A buck a head – that’s how much producers invest in beef promotion. Multiply that by every time the millions of heads of cattle that go to market each year trade hands and it totals nearly $80 million nationwide annually.
Breeders pony up. Importers pay the dollar. So do packers who own cattle more than 10 days. The program is administered by the Cattlemen’s Beef Promotion and Research Board. Fifty cents goes to the national program and most of the rest goes to the state where it’s collected.
“I don’t mind paying the checkoff. I see the good things it does,” said Sheila Miller who, with her husband, Mike, runs Deitschland Farm near Womelsdorf, Pennsylvania. They have been breeding registered polled Hereford cattle for more than 35 years in Berks County.
Miller has seen the educational outreach in Boston grocery stores and top-end New York restaurants where servers need to be able to talk intelligently to customers about cuts of beef, marbling and flavor.
“Everyone realizes the value of the checkoff. We have good compliance,” said Carol Gillis, executive director, New York Beef Industry Council, Westmoreland, New York.
The New York program, which employs a registered dietician to educate foodies and fitness directors, is focused on building consumer trust and promoting the value of a diet including beef.
Administrative expenses are limited to 5 percent of funds raised and, in recent years came in between 4 and 4.6 percent. In a typical year a tad over 15 percent each goes to beef research and to foreign marketing. Over 40 percent of the money raised goes to domestic promotions.
“We are targeting millennials,” Gillis said, “talking about the value of protein in the diet and emphasizing that beef is the best source of protein.” Going after millennials means targeting a consumer group that will be buying for the next 50 years – and hopefully will share their love of beef with their children.
Especially in the Northeast, the beef checkoff goes beyond the stereotypical cattle producer to include dairy beef. The Beef Quality Assurance (BQA) programs work with dairy producers to assure bull calves and spent cows are handled correctly and that animal welfare is considered in shipping and slaughter.
Whether an animal is sold as a bred beef heifer, a market steer or a spent cow, a $1 checkoff is levied. Although Miller chuckles when she uses the term “voluntary,” Deitschland Farm has been faithful every year in participating in the checkoff.
Sheila Miller’s father was a commercial Hereford breeder and World War II veteran who survived the battle of Iwo Jima. Vernon instilled in his daughter and son-in-law the desire to farm and raise cattle and to see the industry thrive.
During last summer’s Cattle Industry Summer Conference in Denver, the checkoff adopted the 2016-20 Beef Industry Long Range Plan (LRP), developed by 16 representatives of various segments of the beef industry. The plan spells out goals to strengthen the beef industry in the coming five years.
Many of those goals are directly tied to the goals of the Beef Checkoff Program, in coordination with representatives of the entire beef chain – restaurateurs, grocers, producers, importers, manufacturers, communicators and more.
“While the beef industry has faced many challenges, the future holds tremendous promise for the industry,” said Don Schiefelbein, owner/operator of Schiefelbein Farms and task force co-chairman. “The task force took a research-based approach to not only determine where the industry is and how we got here, but also (to look) at the trends and issues potentially impacting the beef community so that we can be most successful moving forward.”
The task force identified increasing beef demand as the single most important strategic objective for the industry and established a specific objective to “increase the wholesale beef demand index by 2 percent annually over the next five years.”
They expect to do that by focusing on four core strategies: driving growth in beef exports; protecting and enhancing the business climate for beef; growing consumer trust in beef and beef production; and promoting and strengthening beef’s value proposition.
“The overall vision of the task force was straightforward,” said John Butler, CEO of Beef Marketing Group and task force co-chairman. “Recognizing the growing demand among the world’s middle class for high-quality protein, we want the U.S. beef industry to responsibly produce the most trusted and preferred protein in the world. At this pivotal point in the U.S. beef industry’s history we need to focus our energies and limited resources on those areas that can provide our industry the best results.”
The Millers agree with the overall goal. More troubling is the idea that’s been batted around for the past few years that the $1 checkoff might be raised to $2 a head.
“I’d like to see them have everyone pay in before they double the checkoff on those who do pay,” Sheila Miller said.
Gillis said talk of a $2 assessment has faded recently as more states add local assessments. (New York does not have a state checkoff for beef.) “Two years ago there was more talk about that. We haven’t seen much discussion in the past year in New York State,” Gillis said.
In the case of a bred cow, either the breeder or the purchaser pays the $1 checkoff fee. Typically, at that level, the seller pays. “Every one of our purebred, registered cattle someday will go to hamburger heaven,” Miller said. When their cattle are sold at the New Holland Auction, the auction takes the checkoff out of their check.
However, some auction houses, especially in Pennsylvania, remain “nonremitters,” as they are called. They do not deduct the buck.
According to a 2014 study by Cornell University economist Harry M. Kaiser, the overall marginal benefit-to-cost ratio for the promotional programs was $11.20 gained for every $1 spent.
