The Market's Fine Print

The Checkoff Civil War

John Harrington
By  John Harrington , DTN Livestock Analyst
The current beef checkoff reform movement conjures images tied to the historical War Between the States. (Public domain image)

The horrors of the corpse-stacked "Hornet's Nest" at Shiloh, the "Bloody Cornfield" at Antietam, and the "Peach Orchard's" deadly arbor at Gettysburg truly defy casual comparisons. The extreme and costly lessons of the American Civil War deserve a box of their own, a unique, invaluable space within the national consciousness that's both sacred and scary.

Yet some scars are so deep and defining that you can't help referring to them, even when the topic to be illustrated seems relatively insignificant, if not darn right silly. I suppose that's why images and questions tied to the historical War Between the States have been cropping up in my mind each time a story runs on beef checkoff reform.

Given how many states in recent years have decided to leave the checkoff union in terms of exceeding the long, long-held standard contribution of $1 per head, the beef industry seems to have a rebellion of sorts on its hands. In the simmering years before the firing on Fort Sumter, Northern critics referred to the most emotional advocates of Southern succession as "fire-eaters." You don't have to look far to see checkoff "fire-eaters" turning up state-by-state heat all over the place.

For example, the Missouri Director of Agriculture approved a petition in late December to conduct a referendum of "Show Me" cattle producers to establish a $1-per-head state beef checkoff assessment (i.e., on top of the national dun). Indeed, votes are being counted as we speak with final results to be announced next Monday, April 25.

Both supporters and opponents have been aggressively kicking the soapbox in recent weeks. Based upon the many good friends I have in the state, few beef producers will be wasting their time hiding lamps under bushel baskets. Maybe that's why postbellum historians often label the Missouri theater as "the war within the war."

And then just last month, Iowa Gov. Terry Branstad signed legislation that allows a referendum asking beef producers whether to establish a state checkoff of 50 cents per head. Officials of the Iowa Cattlemen's Association anticipate a definitive vote by either 2016 or early 2017.

If this new Iowa effort is ultimately approved, it will represent a clip from "Back to the Future." As early as 1970, the Iowa beef industry was funding a promotional checkoff at the rate of 50 cents per head. But the program was dropped in 1986 when the national checkoff of $1 began.

While the battle for state checkoffs remains in the bubble in Missouri and Iowa, as many as 14 states already have their own state checkoff on the books. North Dakota is the newest member of this national-plus club, launching the collection of another dollar late last summer.

So what explains this new pattern of rebellious states seeking to break from the national checkoff union? Clearly, there are two major dogs of war: 1) a discontent and frustration with inadequate promotional funds raised by the national checkoff, as well as a countrywide unwillingness to do anything about it; and 2) a desire to more specifically promote beef promotion within a given state.

Although I'm not sure which of these motivating canines plays alpha to the other, the former seems to me to have more legitimacy than the latter. Virtually anyone with at least a toothless old cow (at least anyone who generally embraces the checkoff concept) can recognize the sad state of purchasing power that the national checkoff currently represents. Its tollgate has been stuck at $1 for nearly 30 years, further rusted by plunging herd population.

On the other hand, the need to promote local production with local dollars, while altogether understandable, is problematic at best and fanciful at worst. How realistic is the contention that money collected by the Illinois checkoff (to use a random example) can be channeled to uniquely market Illinois beef? Surely the generic sourcing of steaks and hamburger by the vast majority of retail outlets across the country makes the evaluation of such a program extremely difficult.

But regardless of the exact motivation, I suspect the confederacy of state checkoffs will continue to grow as producers struggle to first stabilize the per capita consumption of beef and then retake at least some of the ground lost to chicken since the late 1970s. Indeed, we may be moving toward a critical mass of state programs that begins to feed on itself. At some point, perhaps, no one will want to feed cattle or pull calves in the last state without its own checkoff.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

(AG)

John Harrington