Industry Update

A grassroots self-help program for an industry that involves more than a million producers and dozens of producer organizations and associations can get necessarily complex at times. And when it does, it's often worth stepping back and taking a look at the big picture - clearing the lens of clutter and returning focus to the mission at hand.

Such is the case with the national Beef Checkoff Program, as a host of misperceptions about the checkoff program seems to have emerged from confusion about how and by whom the program is administered and how it serves producers.

At the heart of the confusion are questions about the different roles of the Cattlemen's Beef Board and industry organizations that contract to carry out checkoff programs - particularly the National Cattlemen's Beef Association (NCBA), which is the largest contractor of beef checkoff dollars but is a separate entity from the Beef Board with a separate role in the checkoff program.

THE BEEF BOARD
So what is the Cattlemen's Beef Promotion and Research Board? More often referred to as the Cattlemen's Beef Board or just the Beef Board, it is made up of 108 beef and veal producers and importers from throughout the country. The U.S. Secretary of Agriculture appoints these cattlemen to three-year terms on the Beef Board, after they are nominated by qualified cattle-producer organizations on a state-by-state basis. The Beef Board oversees collection of the $1-per-head checkoff assessments, certifies and reviews Qualified State Beef Councils, administers the Beef Checkoff Program, and evaluates programs funded at the national level.

According to the Beef Promotion and Research Act - passed as part of the 1985 Farm Bill and approved by 79% of producers who voted in favor of the mandatory checkoff in 1988 - the Beef Board is required to contract with national beef-industry organizations to implement checkoff programs in the areas of beef promotion, research, education, information and communication.

CHECKOFF CONTRACTORS
The reason that the Beef Board must contract with other industry organizations to carry out checkoff programs is because producers said when they helped form the mandatory checkoff program that they did not want to create a whole new expensive layer of bureaucracy. Instead, they said, they wanted to create a board to oversee the programs, which should be carried out by existing beef organizations for the sake of efficiency and to leverage expertise that existing associations had to offer.

According to the Beef Act, organizations eligible to submit a proposal, or "Authorization Request," to implement checkoff programs must be a national beef-industry organization that was in existence at the time of the passage of the Beef Act. There are dozens of such organizations that could submit proposals. For fiscal 2004, for example, 10 organizations submitted 67 different proposals to carry out checkoff programs during the current year, and 46 of those proposals from eight of the 10 organizations were approved, based on considerations including budget and the adherence of programs to the goals of the checkoff program and the beef industry's Long Range Plan.
All organizations that submit proposals to carry out checkoff programs are considered based on the same criteria, regardless of whether or not they have contracted previously. In fact, the Beef Board has recently encouraged associations that had not previously contracted for checkoff funding to do so.

Contracting organizations that are working on checkoff programs in fiscal 2004 include the National Cattlemen's Beef Association (NCBA), the U.S. Meat Export Federation (USMEF), the American National Cattlewomen (ANCW); the Meat Importers Council of America (MICA); the American Meat Institute Foundation (AMIF); the National Livestock Producers Association (NLPA); the American Farm Bureau Foundation for Agriculture (AFBFA); and the American Veal Association (AVA).

NCBA
NCBA has traditionally been the primary contractor of checkoff dollars for a couple of reasons. First, this organization has simply been the one that has submitted the bulk of proposals for development of checkoff programs aimed at building consumer demand for beef - the chief mission of the Cattlemen's Beef Board and the Beef Checkoff Program.

Second, NCBA was formed in the mid 1990s through a very open process that led to the merger of the National Live Stock and Meat Board's Beef Industry Council and the National Cattlemen's Association - which were the No. 1 and No. 2 contractors of checkoff dollars prior to their merger. When you combine the two leading contractors into one organization, it stands to reason that you would end up with a new largest contractor - and one with an abundance of promotional and research expertise and institutional knowledge about the Beef Checkoff Program.

As a contractor of checkoff dollars, NCBA submits proposals for checkoff-funded programs each year to joint industry advisory committees and, ultimately, to the Beef Promotion Operating Committee, the Beef Board, and the U.S. Department of Agriculture, which must approve the Beef Board budget and all program proposals.

A critical point to remember when considering NCBA's role in the checkoff is the structure of that association itself. NCBA has two main divisions: One of them - its policy division - is a membership organization. The Beef Board has neither involvement with nor any connection to the policy division of NCBA or any other contractor, and absolutely no checkoff time or money is invested or used therein.

