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A CBB Member Weighs In With His Perspective…70.9% of NCBA’s Total Overhead Paid by Checkoff

13 Jun

For subscribers to the blog who received email notification of the original post and went looking for it, we apologize.  Formatting issues caused a small delay.

We invite ALL CBB members to weigh in on this blog discussion.  We’d like to hear your perspective, too!

CBB…

Solid as ever

by Chuck Kiker

Member, Cattlemen’s Beef Board

(Published in the Western Ag Reporter week of June 6, 2011 and in the latest edition of the U.S. Cattlemen’s Association newsletter…both available on the internet).

Let’s get this straight… the Cattlemen’s Beef Board (CBB) is NOT an organization, as has been printed in some of the press recently. It is, instead, a board that oversees the national beef checkoff, and its board members are appointed by the U.S. Secretary of Agriculture.

As Board members, we have responsibilities, and we take an oath. One of our key responsibilities is to leave any affiliations with other organizations and our special interests at the door when we are representing the CBB.

For example, U.S. Cattlemen’s Association (USCA) members who have been appointed to CBB represent everyone, not just USCA. CBB members are responsible for representing ALL cattle producers for the good of the industry.

Disclaimer…

I am writing this article as an individual producer and a director of USCA. My opinions and thoughts concerning the beef checkoff and the CBB are NOT the opinions of the beef checkoff, the CBB, the USDA, or even USCA. They are mine!

The checkoff…

The beef checkoff program is 25 years old. The issues we’re experiencing with the checkoff today have a long history, and it takes time and experience inside the CBB to understand the complexity of not only the program and its processes, but also the problems.

Members’ role…

In 2005, at the CBB summer meeting, I began serving on the Joint Producer Communications Committee, made up of members of the CBB and of NCBA’s Federation of State Beef Councils.

As a committee member, you basically listen to bid proposals, called Authorization Requests (ARs), by contractors to conduct work funded by the checkoff in accordance with the Beef Promotion Act & Order. The committees then make recommendations

to the Operating Committee, and it’s Operating Committee that actually decides whether or not the AR should be funded from the Beef Board’s budget.

Can you imagine any other government program where a contractor for federal funds is permitted to vote on who receives the contract?

Conflict of interest?

At that 2005 meeting, potential contractors were making their pitches for their ARs, and the National Cattlemen’s Beef Association (NCBA) had a large one for Producer Communications. Another organization, the National Livestock Producers Association (NLPA),

submitted several ARs that competed with NCBA’s AR. At the end of the presentations, NCBA’s AR that addressed similar efforts to NLPA’s proposals was for significantly more money than NLPA’s. NCBA’s AR was going to cost $2,615,000 compared to NLPA’s AR’s price of $1,756,905.

NCBA pitched its AR at a cost of $1,900,000, but after being asked during discussion if its implementation was included in that price, they disclosed that it was not. It turns out that NCBA submits a separate AR for implementation for all of its ARs per budget category. NCBA’s implementation for Producer Communications was $715,000, bringing the total cost to $2,615,000.  The committee had to choose between the two presentations, and the tension was so thick in the room that the chairman called an executive session of the committee after polling the committee’s preferences on whether to remove the non-committee members from the room. I was the only one on the committee that voted to award the funding to NLPA. 

My point is that NCBA’s influence through membership on the Producer Communications committee and staffing of it clearly and literally directed discussion in favor of the NCBA AR. The committee’s vote could have potentially wasted an extra $750,000 by awarding the funding to NCBA and not to NLPA if the Operating Committee acted on the recommendation.

I learned later that potential contractors at that time had to submit AR proposals to NCBA – not to the CBB – even if the potential contractors was in direction competition with NCBA. Little did I know then, but that was just the tip of the iceberg!

It was at that point, after listening to the debate and reasoning of the other committee members, that I began to understand there were some problems with the beef checkoff process.

Today…

Let’s fast-forward to present times. For the 2011 program year, NCBA was awarded 93% of available program funding. This included 14.2% that went to the U.S. Meat Export Federation (USMEF), a subcontractor under NCBA, as well as 1% that went to American National Cattlewomen (ANCW) – also a subcontractor under NCBA – for its Beef Cook-Off program.

The only other stand-alone contractors besides NCBA are:

– ANCW, which received 0.37% of the funding for the Beef Ambassadors and spokesperson bureau ARs,

– MICA, the Meat Importers Council of America, which received 1.17% of the funding for foodservice, public relations, and retail work in the Northeast Beef Promotion Initiative, and

– CBB, which received 5.27% of the funding for Producer Communications work.

