Op/Ed: If It’s Broken, Let’s Fix It

02 Jun
Beef checkoff…
If it’s broken, let’s fix it!

By Jon Wooster
U.S. Cattlemen’s Association President
Western Ag Reporter, 4/21/11

If you’ve been in ranching for very long, you’ve found out a couple of things. First, we wouldn’t stay in business very long if we threw out everything that broke, and second, sometimes things get a lot worse before they get better.
Let’s keep that in mind as we read the article Troy Marshall wrote for BEEF magazine and that our editor chose to republish this week on the front page of Western Ag Reporter. This article is one of several Marshall has written concerning the checkoff, and it seems to me it might be a little one-sided, misleading, and lacking in accurate facts, so let’s look at this issue from a different point of view.

Fairly straight forward…
The beef checkoff itself is a fairly straightforward program. One dollar is collected every time a beef animal changes hands, and the money is used for beef promotion, research, and education. It was initiated by the Beef Promotion & Research Act of 1985.

A bit more complex…
The governance of the checkoff is a bit more complex. The Cattlemen’s Beef Board (CBB) consists of 106 members with a Chairman, Vice-Chair, Secretary-Treasurer, Executive Committee, and Operating Committee. The CBB – closely linked to the Federation of State Beef Councils, which is a division of NCBA – is tasked with oversight of all checkoff dollars, including those that are expended by the Federation.

Executive Committee…
The Executive Committee is chaired by the CBB Vice-Chair, and the members include the CBB Chairman, CBB Treasurer, and 7 members elected by the CBB.

Operating Committee…
The Operating Committee is made up of 10 people from the Federation and 10 people from CBB. The CBB representation on the Operating Committee consists of the Chairperson, Vice-Chair, and Treasurer of the Board along with 7 CBB reps, who are duly elected by the CBB to serve on the Operating Committee.

For years, the National Cattlemen’s Beef Association (NCBA) maintained a strong influence over the CBB, the Executive Committee, and the Operating Committee, but in the last few years, that has changed. As cattlemen around the country have seen what is happening with NCBA policy, many have worked to get appointed to the CBB, and that board is now more diverse, and members of the CBB aren’t necessarily members of NCBA. This has created some different points of view.

CBB duties…
Two of the CBB’s duties are oversight of the national beef checkoff funds and administration of checkoff funds through the state Beef Councils. This is a responsibility that has been given much attention recently. As a result of losing control of the CBB Executive Committee and of the CBB side of the Operating Committee, NCBA has lost some of its influence on decision making, and it has apparently been unable to prevent the board from giving close financial scrutiny on how checkoff funds are spent and how overhead is allocated.

Gunderson review…
For a time, as the CBB tried to conduct financial reviews and audits, they were apparently stonewalled and given little cooperation by NCBA. Finally, NCBA requested an outside firm to conduct a review, and the CBB agreed so they could complete their oversight requirements. The Gunderson report resulted in NCBA having to pay back $216,000 of misappropriated funds. (NCBA’s request for an outside auditor also burned another $80,000 plus of the producers’ checkoff dollars.)
Reportedly, NCBA wasn’t very cooperative with the Gunderson folks, and the Office of the Inspector General (OIG) is stepping in to do a more comprehensive audit. It seems NCBA doesn’t want oversight on how they appropriate checkoff dollars, and it seems that a lot of checkoff expenditures have been overlooked and not questioned over the years because NCBA has maintained control over who was in a position to ask the tough questions and demand answers.

Ask these questions…
I would suggest to Mr. Marshall that he ask why CBB staff were not apprised of Federation conference calls when the CBB is responsible for oversight of the State Beef Councils? What’s so secretive about a Federation conference call that CBB staff wasn’t invited to be on the call?
I would suggest to Mr. Marshall that he review the Act & Order so he understands that the CBB has the power to make decisions on the checkoff. The CBB’s role is described and dictated by the Beef Promotion Act & Order. The CBB is carrying out that role and trying to make the checkoff more inclusive for checkoff-paying producers.

Right about one thing…
Mr. Marshall seems to be right about one thing. When he describes what the end game is, he says, “it’s to build a more centralized checkoff structure that not only controls the expenditures but also exerts control over the qualified state beef councils and builds the infrastructure to implement and create the programs instead of working with contractors.”
He seems to be describing what NCBA tried to do in 1996. I would argue that the CBB is just trying to fix something that isn’t working the way it should. It is time for all producers to be able to participate in the process… whether they be affiliated with NCBA or not.

Responsibilities & conflicts of interest…
Under the Act & Order guidelines, CBB members are appointed by the Secretary of Agriculture and, as such, are responsible for making their decisions based on what’s best for the ENTIRE industry. They are also responsible for ensuring that their decisions are not based on personal interest. CBB members are responsible, under the oversight of USDA, to disclose any actual or perceived conflicts of interest. Under the current structure, some members of the Operating Committee, who are also on the board of directors for checkoff-contracting organizations, vote on Authorization Requests proposed by those same contractors.
The point I’m trying to make is that we have a contracting organization (for a federal program) participating heavily in who is awarded the federal funds collected from cattle producers. Imagine the scandal if this was any other federal program, and the largest contractor had this much influence on expenditures.

A misconception…
The idea that the CBB is only intended to build beef demand is a misconception resulting from a failure to read the Act & Order. The CBB’s role is MUCH broader and includes oversight that ensures producers’ checkoff dollars are not pilfered to become a funding source for a political lobbying organization.

My take on all this is that NCBA is afraid of losing its checkoff crutch. The misappropriated funds revealed in the Gunderson report pale in comparison to the reported statistic that 70.9% of all NCBA overhead this past year was covered with checkoff dollars. “Overhead” includes all staff salaries, including that of NCBA’s CEO Forest Roberts. In light of that information, it’s no wonder that some refer to the beef checkoff as NCBA’s Cash Cow. The more CBB digs, the more they learn, and that is the job of the CBB.

Fear mongering…
Mr. Marshall, you are right: Something is broken. In the cattle business, when something breaks, you learn to fix it. There may be a little more controversy before this is over, but I believe that, if the debate is kept factual and transparent for all producers, it can be a healthy process. Clouding the debate with fear mongering about the future of the checkoff is not productive.

The CBB is taking necessary and overdue actions to address the problems. Members of the CBB are diligently working towards that by considering carefully the Roles and Responsibilities Committee’s recommendations and by developing a committee structure that invites more input and ideas from a far more inclusive group of cattlemen and women.
What’s wrong with that?

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Posted by on June 2, 2011 in Uncategorized


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