In fact, the Beef Act and Order strictly prohibits the Beef Board from engaging in any legislative lobbying or policy-oriented activity whatsoever. A so-called "firewall," which is a tight system of accounting policies, procedures, practices, controls and evaluations, in addition to annual audits by independent auditing firms and oversight by USDA assure that the Beef Board and NCBA adhere to that requirement.

The other division of NCBA is the Federation of State Beef Councils. The Federation division coordinates closely with the Beef Board to implement the industry's Long Range Plan and is the division that contracts with the Beef Board to conduct specific checkoff programs, as approved by the Operating Committee and USDA. The Federation represents Qualified State Beef Councils that develop and implement state checkoff programs through their producer boards.
The state councils may choose to contribute money from their state share of checkoff dollars - after sending the required 50 cents per dollar to the Beef Board - to NCBA's Federation Division for investment in checkoff programs developed at the national level. In addition, they collect the $1-per-head checkoff assessments from beef producers and collecting points in their states before forwarding half of each dollar collected on to the Beef Board for use in national checkoff programs.

COST RECOVERY
If there are so many beef industry organizations eligible to carry out checkoff programs, why don't more than just a handful usually submit proposals to do so?

Only the beef organizations that are eligible to submit proposals can truly answer that question, but the fact that contractors are paid on a cost-recovery basis only may affect the number of organizations that choose to apply for checkoff funding of programs. "Cost recovery" means that the Beef Board reimburses contractors only for actual costs incurred to conduct specific projects in accordance with a contract approved by the Beef Board's operating committee and USDA. In other words, they are not permitted to profit from checkoff work.

In line with producers' desires at the time they helped form the mandatory checkoff legislation, then, no organizations have the opportunity to profit from checkoff assessments that producers pay to build demand for their product.

The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen's Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval. The checkoff assessment became mandatory when the program was approved by 79 percent of producers in a 1988 national referendum vote. Checkoff revenues may be used for promotion, education and research programs to improve the marketing climate for beef.


