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Agriculture Today

Lawsuit filed against beef check-off

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Wilson County News
August 22, 2012 | 3,572 views | Post a comment

As cattlemen meet to work with other organizations to settle differences within the beef check-off program, one group has decided to take the issue to court. But the announcement of who has lined up for the lawsuit has caused a stampede within the beef industry, with speculation rife about the true intent.

The Humane Society of the United States (HSUS) -- a group known to oppose the ag sector -- is a surprise supporter. See related editorial below.

The Organization for Competitive Markets filed a lawsuit Aug. 9 against the U.S. Department of Agriculture (USDA), USDA Agricultural Marketing Service, the Cattlemen’s Beef Board, and the Beef Promotion Operating Commission. Mike Callicrate, the plaintiff in the lawsuit, is the owner of a meat-packing facility and vice president of the Organization for Competitive Markets. HSUS is not named in the lawsuit, however.

The suit’s objective is to halt the funding of beef check-off dollars to the National Cattlemen’s Beef Association, the major contractor of the beef check-off program.

The Beef Check-off Program was part of the 1985 Farm Bill and became effective July 18, 1986. The program assesses $1 per head on the sales of domestic and imported cattle and an equivalent assessment on imported beef products. Funds are used for research, education, and the promotion of beef and beef products.

Allegations of mismanagement of the beef check-off funds have circulated since 2010, when added safeguards were sought to reinforce the check-off firewall to head off misappropriations, including lobbying. This escalated after an independent audit revealed that the National Cattlemen’s Beef Association did indeed breach the firewall; the association had to reimburse the Cattlemen’s Beef Board more than $200,000. Since then, that amount has climbed to more than $305,000.

Inspector General audit

Although the beef check-off has received much coverage, other commodities promotions also have been scrutinized. A USDA Office of Inspector General Audit was released in March 2012, after an audit was conducted following a complaint against a grain commodity.

In its executive summary, the audit says 18 different boards have marketing promotions using check-off dollars. In 2009, $528 million was collected to “strengthen a commodity’s position in the marketplace through promotion, research, and information programs.”

The Office of Inspector General’s investigative review found that the Agricultural Marketing Service staff “did not always enforce the agency’s guidelines.”

A review of the check-off board’s operations revealed variations in how the term “periodic” review was defined. For the fruit and vegetable program, it was every three years; poultry, five years; and the livestock and seed program “had a policy to conduct a management review when a complaint or concern arose.”

According to the audit, the last beef check-off had not occurred for “at least five years.” Under the new guidelines, it is now required every three years.

Reasons for this include limited resources and staff and “the division conducts internal reviews of program area staff only at the request of the Deputy Administrator.” According to the March 2012 audit report, “The officials stated that this program was considered low risk because it did not involve Federal funding.”

Steps have been taken to safeguard against mismanagement of funds. In November 2010, the Agricultural Marketing Service “revised its guidance to specify the agency’s role.”

Second audit

A second audit currently is being conducted into the beef check-off. According to an Aug. 13 U.S. Cattlemen’s Association press release, “The Inspector General is expected to release in the near future a separate audit report examining specifically the beef check-off, its contractors, and check-off oversight.”

The U.S. Cattlemen’s Association (USCA) and other national cattle or agriculture-related organizations met in Denver, Colo., with representatives of the USDA Agricultural Marketing Service and the Cattlemen’s Beef Board for a Beef Check-off Industry Input Group meeting. According to USCA Executive Vice President Jess Peterson in an Aug. 16 USCA Capital Update, “I am pleased to say there is consensus with folks coming together and outlining what steps can and should be taken to enhance the check-off ... to ensure that the Beef Check-off works to the best and fullest extent possible for each person that pays into it.”

“Unfortunately, language in the Beef Act and Order requires that check-off work be conducted by industry organizations through contracts with the CBB [Cattlemen’s Beef Board], rather than allowing the CBB to contract directly with service providers for promotion, research, and education about beef,” said U.S. Cattlemen’s Association President Jon Wooster. The U.S. cattlemen’s group “has worked diligently over time to facilitate changes in the law so the program is more responsive to a changing beef industry, more efficient and more transparent,” he said.

His association urges the Beef Board and the USDA “to react to this lawsuit proactively by moving immediately to develop short-term plans that will ensure a seamless continuation of current check-off programming by other contractors in the event the plaintiffs in this case successfully obtain the injunction they are seeking from the court,” Wooster said. The group “stands ready to work” for the check-off program to continue.

The lawsuit comes as no surprise to those who have followed the debate on firewalls, since the Organization for Competitive Markets spoke of this in August 2010. But what caused the recent stampede in the cattle industry is the involvement of the Humane Society of the United States, and its role in being questioned.

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