Five Questions With Beef Board's Hanes

LINCOLN, Neb. (DTN) -- DTN recently spoke to Greg Hanes, CEO of the Cattlemen's Beef Board, following a decision by a federal court in Washington, D.C., to continue a lawsuit against USDA challenging the constitutionality of the Beef Checkoff program.

We talked to him about how the ongoing legal pursuits affect the program and what if anything the board is doing to bridge differences between various interest groups in the cattle industry.

Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, or R-CALF USA, filed suit in September 2020 alleging USDA changes to the program were done without following the Administrative Procedures Act. R-CALF alleges USDA "substantively amended" the program by entering into certain agreements with state beef councils without following notice-and-comment rulemaking.

On May 2, 2016, R-CALF sued USDA, alleging the federal Beef Checkoff program amounts to a "government-compelled subsidy of private speech of a private entity," and argued it was unconstitutional.

USDA then entered into memoranda of understanding with 20 state beef councils in Colorado, Florida, Hawaii, Indiana, Kansas, Maryland, Montana, Nebraska, Nevada, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia and Wisconsin.

Here are five questions DTN posed to Hanes and his responses:

DTN: What do you think is the state of the Beef Checkoff program?

HANES: The Beef Checkoff is really the only thing out there that's going to be supporting the industry. It's an extremely competitive market. Beef is not the only protein. So, you have other animal proteins: pork, chicken, lamb and turkey. You've got plant proteins, and those are getting especially aggressive in their marketing, and a lot of the messaging that they put out there is trying to promote their product by saying beef is bad.

With the lawsuits, that is frustrating, and the producers behind this I think don't necessarily understand the programs or the full scope of what they're supposed to be doing and are doing. In most cases I think a lot of this has to do with packers. They think packers are controlling the checkoff, which is far from the truth. There are no packers on our board. No packers make any decisions on the funding or anything, so that's really not an accurate concept.

We have to ensure that our producers are educated and understand what the programs are designed to do, what they can do legally, and make sure that they're doing that. One concern people have is they think that checkoff dollars are being used for policy work and that's clearly not happening. That's probably one of our biggest things that we look at is ensuring that those funds are not used for any kind of policy work.

What happens is we have contractors or different organizations that are implementing the different checkout programs for us. And all those programs are run on a cost-recovery basis. So that means they have to actually do the program first before they'll get reimbursed.

They submit the program that they want to have approved and committees of producers review those programs. They update them and then the operating committee makes the final funding decision. And then once that funding decision is made then that program is picked to get funded by a certain amount and they have to implement that program. And then they submit invoices to us. So, we look at those invoices and make sure that they're not doing any policy work and make sure that they're doing what they were supposed to be doing. And if that's not the case they don't get reimbursed.

DTN: In agriculture it's not all that uncommon to see groups disagree on different issues. But what concerns you most about what we're seeing with these legal pursuits as it relates to the long-term future of Beef Checkoff and the industry?

HANES: Well, it's taking resources. Checkoff dollars, producer dollars, that should be promoting beef. Instead, we're having to use those resources to pay lawyers to defend ourselves. So, to me that's a huge waste of resources that could be really benefiting the industry a lot more than what it is now. With these lawsuits as well, the information that gets out there is not always very accurate. Different organizations are trying to promote their point and so they're not held to the same standards that we are.

We come up with information, we have to be factual. We cannot just make stuff up and say it or make up stats or whatever, but other groups don't have those same limitations because they don't have those same guidelines. They can pretty much go out and say whatever they want. That gets frustrating because then they can go out and say things about what the checkoff's doing or what it's not doing, and that's not necessarily accurate. Even in the case here with the lawsuit they're talking about, 'well, they have skipped public-input processes, ranchers don't have any input into this,' and that is not accurate.

And the MOUs (memoranda of understanding) haven't really changed anything as far as what the states are doing on a marketing basis. So, the states are still defining what their marketing programs are going to be and they come up with the concepts and the ideas. This just solidified that there's a process to be able to review all those to make sure it's accurate.

And again, all the state beef councils, all of our boards are made up of producers in that state, and so they're all involved with state beef council meetings and our meetings are open to the public. So, they can always give feedback, or you know, give ideas, or comments, concerns. I think it's a very open process.

DTN: What could be done to bridge gaps between interest groups in the industry?

HANES: As far as transparency, we're definitely trying to be as transparent as we can. Information on the programs, everything that's going on we have available on the (https://www.beefboard.org/…) website. All the meetings are open to the public for any producers so they can all attend these. I think it is kind of a challenge. The checkoff has been around for 35 years. There's been a whole generation of producers who have grown since it came into being, and they weren't part of that fight to try and get a program to do that. They don't remember how bad it was. How consumption of beef was declining, and beef was the enemy and the bad guy for everything. And this has really turned it around. But they don't necessarily remember, so I think there has to be more education.

With the different groups we have to look for more commonalities. So, there may be certain issues that we don't agree on and those tend to be fewer than the points that we do. And so that's where I think we need to look at OK, how can we get on the same page and really focus on those things that are important to us, for all of us. That's where we get the idea that the checkoff is supporting packers or is doing policy work and it's like that's not true. I think we could all agree that we need to build demand for beef, that there's a lot of competition out there. So, why don't we focus on that and work on building the demand for beef and if you have a problem with packers or you don't agree with something else, there's usually other venues to be able to deal with that.

DTN: Where do you think the industry would be right now if it wasn't for the checkoff?

HANES: We sell about almost 4.5 million head of cattle every year more than if we didn't have the checkoff. And that's every year. So, if we hadn't had that for 35 years that doesn't mean we're gonna lose 5 million every year but you're going to be losing probably millions of head to a certain point where it becomes less sustainable. So, I think that impact has been very huge. We take it for granted that people love beef, and they do, but I think a lot of that has to do with the whole marketing program. So, you've got the 'Beef It's What's for Dinner' and everybody knows that. Without a checkoff, that wouldn't be out there.

A lot of people underestimate the impact of marketing and promotion, and it's obviously very important. If you look at any big consumer company, you know if it's Coke or Pepsi, they spend billions of dollars in marketing and they do that because they know it impacts sales and consumer demand. If Pepsi all of a sudden didn't do any more marketing what do you think would happen? Coke would start taking over a huge market share. And I think that's exactly what would happen with beef if we weren't doing this. We would just continue to lose more and more market share to the other proteins out there.

DTN: What does your group do in terms of outreach to groups like R-CALF?

HANES: We will go to any producer groups that invite us and we'll talk about the checkoff. Unfortunately, we've never been to R-CALF. We've never really been invited. Then sometimes it's frustrating just talking to some of the members or the leaders who are promoting the attitude, or there's a petition out there they're promoting to get rid of the checkoff. And I've talked to some of them and try to explain these things. And sometimes they'll listen to a little bit of it but not all of it. Unfortunately, it's difficult always to change their minds. I think whenever somebody is super, super passionate about something regardless of what side they're on, it's like no matter what other facts you throw out it's hard to change their mind.

They're in a minority as far as the producers, but they're vocal and so people hear it, and it causes questions. I think that's what we're trying to get out there is to make sure that people see the facts and don't get just led astray by a lot of the misinformation.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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