The significance of these figures comes to light when learning how NCBA is reimbursed for its expenses. While it’s true that contractors are not permitted to profit from beef checkoff projects they are awarded, they are permitted to recover “implementation” costs. Implementation can be defined as the costs associated with a contractor’s out-of-pocket expenses. In NCBA’s case, the organization turns in one AR per budget category for each year for the implementation costs on all the ARs it is awarded for a total of four implementation ARs.

NCBA computes the budget needed for its Implementation ARs by estimating the hours NCBA staff will work on programs for the checkoff, along with associated overhead expenses. NCBA has staff whose time is allocated 100% to the checkoff; other staff is allocated partially to the checkoff; and there are a few NCBA employees that do no work for the checkoff at all. At the end of the year, the total number of staff hours worked at NCBA and the total number of hours doing checkoff work are computed into the percentage of hours worked for the checkoff versus the total hours worked at NCBA.  Last year, 70.9% of total work at NCBA was designated as being for the checkoff.  NCBA’s implementation costs last year for the ARs awarded to them came in at a whopping $11.6 million. Remember, those implementation costs are over and above the direct costs of projects. This means that NCBA’s entire overhead was covered at 70.9%.

Even more astonishing is the fact that this includes general administrative salaries. The CEO of NCBA is also considered the CEO of the Federation of State Beef Councils, so his general administrative time is paid 70.9% with beef checkoff dollars.

NCBA has been managing the plan of work for CBB funds, the industry-wide strategic plan, as well as the plans of the committee meetings and the committee’s recommendations of work programs funded by the checkoff.

NCBA does not want to give that up because it enables NCBA to control the goals of the plans, and this in turn lets NCBA control how many hours its staff puts in on checkoff work and, hence, maintain control of the high percentage (70.9%) of its overhead that is reimbursed by the checkoff. This is one of the reasons why you are reading about the hoopla surrounding the vote to approve and implement the recommendations of the Roles and Responsibilities Committee.

Beginnings…

These problems began to evolve around 1996, when the merger between the National Cattlemen’s Association (NCA) and the National Live Stock and Meat Board occurred, and they have simply never been addressed.

Why? Because too many producers participating in the governance and oversight of the checkoff program were too closely tied to NCBA. The recent recommendations made by the Roles and Responsibilities Committee call for making changes to the planning and committee structures currently in place that will reduce the undue influence NCBA has had over the planning and goals of checkoff program work and will put control squarely back into the hands of the CBB. NCBA will still be the main contractor, but will lose its influence over how many hours of program work are done in-house at NCBA, ultimately giving NCBA less control of reimbursement for its overhead expenses.

The Roles and Responsibilities Committee recommendations will also make the committee process more inclusive of all producers and organizations. There will not be the perception that you are attending NCBA meetings when you want to follow your checkoff, and you certainly will not have to pay a registration fee or any kind of dues structure to NCBA to attend and participate in checkoff discussions. Producers are not supposed to have to pay to go to checkoff meetings now, but I know some who have been given a hard time or even turned away at NCBA meetings because they refused to pay a convention registration fee just to go to checkoff committee and CBB meetings held during the NCBA conventions. That’s just not right; it’s our checkoff, and we should have open access to it. 

Other problems…

There are many other problems with the checkoff that result in inefficiencies and misappropriated funds, but the problems are not so enormous that they cannot be overcome. The good news is they are finally being addressed. The CBB now has the highest number of unbiased producers it has had in a long, long time, if not ever.

However, NCBA still has far too much influence over the national checkoff through its Federation of State Beef Councils and its members and directors.

Let me make something real clear, though: Those folks at NCBA who are 100% checkoff staff are working in your best interest, and they are bright, intelligent individuals who serve the beef checkoff well.

The majority of these people are working for you and making the most of the checkoff funding they are budgeted. It’s the structure and the processes that need overhauling, not the talented individuals doing the program work.

The CBB is going to continue to work toward making the beef checkoff more inclusive for all checkoff-paying producers and toward shoring up the program’s compliance with the Secretary of Agriculture’s guidelines and expectations. 

By all means, if you have questions or read something that doesn’t sound accurate, call the Cattlemen’s Beef Board office at 303-220-9890.

Talk to Tom Ramey, CEO of the CBB, or leave your name and number and ask to have one of the CBB officers or staffers return your call. It’s YOUR checkoff, and you deserve honest, factual answers.

There’s no better place to get them than straight from the horse’s mouth.

 

Note: Chuck Kiker has recently been appointed to another term on the Cattlemen’s Beef Board. Previously, he served on the CBB two full terms (six years). He went off the Board for a year, was nominated again in 2010, and went back on the Board in early 2011. This year he has been selected for the third time to serve on the Operating Committee. He is also on the CBB Budget Committee.

 

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Posted by on June 13, 2011 in Uncategorized

 

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