Organization for Competitive Markets Addresses disparaging comments from NCBA leadership

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LINCOLN, NE – Today the Organization for Competitive Markets issued the following statement from Fred Stokes, VP and founder of OCM, after a series of cattlemen’s meetings held in Florida in an attempt to bring industry stakeholders together for the betterment of the industry. This statement follows a campaign of misinformation by NCBA president Marty Smith and CEO Colin Woodall who attacked OCM and it’s board members.

“Colin Woodall, speaking on behalf of NCBA has resorted to absurd and reckless rhetoric in his attempt to impute guilt-by-association to OCM; claiming it is supported by and in partnership with HSUS. He also makes the charge that OCM is not an advocate for cattlemen and makes the outrageous and likely libelist charge that OCM is a domestic terrorist organization.

Let me address these two matters separately, starting with the terrorist charge. I am generally credited with being the primary founder of OCM. I am a retired Army Military Intelligence Officer who held the nation’s very highest security clearance. I served two tours of duty in Vietnam and returned without a scratch. But, I received seven air medals and two awards of the bronze star medal. Two other current board members were previously military officers. OCM has a twenty-two year record of conduct in the best traditions of our beloved country.

Every member of the Board of Directors over the past twenty-two years of the organization’s existence has been an honorable, law-abiding and patriotic citizen of this country. OCM has tenaciously adhered to its mission of making agricultural markets open, transparent, competitive and fair so that independent family agriculture and rural America might prosper. This is hardly the profile of a terrorist organization.

OCM’s shining a bright light on NCBA misdeeds and causing them to become terrified does not make OCM a terrorist organization.

The real terror comes from the caliphate of NCBA, who continues to use cattlemen’s own hard-earned tax dollars to put them out of business and to create more consolidation among the four big packers.

As to OCM’s relationship with HSUS; it has been limited to “in kind” legal support of OCM’s actions delving into NCBA’s suspect handling of beef checkoff funds. This support was voluntarily provided with NO STRINGS ATTACHED. OCM is neither funded by or in partnership with HSUS.

In 2010 Clifton Gunderson Accounting firm conducted an independent audit of NCBA’s expenditures of checkoff funds at the behest of Tom Jones, President of the Cattlemen’s Beef Board. After examination of 1 % of the transactions for a period of two years and five months (9 days), gross “misspending” was found. Unauthorized spousal overseas travel, a $150,000 loan to NCBA’s Executive Director to buy a house and a $2,000,000 advance to NCBA for unspecified future work were among the many misappropriations found. The finding smacked of the beef checkoff fund being used as an NCBA slush fund. As a result of the audit, NCBA was required to refund to the CBB, more than $300,000. This was seen by many of us as but the tip of the iceberg. The audit sent shockwaves throughout the industry. Both the CBB President and Executive came under fierce hostility for their audacity in authorizing the embarrassing outside audit. Both resigned!

In February of 2011, a USDA OIG Audit of the Beef Checkoff Program was commenced at the request of OCM and other allied organizations. A number of OCM members met with the OIG Audit Team at the outset and shared its concerns regarding abuse of these funds. OCM furnished significant information to the OIG investigators during the almost year-long investigation. In almost all cases the investigation team acknowledged finding the information to be factual and useful. I personally had periodic communications with team leader, Mr. Don Pfeil. This relationship was cordial, but ethical and proper. It was clear from these conversations that investigators were focused on the propriety of financial transactions and related aspects, not the supervision of the program by USDA AMS. Mr. Pfeil stated to me, “I am going to follow the money.”

A conversation with Mr. Pfeil in December of 2011 revealed that his team had finished their work and that their findings were now in the hands of the “report writers”. Pfeil stated that he expected a report to be publicly released by March of 2012.

There were rumors and speculation as to what the report would reveal. Many thought the more in-depth examination (OIG Audit) would indeed prove the Clifton Gunderson findings to be but a smattering of the irregularities and provide a strong indictment of NCBA. Others took a more cynical view; that NCBA was well connected and thus the audit would be a sham. This view was supported by a conversation overheard at the February 2012 joint CBB/NCBA meeting at the Opryland Hotel in Nashville. A Pulitzer Prize winning reporter from a major newspaper reported that he overheard a USDA AMS representative tell NCBA officials that he (AMS rep.) had seen the draft OIG report which contained some “bad stuff”. He continued; “but don’t worry I fixed it.”

The “first” final OIG Report was released in March of 2013, fifteen months after the conclusion of the investigation. The report writing process had generated thousands of pages of drafts, as the basis for the scant seventeen page report that effectively exonerated NCBA. Most of us in OCM and in other allied organizations, viewed the report as a whitewash and cover-up.