From 2006-13, an extra dollar invested in product-enhancement research, nutritional research, industry information and beef safety research yielded $43, $29.70, $27.90 and $22.70, respectively, in incremental profit.
Kaiser noted that, if the program had an additional dollar to spend on activities, these clearly would be its highest priorities based on high marginal returns. Next down the list comes new product development, where a dollar earned $19.90. Foreign market development and public relations gave the next two highest returns. A dollar invested in foreign market development and public relations efforts yielded $14.20 and $12.70. Highly visible beef advertising had a return of $6.40 – not bad, but far from the best ROI.
A cattle producer’s checkoff dollars go beyond selling beef. They also work to protect the industry against the rural version of urban myths.
The program funds an effort to safeguard individual producers and the beef industry from what it terms misinformation, misperceptions, crises and attacks or emotional rhetoric from misinformed sources or anti-meat individuals and groups. This includes myth-busters for misinformation such as a purported link between red meat and cancer, undercover videos that show isolated instances of abuse that are shown as representative of the entire beef industry or, most recently, that cows cause global warming.
“Our role is really protecting and preserving consumer confidence in and consumer demand for beef,” said Season Solorio, who directs the checkoff’s issues and reputation management program.
“Ultimately, we know that sometimes when issues pop up, and (with) consumers not being as involved with what happens on farms and ranches every day, they may look at that and say ‘Maybe I am going to limit my beef demand today or this week or this month,’ and that’s the last thing that we want,” Solorio said.
“Ultimately, what we’re really trying to do is make sure that consumers never hear about those issues – that would be our ultimate goal; and, number two, if they do hear about those issues that they have the other side of the story and that they understand that that headline – that 140-character soundbite on Twitter that they read – might not be the entire story,” Solorio said.
Any producer can click on http://www.factsaboutbeef to access the industry’s side. Helping promote a positive view of cattle production goes a long way to helping consumers understand how producers raise beef. Solorio said checkoff dollars are used to promote the truth and to shut down vast amounts of misinformation before it ever reaches the public.
If it cannot be headed off in advance, checkoff dollars help respond with facts and science when myths are purported. The fancy term is “reputation management.” For those who track such things – and they range from movie stars and ball players to Fortune 500 corporations – there is more strategy and engagement to the process than most folks could imagine. It is a constant process of monitoring and positioning the brand in its best light.
During 2015, 2,300 producers from across the country became Beef Quality Assurance-certified. The BQA program is part of the latest “free-certification” supported by Boehringer Ingelheim Vetmedica, Inc. (BIVI).
That is the highest number in the program’s five-year history and means nearly 24,000 producers have taken advantage of this offer to sign up for BQA certification during the five promotions. Through the sponsorship of the BQA certification program, BIVI provides financial support for the Beef Cattle Institute, which developed the certification module. The checkoff-funded BQA program is important to the cattle industry as it provides producers a set of best practices for producing quality beef. It also gives consumers the assurance that the beef they eat is safe and wholesome.
The BQA program in New York, for example, reaches beyond farmers into the state’s three agricultural schools. Students in animal science are given the full BQA program and can be certified in the state program.
The dairy version of the BQA program is part of that outreach effort. This spring, for example, the New York Beef Industry Council took a group of dairy producers to the Cargill operation in Wyomissing, Pennsylvania, as part of its educational outreach.
Just as those who skip the coin box vex paying subway passengers, free riders annoy paying cattlemen. At the root of many producers’ reluctance to participate – in effect, to give themselves a free ride on other producers’ contributions – is the question of who gives anyone the right to assess a buck a head on production.
In 1996, the Commodity Promotion, Research and Information Act, commonly known as the “Generic Act” was enacted to allow commodity groups to create programs for their commodities under a generic statute. Prior to the Generic Act, many current programs had been overseen by USDA’s Agricultural Marketing Service (AMS). Those programs were established under commodity-specific legislation. The U.S. Secretary of Agriculture has delegated all functions to AMS for these programs except those delegated to the USDA’s Foreign Agricultural Service, which has been given the charge to oversee international marketing activities.
However, the federal legislation, which provides authority for collection and expenditure of funds, also mandates for all programs that the Secretary of Agriculture appoint the board members and approve the boards’ budgets, plans, projects and contracts.
The USDA is committed to oversight of research and promotion boards in ways that allow them to grow and adapt to a fast-changing marketplace, including leadership to serve on the boards that reflects a diversity of perspectives and opinions.
The USDA is efficient, spending about one-half of 1 percent of the beef checkoff money raised.
The boards’ staff and appointed membership determine the direction of and carry out board programs as well as manage the boards. Every R&D program has a mission to maintain and expand the markets for its commodity.
Various state and regional promotion programs have been established under state and other laws. It’s the USDA’s responsibility to review and approve all budgets, which is done via independent annual audits performed in accordance with Generally Accepted Government Auditing Standards.