Welcome to the Angus e-List
Understanding the Beef Checkoff What is the difference between the Beef Board and checkoff contractors like NCBA? A grassroots self-help program for an industry that involves more than a million producers and dozens of producer organizations and associations can get necessarily complex at times. And when it does, it's often worth stepping back and taking a look at the big picture - clearing the lens of clutter and returning focus to the mission at hand. Such is the case with the national Beef Checkoff Program, as a host of misperceptions about the checkoff program seems to have emerged from confusion about how and by whom the program is administered and how it serves producers. At the heart of the confusion are questions about the different roles of the Cattlemen's Beef Board and industry organizations that contract to carry out checkoff programs - particularly the National Cattlemen's Beef Association (NCBA), which is the largest contractor of beef checkoff dollars but is a separate entity from the Beef Board with a separate role in the checkoff program. THE BEEF BOARD So what is the Cattlemen's Beef Promotion and Research Board? More often referred to as the Cattlemen's Beef Board or just the Beef Board, it is made up of 108 beef and veal producers and importers from throughout the country. The U.S. Secretary of Agriculture appoints these cattlemen to three-year terms on the Beef Board, after they are nominated by qualified cattle-producer organizations on a state-by-state basis. The Beef Board oversees collection of the $1-per-head checkoff assessments, certifies and reviews Qualified State Beef Councils, administers the Beef Checkoff Program, and evaluates programs funded at the national level. According to the Beef Promotion and Research Act - passed as part of the 1985 Farm Bill and approved by 79% of producers who voted in favor of the mandatory checkoff in 1988 - the Beef Board is required to contract with national beef-industry organizations to implement checkoff programs in the areas of beef promotion, research, education, information and communication. CHECKOFF CONTRACTORS The reason that the Beef Board must contract with other industry organizations to carry out checkoff programs is because producers said when they helped form the mandatory checkoff program that they did not want to create a whole new expensive layer of bureaucracy. Instead, they said, they wanted to create a board to oversee the programs, which should be carried out by existing beef organizations for the sake of efficiency and to leverage expertise that existing associations had to offer. According to the Beef Act, organizations eligible to submit a proposal, or "Authorization Request," to implement checkoff programs must be a national beef-industry organization that was in existence at the time of the passage of the Beef Act. There are dozens of such organizations that could submit proposals. For fiscal 2004, for example, 10 organizations submitted 67 different proposals to carry out checkoff programs during the current year, and 46 of those proposals from eight of the 10 organizations were approved, based on considerations including budget and the adherence of programs to the goals of the checkoff program and the beef industry's Long Range Plan. All organizations that submit proposals to carry out checkoff programs are considered based on the same criteria, regardless of whether or not they have contracted previously. In fact, the Beef Board has recently encouraged associations that had not previously contracted for checkoff funding to do so. Contracting organizations that are working on checkoff programs in fiscal 2004 include the National Cattlemen's Beef Association (NCBA), the U.S. Meat Export Federation (USMEF), the American National Cattlewomen (ANCW); the Meat Importers Council of America (MICA); the American Meat Institute Foundation (AMIF); the National Livestock Producers Association (NLPA); the American Farm Bureau Foundation for Agriculture (AFBFA); and the American Veal Association (AVA). NCBA NCBA has traditionally been the primary contractor of checkoff dollars for a couple of reasons. First, this organization has simply been the one that has submitted the bulk of proposals for development of checkoff programs aimed at building consumer demand for beef - the chief mission of the Cattlemen's Beef Board and the Beef Checkoff Program. Second, NCBA was formed in the mid 1990s through a very open process that led to the merger of the National Live Stock and Meat Board's Beef Industry Council and the National Cattlemen's Association - which were the No. 1 and No. 2 contractors of checkoff dollars prior to their merger. When you combine the two leading contractors into one organization, it stands to reason that you would end up with a new largest contractor - and one with an abundance of promotional and research expertise and institutional knowledge about the Beef Checkoff Program. As a contractor of checkoff dollars, NCBA submits proposals for checkoff-funded programs each year to joint industry advisory committees and, ultimately, to the Beef Promotion Operating Committee, the Beef Board, and the U.S. Department of Agriculture, which must approve the Beef Board budget and all program proposals. A critical point to remember when considering NCBA's role in the checkoff is the structure of that association itself. NCBA has two main divisions: One of them - its policy division - is a membership organization. The Beef Board has neither involvement with nor any connection to the policy division of NCBA or any other contractor, and absolutely no checkoff time or money is invested or used therein. In fact, the Beef Act and Order strictly prohibits the Beef Board from engaging in any legislative lobbying or policy-oriented activity whatsoever. A so-called "firewall," which is a tight system of accounting policies, procedures, practices, controls and evaluations, in addition to annual audits by independent auditing firms and oversight by USDA assure that the Beef Board and NCBA adhere to that requirement. The other division of NCBA is the Federation of State Beef Councils. The Federation division coordinates closely with the Beef Board to implement the industry's Long Range Plan and is the division that contracts with the Beef Board to conduct specific checkoff programs, as approved by the Operating Committee and USDA. The Federation represents Qualified State Beef Councils that develop and implement state checkoff programs through their producer boards. The state councils may choose to contribute money from their state share of checkoff dollars - after sending the required 50 cents per dollar to the Beef Board - to NCBA's Federation Division for investment in checkoff programs developed at the national level. In addition, they collect the $1-per-head checkoff assessments from beef producers and collecting points in their states before forwarding half of each dollar collected on to the Beef Board for use in national checkoff programs. COST RECOVERY If there are so many beef industry organizations eligible to carry out checkoff programs, why don't more than just a handful usually submit proposals to do so? Only the beef organizations that are eligible to submit proposals can truly answer that question, but the fact that contractors are paid on a cost-recovery basis only may affect the number of organizations that choose to apply for checkoff funding of programs. "Cost recovery" means that the Beef Board reimburses contractors only for actual costs incurred to conduct specific projects in accordance with a contract approved by the Beef Board's operating committee and USDA. In other words, they are not permitted to profit from checkoff work. In line with producers' desires at the time they helped form the mandatory checkoff legislation, then, no organizations have the opportunity to profit from checkoff assessments that producers pay to build demand for their product. The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen's Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval. The checkoff assessment became mandatory when the program was approved by 79 percent of producers in a 1988 national referendum vote. Checkoff revenues may be used for promotion, education and research programs to improve the marketing climate for beef.
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