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Wed January 2, 2013
Beef checkoff feud exposes divide within cattle industry
This story on the American beef industry is part of a special reporting series from Harvest Public Media. Check out the rest of their stories at harvestpublicmedia.org.
When Allen Berry brought his 11 yearlings to the Green City Livestock Market in central Missouri last month, he paid into a fund that at first blush, seems a bargain.
Berry paid $11 into the Beef Checkoff, a mandatory government program that gets $1 each time an animal is sold on its way to the slaughter house. Berry ultimately took home a check for $9,723, which he netted after all the expenses were paid to the sale barn.
“I don’t mind paying for that,” said Berry, who farms near Trenton, Mo. “It’s a cost of doing business.”
That bargain turns into a bonanza for the Cattlemen’s Beef Promotion and Research Board, a USDA program that rakes in $80 million annually from the Beef Checkoff and is probably best known for the “Beef: It’s What’s for Dinner” campaign.
But the Beef Checkoff is now the center of a dispute that has cut a deep rift in the cattle industry, centered around the National Beef Cattlemen’s Association, which acts as a contractor for the government program. The NCBA gets about half of that annual take, creating what its critics say is a powerful force that has helped run tens of thousands of farmers and ranchers out of the business with their own money.
The dispute has moved into federal court in a lawsuit filed by Kansas rancher Mike Callicrate, who alleges that the NCBA is using the Beef Checkoff funds improperly to lobby government officials. Callicrate is president of a group called the Organization for Competitive Markets, which represents independent cattle producers.
“They have betrayed the people who they profess to represent,” said Fred Stokes, a Mississippi cattleman and OCM director. “They do not represent the best interest of the cattle producer. They are proponents for the packing industry.”
The meatpackers, headed by four huge corporations that process 82 percent of U.S. beef, are an industry partner of the NCBA. But that’s just one segment of the industry the association represents, said Scott George, a Montana cattleman who is the incoming NCBA president.
“NCBA has tried to work with this entire beef community, from the pasture where those calves are born, clear to the plate at the end,” he said. “We don’t give preference to any one segment of this, except for our producers. We are trying to keep them profitable.”
Beef Checkoff funds have been used for the popular ad campaign using famous actors like Sam Elliott, as well as paying for research that has benefited producers by improving the way cattle are handled, promoting food safety and creating new products that are convenient for consumers, George said.
“NCBA has stepped up to the plate and we’ve stepped up in a big way,” he said, “because this is our primary business, the production of beef.”
During the last 20 years, the number of farmers and ranchers who raise cattle in the U.S. has declined more than 21 percent, according to the USDA. There are many reasons for the decline, but the NCBA has played a role, said Dudley Butler, who resigned from a high-profile USDA office this year.
The powerful executives from the big beef packing companies wield undue influence over the boards that govern the NCBA, Butler said, and they are promoting policies that are not in the best interests of independent producers.
“It’s the leaders at NCBA, not the grassroots members, but the leaders, that are leading their members down the road to the slaughterhouse of vertical integration,” said Butler, who had headed the USDA’s Grain Inspectors Packers and Stock Yards Administration.
Already, the pork and poultry businesses are vertically integrated, meaning a common owner operates the entire supply chain, from growing the animals to processing and selling the meat. That forced the vast majority of independent farmers out of both industries, many of whom were forced to work under contract to huge food companies.
Butler and others describe the Beef Checkoff litigation as a last stand for independent cattle producers. The renegade ranchers have teamed up with the Humane Society of the United States, an animal rights group widely reviled by farm country. Most in agriculture believe the Humane Society plays to the emotions of people who don’t understand farming, sensationalizing animal handling practices and proposing nonsensical rules.
The OCM-Humane Society alliance, according to Butler, is much like the U.S. siding with Stalin against Hitler during World War II.
“The enemy of your enemy is your ally,” Butler said. “When you get into these conflicts, there’s a line drawn in the sand.”
The OCM-Humane Society alliance deeply disappointed the NCBA’s George, who accuses OCM of fragmenting the ag industry. Cattle producers need to band together in the face of drought, high feed prices and uncertain federal policy, he said.
“I think they have recognized that if they can interrupt the Checkoff program, which is trying to alleviate consumers’ concerns, and build demand for a product, then they have succeeded whether they win the lawsuit or not,” he said.
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This story originally aired as part of Business Beat, a weekly program about business and economics in mid-Missouri.