Friday, March 20, 2015

North Dakota Legislature Doubles $1 Beef Checkoff Fee On Struggling Ranchers


In the United States, a commodity "checkoff program" collects funds though a checkoff mechanism, sometimes called "checkoff dollars," from producers of a particular agricultural commodity and uses these funds to promote and do research on that particular commodity.

The organizations must promote their commodity in a generic way, without reference to a particular producer. 

Checkoff programs attempt to improve the market position of the covered commodity by expanding markets, increasing demand, and developing new uses and markets.

The United States Department of Agriculture is responsible for overseeing the formation of checkoff organizations under the authority of the Commodity, Promotion, Research and Information Act of 1996.

These organizations are responsible for familiar American advertising campaigns, including "Milk Does a Body Good;" the "Got Milk?" campaign with celebrities with milk moustaches; the "Pork. The Other White Meat"; "The Incredible, Edible Egg"; and yes, the "Beef: It's What's for Dinner."

The popular "Beef: it’s what’s for dinner" commercials have been funded by the people who raise cattle, producers who pay a mandatory $1 Beef Check off fee on each animal and every animal they sell.

The US Congress has permitted producer groups to make checkoff programs mandatory. And now, the state of North Dakota's Legislature has doubled the $1-per-head checkoff that ranchers are forced to pay when they sell cattle.

North Dakota's Senate voted 45-2 to approve the bill on Wednesday. North Dakota's House approved the measure last month. And as surprising as it is, the measure was pushed by the North Dakota Stockmen's Association.

The legislation would send half of the $2 checkoff to a national board and the other half would stay with the state Beef Commission for beef research, education and promotion.

The legislature has the nerve to say that ranchers would have the option of asking for a refund of the additional dollar. Have you ever seen that happen with a mandatory fee  tax? Me neither!

Congress authorized the national beef checkoff program at the $1-per-head level in 1985. The North Dakota Beef Commission is required to forward half of the money collected from ranchers in the state to a national beef board. The other half can be used in-state or for national efforts.

Nancy Jo Bateman, executive director of the North Dakota Beef Commission, said the group has collected an average of about $1.2 million annually in checkoff fees in recent years from the state's cattle operations.

The measure pushed by the Stockmen's Association would send half of the $2 checkoff to the national board and the other half would stay with the state Beef Commission.

The Independent Beef Association of North Dakota (IBAND) and the North Dakota Farmers Union opposed to the measure. 

They say it amounts to a tax and that ranchers should have the opportunity to vote on the increase.

The North Dakota Farmers Union has about 40,000 members. IBAND was formed eight years ago by ranchers unhappy with the Stockman's Association.

IBAND Chairman Larry Kinev, who has a ranch about 50 miles east of Bismarck, said the current checkoff has done little to help North Dakota ranchers.

"I'd like to see all the money stay in North Dakota," he said.

"This is a tax, not an assessment," said Frank Tomac, who ranches in Sioux County, in south-central North Dakota. "If those taxes have no benefits, rewards or returns, then its taxation without representation."

According to the Cattlemen's Beef Promotion And Research Board, usually referred to as the Cattlemen's Beef Board or CBB, it consists of 103 members, including domestic beef, dairy and veal producers, as well as importers of beef and beef products.

The Beef Board oversees collection of $1-per-head on all cattle sold in the U.S. and $1-per-head equivalent on imported cattle, beef and beef products.

The Beef Board is responsible for approving the annual budget for its national checkoff-funded programs. The Beef Promotion Operating Committee consists of 20 members, and is responsible for approving projects and funding to carry out programs.

By law, the Operating Committee and the Beef Board contract with established national, nonprofit, industry-governed organizations to implement programs of promotion, research, consumer information, industry information, foreign marketing and producer communications. 

What is the Beef Checkoff?

The Beef Checkoff Program was established as part of the 1985 Farm Bill.

The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. 

Supposedly the checkoff fee became mandatory when the program was approved by 79 percent of producers in a 1988 national referendum vote.

The checkoff is collected by qualified state beef councils, which retain up to 50 cents on the dollar. 

The state councils forward the other 50 cents per head to the Cattlemen’s Beef Promotion and Research Board, which oversees the national checkoff program, subject to USDA review. 

The Cattlemen’s Beef Board is said to represent all segments of the beef industry, including beef, veal and dairy producers, as well as cattle and beef importers, and are nominated by industry organizations and importers and appointed by the U.S. Secretary of Agriculture.

The structure of the Beef Checkoff Program is supposedly based on the following directives:
  1. All producers and importers pay the same $1 per head.
  2. Producers in the state control one half of the money collected by state beef councils.
  3. All national checkoff-funded programs are budgeted and evaluated by the Beef Board.
  4. Beef Board members are nominated by fellow beef producers. 
What does the checkoff money do?

The checkoff program was supposedly designed to stimulate others to sell more beef and stimulate consumers to buy more beef. 

This can be accomplished through initiatives such as consumer advertising, marketing partnerships, public relations, education, research and new-product development.

According to the Cattlemen's Beef Board, most of that money is used for promotion and education. But there’s been some criticism in recent years, some from a group of small producers who argue that the marketing solely benefits a few large companies that make up more than 80 percent of the industry. 

They are companies that can absorb heavy levies that small ranchers cannot.

By law, checkoff funds cannot be used to promote particular breeds or brands without prior approval from the Beef Board Executive Committee and USDA, nor can they be used to influence government policy or action, including lobbying.

