoff, NCBA and the Cattlemen’s Beef Board are about as transparent as momma’s muumuu was.

It’s simply wrong that a government program, financed by your beef taxes, should be so hard to find any information about. Believe me, I’ve tried. And so have two other entities that probably wouldn’t exist today were it not for NCBA’s heist of the beef checkoff. R CALF and the OCM tried to get financial information about the beef checkoff for years from the USDA by going through all the proper channels but they ran into one roadblock after another. This just intensified their belief that there was something rotten in Denver.

A partial audit in 2010 of the checkoff that was the equivalent of just nine days of spending, found numerous irregularities and a full government audit later on was mired in controversy, as released documents showed agency “heartburn” and fear of “embarrassment” over an audit report that was “reworked,” “transformed,” and “rebooted.”

The OCM got tired of the run-around so in 2013 they filed a Freedom of Information Act request to get financial information about the checkoff. According to OCM, “The USDA failed to comply so in 2014 OCM filed the ongoing lawsuit to force the USDA to release the government audit documents and financial records. OCM and its members are still waiting for answers. Since 2014, USDA and NCBA have stalled the release of the information in court. In 2017, the U.S. Government Accountability Office issued a report calling out USDA for its lack of transparency and oversight over the Beef Checkoff Program. The same year in the courtroom, USDA turned over more than 12,000 pages of financial and audit documents that had been almost completely blacked-out and redacted.”

OCM founding member Fred Stokes says, “The people paying the federally mandated checkoff assessment shouldn’t have to spend four years in court to see how the government spends those funds. With USDA and NCBA’s complete lack of transparency they are destroying the integrity of the Beef Checkoff Program. If they have done nothing wrong they should just release the audit and financial expenditure documents,” says Stokes. “We strongly support a transparent Beef Checkoff Program that works for the hardworking family farmers and ranchers who pay into the program. OCM supports a fair and transparent Beef Checkoff Program but the next time a poll is conducted the overwhelming sentiment might be to simply end the beef checkoff program. This would be a no-win situation for all.”

No Other Option

R CALF has also been left with no other option than to go to court to stop NCBA’s ongoing shenanigans. R CALF has been working for checkoff reform for two decades and their every effort has been repelled. The one issue that really gave R CALF traction with ranchers is Country of Origin Labeling (COOL). R CALF believes in it, NCBA doesn’t.

R CALF has also pushed for the separation between the Federation of State Beef Councils, the Beef Checkoff Program, and the NCBA, but NCBA could never afford to let that happen. R CALF members became so disgusted that they passed a resolution that said the current checkoff system is “corrupt and unsalvageable” and that Congress should repeal it.

Says R CALF CEO Bill Bullard, “Our efforts through the executive branch and the legislative branch have met brick walls so now we’re pursuing, through the third branch of government, incremental reforms with the overall objective of achieving our member policy, ensuring that beef promotion actually benefits U.S. cattle producers.”

R CALF’s next assault on the checkoff and more specifically the NCBA, began in Montana where its beef council was using state checkoff funds to help pay for ads with Wendys’ featuring beef that came from… well that’s just the point. We don’t know where the beef came from. Turns out, American cattlemen may have been paying to promote Australian beef, for all we know. So R CALF filed a lawsuit against the USDA alleging that they are unconstitutionally compelling Montana producers to fund the corporate speech of the Montana Beef Council. So far, R CALF has won in court every step of the way and has added 13 more states to their hit list.

Laundering Your Money

R CALF’s latest charge against the NCBA is that in addition to being thieves, they are also laundering money! According to Bullard, “What we believe is a form of money laundering is the NCBA Federation’s pay-to-play scheme which is described in the NCBA Federation Division Investment Schedule. Unlike the CBB whose representation is based on the number of cattle in each state, representation on the NCBA Federation is based on how much money the state beef councils send to the NCBA. According to the NCBA Schedule, even states with small numbers of cattle must pay 10% of the checkoff payments they collect from producers if they want any representation at all on the NCBA Federation.”

“The NCBA Schedule also shows the top 15 cattle producing states, several of which are now included in R CALF USA’s beef checkoff case, each pay $32,000 to the NCBA for their first three seats on the NCBA Federation. Based on the NCBA Schedule and the NCBA Report, those states must then pay about $263,000 each for their fourth and fifth seats and $526,000 for their sixth seat. Then, if a state sends the NCBA $1 million or more, it is entitled to a leadership position on the NCBA Executive Committee. Three of the states now in R CALF USA’s beef checkoff case paid the NCBA more than $1 million to buy representation on the NCBA’s Executive Committee.

“This looks like a classic case of money laundering to us,” Bullard said. “The NCBA is free to admit or deny these allegations and the facts we are presenting but it certainly looks crystal clear to us.”

“Many of the states are sending hundreds of thousands of dollars, if not more, to the NCBA for two things,” Bullard said. “One, to give NCBA money to promote beef on a national level. The other, to buy seats on the Federation of State Beef Councils, that is housed, owned and controlled by the NCBA. That’s a pay-to-play scheme. They’re siphoning off half the checkoff dollars and those dollars are not subject to the same fiscal controls that are imposed on the national program through the National Cattlemen’s Beef Board.”

One way to stop all this bickering would be to allow for a referendum vote on whether or not beef producers want to continue paying for the beef checkoff as presently constructed. But after Drover’s recent poll we’re confident that’s the last thing in the world the USDA, Beef Board, or the NCBA will ever allow.