In the first place, the report did not “follow the money” but rather focused on USDA AMS’s oversight of the program. Because of the uproar, or for some other unknown reason, this first report was withdrawn to be reworked and re-released in late January 2014; some three years after the audit began. There were few changes, but the outright vindication of NCBA was removed.

Not only does NCBA have disproportionate influence over who is awarded Checkoff contracts, it also has tremendous influence over the success or failure of entities that are awarded contracts. Anecdotal evidence strongly suggests that NCBA and its affiliated state organizations exerted undue influence to cause non-NCBA contractors to fail. For example, the National Livestock Producers Association previously was awarded the contract to implement the Checkoff’s Beef Mobile program, a program that necessitated the cooperation of State Beef Councils for its success. However, based on our best available information, the State Beef Councils (controlled by NCBA) refused to cooperate with this non-NCBA affiliated organization, thus ensuring the failure of the program and exclusion of the National Livestock Producers Association from the Beef Mobile program contract.

The Checkoff Program’s clear and unambiguous language prohibits using any Checkoff funds, in any manner, for the purpose of influencing governmental action or policy, with the single exception of recommending amendments to the Order. However, NCBA routinely charges one-half of its officers travel expenses to the Checkoff. According to the OIG Audit Report itself, 83% of NCBA’s total revenue comes from the Beef Checkoff. These funds pay a major portion of salaries and overhead and are essentially the organization’s lifeblood.

The NCBA IRS Form 990 for 2017 reflects that the Executive Director position that Mr. Woodall currently holds pays $574,000 per year in total compensation. Numerous other NCBA officials receive salaries of more than $200,000.

In August of 2012, The Polsinelli Law Firm of Kansas City filed a suit on behalf of OCM against NCBA and USDA based on the conflict of interest constituted by NCBA’s undue influence in the contract awarding process. Immediately, intense pressure came from the Big Ag community, causing Polsinelli to withdraw from the suit.

In May of 2014, the President of HSUS offered legal assistance to support litigation against USDA OIG to compel compliance with a previous and long-ignored OCM Freedom of Information Request. This support was furnished with no strings attached. OCM appropriately expressed its gratitude.

In 2018 NCBA became an Intervenor in OCM’S FOIA suit after learning that 10,000 pages of unredacted financial records and ledgers were deemed relevant and would potentially be released to us. As a pretext for opposing the release, NCBA made the absurd claim that OCM competed with NCBA in the Contract Bidding process and that this “Privileged and Confidential” information would cause them competitive harm.

NCBA, USDA AMS and USDA OIG have all gone to extraordinary lengths to stall and resist release of the records that would show how beef checkoff funds were expended. Hard-pressed beef cattle producers are compelled to provide the $80,000,000 each year to fund the beef checkof program; they are entitled to know how their money is being spent! The protracted and aggressive resistance to the release of records raises an obvious question; what are they trying to hide?

The Beef Promotion and Research Act of 1985 has been a dismal failure in terms of promoting the interests of the U. S. cattle producers who fund the program. Since the program began, per capita consumption of beef has diminished with a resultant loss of market share and many producers have been driven out of business. Those remaining have struggled to remain viable. In terms of promoting the interests of U. S. checkoff-paying cattlemen, it is reasonable to say that the almost $3 billion that has been spent over the past thirty-five years has been wasted.

NCBA has a long record of working against the interests of cattle producers. They were a plaintiff in litigation to block implementation of COOL (Country of Origin Labeling); worked against producers seeking mandatory price reporting; against cattle producers that opposed the National Animal Identification System (NAIS); against cattle producers that supported captive supply reform in a major class-action lawsuit; against cattle producers that tried to prevent the premature reintroduction of imported cattle from a disease-affected country; against cattle producers that attempted to ban packer ownership of livestock in both the 2002 and 2008 Farm Bills; and were key in effectively opposing the proposed Grain Inspection, Packers and Stockyards Administration (GIPSA) rules that clarifies and defines how GIPSA will administer and enforce the Packers and Stockyards Act.

Based on NCBA’s reporting of membership numbers, they have only one cattleman in thirty-three as members. So, it appears that cattlemen have been compelled to be the principal funder for an organization that has a mere 3% of total cattle producers as members. Clearly, NCBA has used the approximately $1.2 billion it has received since 1996 to become the spokesman for the entire industry.

It is my opinion that as long as NCBA is the voice of the industry and the spokesman for producers, the future of independent ranching in this country is very bleak.”

Written by: Fred Stokes

November 24, 2020

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