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“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 funds…”

05 Jun

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.)

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.

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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Posted by on June 5, 2011 in Uncategorized

 

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