Jolley: Five minutes with USCA’s Jon Wooster and the Beef Checkoff
Chuck Jolley | Updated: July 22, 2011
I might have been looking the wrong way in the run up to the 2011 Summer Conference. When I scheduled my trip to Orlando, I thought the internecine, damaging-or-injuring-participants-on-both-sides-of-the-conflict, financial battle between the National Cattlemen’s Beef Association and the Cattlemen’s Beef Board was slowly being resolved. I understood the Orlando location was a forced compromise but maybe these two groups were getting closer to a kiss-and-make-up solution?
U. S. Cattlemen’s Association President Jon Wooster lobbed a grenade into that semi-peaceful scenario last week with a fiery editorial about misspent finances, shattered trust and lost opportunities. All of a sudden, I was looking at something out of one of those overwrought TV reality programs; not a “can’t we all just get along?” event.
If you haven’t read Wooster’s editorial, click here. WARNING: It’s not for the financially faint-of-heart.
His comments were hot enough to temporarily melt my computer screen. The timing, coming just a few short weeks before the Summer Conference in Orlando, couldn’t have been more flameworthy. What he wrote will surely be the main course of hallway discussions at the Gaylord Palms Resort & Convention Center. I’m not sure I want to be anywhere near some of the back room ‘conversations.’
The Cattle Industry Summer Conference is supposed to include meetings of the National Cattlemen’s Beef Association, Cattlemen’s Beef Promotion & Research Board, American National CattleWomen, Inc. and National Cattlemen’s Foundation. All four of those groups will meet, of course, but only the first two will have ‘hit-the-fan’ moments.
I had to contact Wooster and ask him to confirm and clarify what he wrote. There was no backing down and his clarifications were even more incendiary.
Q. Jon, your editorial last Thursday seemed to take the back room financial brawl between NCBA and CBB out into the streets. You noted, “It is unprecedented in beef check off history for the CBB chairman and chief executive officer to have been driven out of office.”
The announcements issued by CBB about both resignations were of the politically correct ‘resigning to pursue other opportunities’ variety. What were the reasons behind those two unprecedented moves as you see it?
A. U.S. Cattlemen’s Association (USCA) believes the reasons are obvious. The public discussion over the proposed roles and responsibilities policy changes and expanding financial irregularities by the check off’s primary contractor was being purposefully redirected by NCBA’s unsavory charges against CBB leadership. It’s a familiar but worn out tactic that this time has really damaged NCBA’s credibility in the country.
Tom Jones’ letter of resignation to CBB members discussed the defamation and misrepresentation that has gone on. CBB leadership was attacked for essentially doing their jobs – for providing oversight of the check off. I think the industry should be grateful to Mr. Jones and Mr. Ramey for not only their service but also for their forthright courage. Their resignations took the charges of misconduct and unethical behavior off the table. Now that the curtain has been pulled back for investors, hopefully public discourse will get back to more important issues.
This has been unfortunate for the beef check off in many ways. We’ve lost two very experienced, qualified leaders who understand the national program and, even worse, this exercise has likely cost the check off tens of thousands of dollars at a time when budgets are shrinking. We’re researching those exact costs, by the way, and will make the figures public for investors so they can better understand just how little regard the check off’s primary contractor has for their hard-earned dollars. None of this has been productive for the industry; in fact, it has inflicted great harm.
The interests of the hundreds of thousands of check off-paying cattle producers who choose not to belong to NCBA were being marginalized in the process. USCA made the decisions it did to prevent a total collapse of the program.
Q. When the financial irregularities were first brought to light just before the Denver meeting last year, the hallways and meeting rooms were filled with some very public name-calling and serious allegations. The Denver meeting in February showed a gentler, kinder public face but the long knives were still being brandished behind closed doors. What can we expect in Orlando?
A. Interestingly, four of the 16 former chairs of the CBB since 1995 simply refuse to help find solutions and their actions exacerbate the current situation. The four former leaders sent a letter to the CBB dated July 15 rejecting the proposed CBB policy changes and alluding to yet another resignation, that of Dan Dierschke, CBB Immediate Past Chairman. You would think that as former check off leaders their priorities would be to facilitate a productive public discussion about the proposed policy changes in a manner concerned about the primary contractor’s expanding financial irregularities. One has to take into consideration, however, that at least one of the four is also a former NCBA president.
We hope that the discussion in Orlando will be one of reason, respect and intelligence and based on what’s best for all cattle producers and the future of the check off. CBB members take an oath of responsibility when they accept the Secretary’s appointment to the board. They are charged with equal representation of all producers and not just the interests of NCBA. The outcome in Orlando rests squarely on the shoulders of the 106 CBB members who will gather there.
Q. You want the fight taken out of the hands of the NCBA and CBB and you’ve called for a federal investigation, instead. Your suggestion strikes me as taking the dispute from the hands of a marriage counselor and giving it to a divorce lawyer. Is this a relationship that can be repaired and should be saved or do you think it’s time for them to go their separate ways?
A. First, I’m sure you’ve heard the old adage that says the primary cause of divorce is marriage. The union between the Federation of State Beef Councils and NCBA should never have been allowed to occur, but back then I don’t think anyone anticipated the level of abuse that union would spawn, nor did anyone realize how the Federation coming under a policy group’s umbrella would entrench that policy group’s control over the program.
