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Will beef check-off be checking out?
The much-anticipated Office of Inspector General’s audit of the beef check-off is complete, and folks on both sides of the fence are considering it a victory. But questions continue of whether to keep the beef check-off voluntary.
This audit follows an independent audit by Clifton-Gunderson for fiscal years 2008-10. This was not part of a required annual audit and was initiated by the Cattlemen’s Beef Board to investigate alleged abuse by the main contractor, the National Cattlemen’s Beef Association (NCBA).
In short, the NCBA had “mistakenly coded and submitted improper expenses to be reimbursed by the beef checkoff fund,” and reimbursed $216,944 back to the beef board and hired a compliance manager.
According to the second audit, more than 1,000 invoices amounting to more than $20.5 million in reimbursement payments were reviewed for the Cattlemen’s Beef Board.
The audit’s finding stated that the beef board’s primary contractor -- the NCBA -- was in compliance with legislation, but found fault with the Agricultural Marketing Service, which had:
•Not conducted periodic management reviews of the board
•“Not identified weaknesses in the beef board’s internal controls over project implementation costs.”
The Office of Inspector General recommended the Agricultural Marketing Service:
•“To develop and implement oversight procedures specific to the beef board.”
•“Perform management reviews of the beef program.”
•“... that the beef board improve the transparency of its documents.”
The final results of the second audit are similar to an audit conducted for another grain commodity in 2012 that emphasized that the Agricultural Marketing Service “is responsible for overseeing the implementation, administration, and operation of commodity research and promotion boards.”
Since then, the Agricultural Marketing Service guideline was changed in March 2012, and “must conduct management review at least once every three years.”
The beef check-off (Beef Promotion and Research Act of 1985) is just one of 19 research and promotion programs overseen by the U.S. Department of Agriculture (USDA) Agricultural Marketing Service.
According to the 2012 report -- for the grain commodity -- the government only conducts an audit if a complaint was made.
With the beef check-off case, an audit had not been conducted in “at least five years.” Under the new guidelines, it is now required every three years.
The NCBA is comprised of two divisions -- the federation and the policy divisions. The federation part of the NCBA receives 100 percent of its funds from the check-off. This equals about 82.5 percent of the NCBA’s total funding. The NCBA’s policy division is derived from contributions from companies and individuals, totaling 17.5 percent of the association’s total budget.
One of the complaints of cattlemen was the issue of who comprises the board. “The Act and Order require that half of the beef promotion operating committee’s members be individuals from an organization that has become a component of the board’s primary contractor -- NCBA. This committee is responsible for voting to approve contracts. ... It is crucial that AMS [Agricultural Marketing Service] ensures its independent review of the boards are designed to provide comprehensive assurance of contract compliance.”
According to the latest audit, no additional errors were found, but R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) questioned why a $39,000 error was not mentioned in the latest audit.
R-CALF USA cites an interview with Cattlemen’s Beef Board Chairman Tom Jones, who resigned last summer during the controversy. In an interview by Leesa Zalesky of Western Ag Reporter, Jones said that “subsequent procedures” performed by the Cattlemen’s Beef Board for fiscal years 2008-10 “have identified an additional $39,000 improperly billed” to the beef board during that time.
In response, R-CALF filed a formal complaint to U.S. Agriculture Secretary Tom Vilsack and the USDA, calling the audit a “colossal whitewash of monumental proportions.” The R-CALF would like to suspend the NCBA from being a contractor.
As with any organization that has control of a project for years, changes come slowly.
One major change has occurred since the time frame of the audit. Marketing organizations must have been in existence when the Beef Act was signed in 1988. Since August 2012, more organizations are eligible to become contractors.
Since the first audit findings, the U.S. Cattlemen’s Association and the National Farmers Union have sponsored joint conferences to address issues of concern to cattlemen. The NCBA has been included in these talks.
However, the U.S. Congress has stepped in to make this a political issue.
U.S. Sen. Ted Cruz of Texas resurrected an amendment to make the check-off voluntary. The marketing amendment would make all national check-offs and promotion boards voluntary.
Last summer, an amendment by U.S. Sen. Jim DeMints would have prohibited mandatory or compulsory check-off programs. The amendment was rejected.
Members of the Wilson County Farm Bureau passed a resolution to support the “establishment of a statewide beef check-off program” if the national Beef Check-off program is discontinued.
Like a good U.S.-born/raised USDA steak on a summer grill, the check-off debate continues to sizzle.
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