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“An Ethically Dismal Situation…”

04 Jun
Thursday, March 31, 2011

To NCBA leaders, silence is golden

by Alan Guebert 

It’s a safe bet that before March 1, USDAofficials never heard of the Cattle Producers of Louisiana. It’s also a safe bet that by March 2, USDA bigwigs not only knew about the bayou ‘boys, they also knew at least one of ‘em could write a mean letter.

That letter, dated March 1 and sent to Secretary of Agriculture Tom Vilsack, begins with a simple declarative sentence: “The Beef Checkoff is broken.”

Dave Foster, CEO of the Louisiana group and the letter writer, goes on to note the “ethically dismal situation” between checkoff’s operator, the Cattlemen’s Beef Board, and its primary contractor, the National Cattlemen’s Beef Association.

Making a bad situation worse, he adds, is that required government oversight of both “appear(s) to exist only as a concept rather than an operational reality.”

The real problem 

The heart of the problem, Foster points out, is the 1996 merger that all but married the newly formed Federation of State Beef Councils to the reformed NCBA. While the federation was deemed to be independent, its members — who control 50 cents of every beef checkoff dollar — have moved more and more to NCBA’s side of the bed.

Indeed, NCBA is so open in its role at the federation that a March 21 NCBA news release trumpeted the recent election of New Mexico cow/calf producer Jane Frost, a member of NCBA’s national executive committee, as a regional vice president of the federation.

“There is no effort to even disguise who is in charge of the federation,” says one state beef leader who noticed the two-hatted jobs now held by Frost. “It’s NCBA, and any question about it all but ensures you’ll be marginalized.”

Blurred lines 

That charge is echoed by the Louisiana cowboys.

“It is unknown what the political preferences and policy desires are of the 90 percent-plus of nationally unaffiliated (with NCBA) cattle producers… However, it is reasonable to believe… (they) would like to make policy and political decisions that involve their money for themselves and not have those decisions made for them by an organization they have avoided (and chosen) not to join.”

The Cajuns then take a step few dare to take: They dig into NCBA’s recent tax filings to see just how much the checkoff means to the tiny group’s — only 1 out of 33 cattle owners nationwide belong to NCBA — day-to-day operations, clout and survival.

The answer is shocking. According to the group’s Internal Revenue Service Return of Organization Exempt from Income Tax, or Form 990, NCBA’s revenue in 2008, the latest filing available, equaled $55.6 million of which $46.1 million, or 83 percent, were checkoff dollars.

Even more shocking is the Form 990 revelation that NCBA collected a meager $3.4 million in total membership dues. That means less than 6 percent of its 2008 revenue came from people who chose to join.

Dig deeper into the 990 — and you can; the 31-page filing and the Louisiana letter it prompted are posted at www.farmandandfoodfile.com — reveals that NCBA’s top 14 officials earned a combined $2.7 million in salaries and benefits in 2008. Overall, that means four out of five dues dollars collected by NCBA went to just 14 of its 193 employees.

It also means that NCBA is not a national cattlemen’s group. Take away the 83 percent of its revenue, the checkoff dollars it got in 2008, and NCBA doesn’t have enough members or money to populate or operate an average rural county in the U.S.

And yet, by law and by USDA’s failure “to restore operational integrity” to the checkoff, NCBA remains the single, biggest benefactor of checkoff cash.

And you? Well, you pay and say little and your silence is pure NCBA gold.

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1 Comment

Posted by on June 4, 2011 in Uncategorized

 

One response to ““An Ethically Dismal Situation…”

  1. beefcheckoff

    June 5, 2011 at 1:40 pm

    Cattle Producers of Louisiana
    PO Box 886  Prairieville, LA 70769

    Toll Free: 888-528-6999
    Web: http://www.lacattle.org

    March 1, 2011

    The Honorable Tom Vilsack
    Secretary
    United States Department of Agriculture
    1400 Independence Avenue, S.W.
    Washington, DC 20250

    Dear Mr. Secretary:

    The Beef Checkoff is broken.

    Many cattle producers have realized for a long time that there is a problem within the checkoff. Others have just had this situation revealed to them. While there are still other individuals that for various reasons including monetary interest, political expediency, organizational jealousy, misplaced loyalty, and “we have always done it this way”, who refuse to admit that anything is wrong.

    While the magnitude of this problem has recently been graphically revealed, the problem did not just occur and has festered for many years while being ignored by anyone who possessed the power to rectify it.

