Checkoff, Check-mate Part II

by Mayzie Purviance

“Every dollar you invest in the Beef Checkoff arms the beef industry with the research capabilities and knowledge necessary to drive demand for beef for generations to come.  Your dollar helps promote beef around the world, elevate consumer trust with the latest news on nutrition and safety, supports cutting-edge innovation, and keeps beef producers informed through transparent, results-driven communication and education,” the Cattlemen’s Beef Board (CBB) website reads.

The tone of this statement (toward the Beef Checkoff) is a bit different than the tone of last week’s Western Ag Reporter article which highlighted an essay written by the Animal Wellness Action’s Executive Director Marty Irby titled, “USDA’s Runaway Checkoffs Should Serve Family Farmers, Not Bankrupt Them.”

Per the Beef Checkoff website, the Checkoff is set in place to act as a catalyst for change and is designed to stimulate beef sales and consumption through a combination of initiatives including consumer advertising, research, public relations, and new-product development.

Or, as CBB Chairmen Jared Brackett said, the Checkoff was established in 1985 to offset the lack of demand.

“The reason it’s continuing,” Brackett said, “is because we’ve had great success with it.”


$80 million sounds like a lot of money…

Brackett said the CBB spends about $40 million a year.  He explained that $1 of every head of cattle sold is evenly split into two funds.  Half of this collected cash goes to CBB and the other half is put towards state programs and specific state beef councils.

“At the end of the day, we’re looking at about $80 million that’s being spent on behalf of our producers.  That’s a drop in the bucket compared to what out detractors and anti-animal agri-culturists are spending to destroy our industry,” Brackett said.  “It’s really important that we continue to have that voice.  We’ve got a pretty good track record of getting a return on these dollars — the last ROI we did was about $11.90.  That’s pretty impressive considering how much we spend.”

Eighty-million dollars sounds like an outrageous number until the math is figured.  According to USDA, the U.S. is home to a little over 94 million head of cattle as of January 1, 2020.  Granted, not all of these animals will be sold at market such as replacement heifers, calves, bulls, etc., thus not contributing to the $1 per head checkoff fund.

The $80 million figure producers to beg the question, is the checkoff bankrupting America’s agriculturists, as suggested by the title of Irby’s article?

According to Farm Bureau, no.  At the end of January 2020, Farm Bureau released an article titled “The Verdict Is In: Farm Bankruptcies Up in 2019,” which claimed 595 Chapter 12 bankruptcies were filed.  This article was a follow up to the October 2019 article, “Farm Bankruptcies Rise Again.”

The October 2019 report states: “The repayment terms on this [2019 farm] debt, according to data from the Kansas City Federal Reserve, reached all-time highs for a variety of categories.  All non-real estate loans saw an average maturity of 15.4 months, feeder livestock had an average maturity period of 13 months, other livestock had a maturity period of 18 months and other operating expenses, i.e., loans primarily for crop production expenses and the care of feeding livestock, had an average maturity period of 11.5 months – all record highs.

“Put simply,” the report continued “Farmers are taking longer to service their debt – a trend made easier due to historically low interest rates.”

Farm Bureau did not include the Checkoff in the list of possible debt reasons.  USDA statistics and simple math helps explain why.

The earliest Census of Agriculture, from 2017, states the average beef cow herd is 43.5 head of cattle per operation.  Larger scale operations consisting of 100 or more beef cows compose 9.9 percent of operations but make up 56 percent of the beef cow industry.  Utilizing the average herd size of 43.5 head of cattle, one could assume cattle producers spend, on average, $43.50 per year on Checkoff funding.

Farm Bureau declined to comment on the claim that the Checkoff contributes to farm bankruptcies, “as we feel that our story on farm bankruptcy is unrelated to this topic.”


The Checkoff is not here to bail you out…

“It’s never been the checkoff’s function or goal to make your operation profitable.  We are a tool that if utilized can help your operation by driving more demand for beef,” Brackett stated.  “We don’t make individual decisions on your operation as far as the timing of breeding, the type of genetics you use, whether you buy a new pick up or not — I’ve never seen a producer go bankrupt because they paid a dollar per head to the checkoff.”

The checkoff’s goal is plain and simple: increase demand for beef.  The checkoff does this through promotional efforts, Brackett said.

“As a producer, I don’t have an operating budget to go and promote beef as an individual.  But when we get together as a group, we’ve got some real money.  If I tried to promote my own product, how much luck would I have? How much success would I have? But if we come together as a group of producers, we’re talking $80 million+ that we’re able to spend on that,” Brackett continued.  “We’re actually able to conduct studies and offset some of those [negative] reports that come out.”

Brackett said another main function for your checkoff dollars is spent to combat detractors from animal activist and anti-ag organizations.

“There’s a reason why they don’t like us.  They don’t like what we do for a living.  They don’t like what we raise.  They don’t like the way we do it,” Braackett said.  “I think part of it, too, is that they’re also a bit jealous of our lifestyle.  I mean, we’re in an industry where we have multi-generations [living the same lifestyle].  I know some of these people say these multi-generational operations are going out of business — and sometimes they are, sometimes they’re not.  But what people need to realize is: It’s not the checkoff’s responsibility to do your finances.  I feel for these producers who are going out of business, don’t get me wrong, I do.  I’m sure there are some really good ones, but we also are in a competitive market and if you make a poor decision, sometimes that happens.

“To blame the checkoff for you going under — that’s a pretty big stretch in my mind.  I don’t see the checkoff doing anything that would actually cost our producers money,” Brackett concluded.


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