There’s a revolving door of people between NCBA’s policy and check off division leadership positions. For example, Scott George, who was the NCBA Federation Chairman in 2010, is the 2011 NCBA Vice President; Jan Lyons, who chaired the CBB in 1996, served as NCBA President in 2004; David Dick who is the current chairman of NCBA’s Federation served on NCBA’s Policy Division Board; the links go on and on. The relationship is often described as incestuous and it has been that way since the merger in 1996.
Whether or not NCBA’s Federation and Policy Divisions should go their separate ways is something that will require legal analysis of the Act and Order to understand whether that would require Congressional action. There are ways to distance that relationship and strengthen the firewalls between the two without a divorce, but that’s going to take open minds working without bias. The first steps towards that separation are elimination of the joint committee processes, including the nominating committee, and removal of NCBA’s Policy Division from committees handling planning, budgeting and evaluations.
I prefer to characterize it like this: contractors to the Department of Defense have no place in the planning, budgeting and allocating of defense funds. NCBA’s role in the check off planning, budgeting and allocating of check off funds contrasts starkly with federal policy in that NCBA, as a primary contractor, currently has significant roles in check off planning, budgeting and allocations.
The U.S. Supreme Court ruled that the check off program is a government program. NCBA supported that ruling. Yet, NCBA now proclaims that it is worried the CBB’s proposed policy changes will bring about government overreach into the check off. You can’t have it both ways.
Q. Any financial irregularity is cause for concern. It was the NCBA’s position that the moneys in question were merely miscoded and a very small percentage of the overall budget. What can you tell me about the ongoing internal audit as well as the OIG federal audit?
A. USCA is aware of NCBA’s defensive arguments and, frankly, they simply don’t hold any water, particularly when the NCBA CEO improperly charged the check off for his family’s travel to a non-check off related event. I believe there were golf tournament fees and other travel expenses to non-check off events also involved. Miscoding? I don’t think anyone really believes that. Enron claimed many of the same arguments. NCBA’s indignant response to the public disclosure of the irregularities was a tremendous signal to investors. The group went on the attack when they should’ve been apologizing to cattle producers and punishing or removing the offenders in their midst.
There’s some blatant hypocrisy in play when NCBA demands removal of CBB leadership yet fails to punish or penalize its own for such significant improprieties. Frankly, it’s a little surprising that the CBB and/or USDA didn’t impose financial penalties for the irregularities uncovered thus far.
USCA understands that the OIG audit is underway and that the final report could be issued this Fall. However, the timing will depend on how expansive the audit becomes which relates to how many irregularities are found. Several groups have asked the OIG to expand the audit to certain state beef councils and that may push back the completion date.
Q. Your editorial talked about some of the back room maneuvering between NCBA and CBB behind the location of this year’s summer meeting. I’m sure most people in the business don’t understand the details behind locating the event and how it’s paid for. Would you explain how it works?
A. Because the summer and winter meetings of the CBB and NCBA are joint, it’s the check off that pays the lion’s share of all the costs, and that’s a significant total considering all the people involved, the travel and lodging, site expenses and so forth. One would think that selecting the joint meeting sites would include thorough communication between the parties involved.
NCBA leadership wanted to hold the summer meeting at a Gaylord Properties hotel in Washington, DC, where the costs would have been even higher than other locations. The CBB conducted a cost analysis and discovered that the costs would be at least $80,000 less to the check off to hold the summer meeting in a location like Denver. To the CBB Executive Committee’s credit, they rejected the proposal for the Washington, DC site and said they would hold their summer meeting in a different location with or without NCBA.
Not only were the costs significantly higher, but there is also a question about breaching firewalls if NCBA staff and members are in Washington, DC on the check off’s tab and make any political contacts while they’re there. The Act and Order are very clear that check off funds cannot be used for lobbying or political influence of any kind.
The CBB Executive Committee meeting minutes show that despite being directed otherwise, NCBA staff went ahead and signed a contract with Gaylord Properties for the Washington, DC site. The minutes also show that NCBA staff excluded the CBB from negotiations with Gaylord Properties. The penalties alone for breaking the contract were $200,000 and the CBB’s legal counsel advised that NCBA’s check off division would be responsible for at least half the penalties. In the end, the CBB Executive Committee determined that it would be in the best interest of the check off to renegotiate with Gaylord Properties to move the summer meeting to another one of the company’s sites. That’s how the 2011 summer meeting ended up in Florida during the month of August.
Q. Let’s talk about the health and the future of the check off. Real dollars funding the work done by CBB have declined by 20% in the last five years. Looking at inflationary dollars, the money available has dropped by half since the program’s inception. Now, we have the CBB going forward at a critical time without people in the top two positions. There seems to be more bad news than good lately. What do you see in the immediate future?
A. The timing surrounding the loss of CBB leadership absolutely could not be less fortunate for the beef check off. We’ve lost two excellent, experienced leaders and we have a primary contractor that appears to believe that the check off belongs to them. As you’ve stated, budgets are contracting and inflation is taking its toll.
NCBA has effectively blocked any advancement of the check off by failing on all counts to embrace the changes producers are asking for and by failing to clean up its own financial unprofessionalism. If the healing process were to start tomorrow, it would take a long time to rebuild the trust that’s been broken and the confidence that’s been shattered.
Q. Thousands of people read Cattlenetwork. What would you like to say to them?
A. USCA has swung the gate wide for every check off-paying producer to have a say in molding the future of the check off and to feel secure doing so. We want every producer who’s interested to get in touch with their Congressional representatives, the Department of Agriculture and their CBB representatives to make clear their ideas and desires.
Chuck Jolley is a free lance writer, based in Kansas City, who covers a wide range of ag industry topics for Vance Publishing.