So if the checkoff funds cannot be used to influence government policy or action, including lobbying, why is it that an audit released two years ago found that some of the money is used for lobbying politicians -- which is a direct violation of the Federal law?

So why didn't the legislature up there allow the ranchers to vote on it? 

The simple answer is that they knew not enough people would go for it because it is a tax!

The $1 Beef Checkoff fee is a Tax, just as this added $1 Beef Checkoff fee is a Tax Increase! 

Yes, this is one of those times when a fee is in fact a tax.

The reason this fee is in fact a tax is because it is enacted by the government and has rules of compliance which bring penalties if compliance is not adhered to. That's right, no different than Income Tax.

According to the CBB, in their Compliance With The National Beef Promotion Act and Order, they state "By law, all producers selling cattle or calves, for any reason and regardless of age or sex, must pay $1-per-head to support beef/veal promotion, research and information through the Beef Promotion and Research Act. 

Here are some specifics: 

Whoever makes payment to the seller is considered a "Collection Point" or person and must withhold $1-per-head, remitting those funds to the Qualified State Beef Council (QSBC) where they live. 

Collection points could include auction markets, feedyards, dealers/order buyers, other producers, auctioneers, clerking services, banks, packers and other entities.
The buyer is generally responsible for collecting $1 per head from the seller. By law, both buyer and seller are equally liable to see that $1-per-head has been collected and paid.

Also under the Act and the Order, the State Beef Council is legally responsible for collecting monthly assessments as well as a two percent late charge on checkoff remittances if they are not received in our office postmarked by the 15th of the month following the month of sale.

No producer is exempt from the checkoff. Buyers who resell cattle no more than 10 days from the date of purchase may file a non-producer status form and avoid paying an additional dollar. They are, however, responsible for remitting collected funds and reporting any transaction to the QSBC.
Remember: A dollar or a document!  All selling/purchase transactions must be reported. 

In each case, either $1-per-head or non-producer status form document must be collected by the buyer from the seller to show the dollar has been collected and paid within the past 10 days.

Buyers should keep receipts showing the checkoff has been paid.

Persons in non-compliance with the Act and Order are subject to a civil penalty of up to $7,500 per transaction, plus unremitted checkoff dollars and interest.
As for me, my opinion it that this is certainly a tax because it is mandatory. 

While there are those who are saying that ranchers can opt out of the additional $1 Beef Checkoff, I doubt that will be allowed as that person certainly cannot opt out of the basic $1 Beef Checkoff fee which is mandatory and comes with fines if and civil penalties if not paid.  

So why is the North Dakota Legislature and the Stockmen's Association for it? 

Supporters of the $1 Beef Checkoff increase say the beef industry faces increasing attacks from activist organization, and the extra money is needed for promotion and research.

"The beef community faces challenges from outside influencers who are continually spreading misinformation about our livelihood," said Sheyna Strommen, who raises cattle near Fort Rice.

Julie Ellingson, executive vice president of the Stockmen's Association, said the current fee hasn't been hasn't changed for three decades, prompting a dozen other states to increase it at the state level in recent years.

"The assessment today is $1 per head, the same as when the checkoff first came to be," Ellingson said. "But our dollar doesn't stretch as far as it used to."

Besides the fact that the money spend by activist organizations stretch just as far as anyone else's, the basic problem with that sort of logic is that it begs the question: 

Since $1.2 Million is the amount of money going to the Cattlemen's Beef Board just from the state of North Dakota ranchers and not the total amount from other states as well, how much money does the Cattlemen's Beef Board need?

Friends, all toll the Cattlemen's Beef Board is said to have in excess of $80 Million a year coming in for the little they do.

And frankly, if $80 Million won't stretch as far as it use to, and North Dakota now raised it, will states like North Dakota feel they have to raise it again and again and again using with the same argument down the road -- that the Millions of dollars just won't stretch as far as it used to?

Friends, this is the very same logic that has all of the departments of the Federal Government requesting more and more money every year. 

This is the same logic of the Obama Administration as they spend the Trillions of dollars with nothing to show for it.

This is the sort of logic from people who think they can just keep raising taxes on the backs of the American people with absolutely no care or concern if they will can afford to pay it without going broke? 

This is that whole Washington attitude of spending is OK and the sky's the limit because if we run out of money we just raise the fees taxes! 

I don't like it when Americans are refused the opportunity to vote on a proposal which costs will take money out of their pockets.

It is un-American, un-patriot, and purely selfish to hit ranchers with even more of a burden -- call it taxes or fees or what -- especially when fighting a drought, increased feed, labor, and fuel costs.

And there is something else, as with anything else, a producer is going to have to either absorb the extra cost or pass along his extra cost to the consumer by way of the buyer. That in turn will raise the price of beef.

Raising the price of beef because the Cattlemen's Beef Board needs more money to promote your beef is asinine and sounds like a fools parade of a dog chasing it's tail. Nothing but a never ending cycle.

Also, now that the consumer has to pay more for the beef that the Cattlemen's Beef Board needs more funds to promote -- it becomes a tougher job to promote more expensive beef than one that is reasonably priced.

Yes, the addition cost seems to only benefit the Cattlemen's Beef Board, their agents, their celebrity spokespeople, their members, all while placing more burden on the producer.  

I like beef and have been a supporter of the Cattlemen's Beef Board's promotion for years, but this is just not right when ranchers are already strapped for funds to make their livelihood a go.

Sometimes you just have to say enough is enough and stop breaking the backs of ranchers. 

And yes, that's just the way I see it.

Tom Correa


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