Editorial
Market Association And NCBA
At Odds Again Over Checkoff

By Steve Kelton

The Livestock Marketing Association and the National Cattlemen’s Beef Association are head-to-head again over the beef checkoff. The latest wrinkle in the battle is a move by LMA to trigger a producer referendum on the beef checkoff program.

The dispute goes back at least half a decade, when simmering divisions came to a head over a research program backed by the then-National Cattlemen’s Association. Using checkoff funds, NCA initiated a study of industry "alliances" that LMA saw as a direct threat to its members’ existence.

By promoting such "alliances," LMA charged, NCA was using producer contributions collected in large part by livestock auctions to further vertical integration within the industry. The group saw that as an assault on small and medium-sized producers and on auction barns themselves. Neither had much place in a vertically integrated industry, LMA charged, and it opposed using money collected from and by those entities to hasten their own demise.

The rift deepened when NCA merged with the National Livestock and Meat Board, and the resulting NCBA became the prime contractor for Beef Board spending. That put checkoff dollars even more directly into the hands of those who favored vertical integration, critics within LMA argued.

Opposition to the merger came within a few votes of triggering a checkoff referendum call by LMA at that point, but enough resistance prevailed to "give the new industry structure a chance to work," in the words of a fact sheet explaining LMA’s current position.

The new push for a referendum was almost certainly triggered by events at NCBA’s recent convention. First was the reversal, under questionable circumstances, of a vote to support mandatory fat cattle price reporting. The straw that may have tipped the load, however, was NCBA’s announcement that it would give packer giant IBP checkoff funds to develop proprietary retail products.

"With four packers controlling virtually the entire fed cattle market," asks LMA president William E. Irons Jr., "and a total unwillingness to support mandatory price reporting, should producer dollars be spent to research new products that would mainly benefit one segment of the industry?"

It’s a fair question, and one that increasing numbers of rank and file producers are asking.

Any product that would increase beef sales and demand is arguably of benefit to producers in the long run, but those same producers can be forgiven for wondering why they should pay a packer’s research and development costs. It is not done that way in other businesses, nor even in competitive sectors of the beef business.

McDonald’s, for example, doesn’t expect cattle producers to foot the bill for developing a new hamburger every time Burger King trumps its old offering, nor vice versa. And Georgia Pacific doesn’t tap the bank accounts of East Texas mom-and-pop logging companies to help it design a new door molding whenever Weyerhauser takes the lead in that line.

What makes the NCBA-IBP arrangement all the more mystifying is that the cattlemen’s group already has a brand-spanking new program in place to reward innovative product development — but on a competitive basis, and after the fact. The program is essentially a contest in which the best product wins, but only after its developer risks his own money.

This is the first year for the contest, and the winner was California’s Harris Ranch Beef, a ranch company that developed its own feedlot, packing and retail service divisions. It’s vertical integration, but from the bottom up and not the top down.

It is also an independent outfit a fraction the size of IBP. If it could find the money to conduct its own retail product R&D, something tells us IBP could scrape the bottom of enough barrels to scare up a few coins. And something tells us as well that a lot of other people in the business are thinking the same thing.

If, indeed, the beef checkoff has done all the good things its backers claim — and there’s no way to document that one way or the other, because you just can’t prove a what-if — it would be a shame to lose it over something like this.

That is particularly true because we suspect the real beef most dissenting cattlemen have with the beef checkoff is not with the checkoff at all, but with NCBA and its uncanny ability to set at least one foot in the wrong track at every opportunity.

For those who live to catch NCBA and the packers in bed, the price-reporting vote and the R&D award to IBP look for all the world like a trail of lingerie. Whether that trail leads to just another dust-up or to a divorce is yet to be seen.