    The Cattlemen’s Beef Board (CBB) appears to have abdicated their fiduciary responsibility for checkoff funds. This was evidenced by the reported response of the Beef Board to the results of the Clifton Gunderson Agreed Upon Procedures Examination of the National Cattlemen’s Beef Association (NCBA).

    Incredibly, CBB members were apparently more upset with their Executive Committee for having the blatant misappropriation of checkoff funds by NCBA discovered and revealed than they were with NCBA for committing the misappropriation of the funds. This reaction was highly questionable and very frightening and can only suggest misplaced loyalty and abandoned responsibility.

    Historically, government oversight has appeared to exist only as a concept rather that an operational reality. The apparent government response to the Clifton Gunderson AUP exam was to instruct the CBB and the NCBA to “get together and work things out and we will signoff on it”. Not unlike parents telling children to “go and play nicely together”. This benevolent approach of parental tolerance is insufficient to dutifully address problems of significant magnitude which this examination indicated exist.

    In 2005 the United States Supreme Court in Johanns v Livestock Marketing Association decreed that the checkoff was “government speech” and thus immune to legal objection from those who pay for it. Effectively a “beef tax” was judicially created. Livestock producers covered by the Beef Promotion and Research Act and Order have no viable recourse but to pay despite any disagreement with the message or the method. At best, they can only hope that their government will ensure that the expenditure of their mandatory payments will be properly administered and ethically spent.

    The 1996 merger of the National Livestock and Meat Board, of which the Beef Industry Council was a part, with NCA to create what is now known as NCBA should never have been permitted to occur by the USDA. The Beef Industry Council became NCBA, internally designated as the “Federation”, a distinction without difference. By virtue of this merger, NCBA was assured of at least ten seats, of the twenty available, on the Beef Promotion Operating Committee which selects and oversees CBB contractors. In what public procurement process financed with “taxpayer” funds is the primary, practically exclusive, contractor allowed to participate as a part of the selection and management committee? (According to the CBB Annual Report, NCBA received 98.7% of total contractor funds in 2009 and 98.6% in 2010.)

    The Honorable Tom Vilsack
    March 1, 2011
    Page 3

    While it is difficult to believe that such an ethically dismal situation as exist with the current checkoff operation could be made worse, consider the high profile involvement of NCBA in the recent congressional elections. Apparently exercising their newly given rights to fund political ads from “the company treasury” under Citizens United v Federal Election Commission, NCBA was active in the election sponsoring political advertisements for and against would be members of congress. The ability of NCBA to engage in such partisan politics is obviously greatly enhanced by the contribution of checkoff dollars to their treasury acquired through massive supplanting.

    According to their Form 990’s filed with the Internal Revenue Service by NCBA for the years 2006, 2007, and 2008 over eighty per cent (80%) of NCBA income is checkoff funds received from either the CBB or the “Federation”. Those same reports show that less than six per cent (6%) of NCBA revenue comes from membership dues. There is no question that without checkoff funds paid by the nation’s cattle producers, NCBA would be a shadow of its current self with political and policy activity affected likewise.

    Control of the expenditure of these massive amounts of checkoff funds by NCBA allows them the undue benefits of economic and political influence as well as editorial goodwill disproportionate with other organizations that do not enjoy checkoff bloated coffers. For any national cattle organization to claim that they speak for all United States cattle producers demonstrates gross arrogance and monumental misrepresentation.

    It is unknown what the political preferences and policy desires are of the ninety per cent (90%) plus of nationally unaffiliated cattle producers who pay the mandatory checkoff. However, it is reasonable to believe that those individuals would like to make policy and political decisions that involves their money for themselves and not have those decisions made for them by an organization that they have avoided by not choosing to join.

    It is now well past the time that USDA should have acted to restore the operational integrity of the Beef Checkoff, but it is certainly not too late. Cattle producers who pay these checkoff dollars, under penalty of law should they refuse to do so, have no one else to which to turn for help.

    The Honorable Tom Vilsack
    March 1, 2011
    Page 4

    They should be able to expect that their government will act to address an ethically challenged situation and restore integrity to a program in which the law requires their mandatory participation.

    Mr. Secretary, please fix the Beef Checkoff.

    Thank you.

    Sincerely,

    Dave Foster
    CEO
    Cattle Producers of Louisiana
    PO Box 886
    Prairieville, LA 70769

    C: Phyllis K. Fong
    Inspector General
    PO Box 23399
    Washington, DC 20026-3399

     

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