For Immediate Release: August 31, 2023
Contact: R-CALF USA CEO Bill Bullard
Phone: 406-252-2516; r-calfusa@r-calfusa.com
Please find below R-CALF USA’s weekly opinion/commentary that discusses how producers are harmed when the government-run beef checkoff program increases competition against them. It is in three formats: written, audio and video. Anyone is welcome to use it for broadcasting or reporting.
Beef Checkoff Harms Producers
Commentary by Bill Bullard, CEO, R-CALF USA
There’s important legislation that should be included in the 2023 Farm Bill. It’s called the Opportunities for Fairness in Farming Act, or OFF Act, and it updates and reforms the beef checkoff program, which hasn’t had any meaningful updates for nearly 40 years. The OFF Act will disallow lobbying groups from receiving checkoff dollars and will impart transparency and accountability to the government-run program.
Opponents of the OFF Act, primarily the lobbying groups now receiving millions of the mandatory checkoff dollars, are crying foul. They argue the beef checkoff program should remain unchanged because the beef industry is receiving $11.20 for every $1 invested by the cattle industry.
In a pending lawsuit that R-CALF USA has against the government-run beef checkoff program, the court is requiring us to prove that the beef checkoff program is harming our cattle producing members.
We’ve accomplished this with the first-ever scientific analysis measuring the impact the current beef checkoff program has on consumer buying decisions. But first, let’s address this $11.20 return to the beef industry for every $1 paid by cattle producers.
And let’s start where we can all agree: Yes, the generic advertising of beef conducted by the beef checkoff program helps to increase overall beef sales. But the question producers should ask is whether those increased sales benefit cattle producers? The return on investment (ROI) study by Harry Kaiser of Cornell University does not answer this question, instead it simply finds that beef advertising increases beef sales.
Now if the checkoff increases the sale of beef sourced from foreign countries, or if it pulls more foreign beef into the U.S. market, then the checkoff is actually harming domestic producers.
This is why the OFF Act is so important. By increasing transparency and accountability, cattle producers could direct the beef checkoff program so it does benefit them.
In our lawsuit, we focused on an important legal doctrine known as the doctrine of competitor standing. It states that when the government increases competition against you, you are injured, and it’s an injury the law recognizes.
In other words, if you could operate in a smaller market, say a market that differentiates where your beef was produced, who produced it, and under what standards of care were employed in the raising of your cattle, then your beef would command a higher price than it does now because the government-run advertising campaign simply informs consumers that beef is beef, meaning that beef is nothing but a commodity.
Our lawsuit’s study shows that when beef is relegated to a commodity as it is under current beef checkoff ads, consumers simply look for the lowest cost beef because they believe it’s all the same, meaning it’s interchangeable. Think of paper as an example of an interchangeable commodity, consumers likely seek out the paper that’s cheapest.
But our analysis also shows that when consumers are informed that there is a difference between beef products, based on where it was grown, how it was grown, and who produced it, then consumers will start seeking out beef that is different and they are willing to pay more for it.
And this is how domestic cattle producers are harmed under the current beef checkoff advertising each time they sell an animal that was produced domestically, subjected to our high domestic production standards, and produced by domestic cattle producers.
The current beef checkoff program doesn’t give any of that factual information in its generic advertising – it simply tells consumers to eat more beef, and they do, and that helps explain why imports have been increasing so dramatically – the beef checkoff program helps pull more generic, imported beef into our market.
With the OFF Act we can begin to correct this serious problem. You see, our lawsuit’s study shows that beef sales increase about the same whether the advertisement says just eat more beef, or if it says beef that is produced domestically by domestic cattle producers and under high standards of care is available in the marketplace. The big difference is that under a program where consumers are informed that beef is different, they will seek out the differentiated beef and pay more for it.
So contrary to OFF Act opponents who say the beef checkoff program is lifting all boats, it’s not doing that at all. Instead, it’s providing undeserved benefits to the cheapest boat while depriving producers of domestic beef from receiving the higher prices consumers are willing to pay if only they knew there was a difference based on where and how the beef was produced.
So it is that when the government increases competition against you as it does under the current beef checkoff program, it causes harm. This explains why we need the OFF Act, to reform the beef checkoff so it can begin to benefit America’s cattle producers.
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R-CALF USA’s weekly opinion/commentary educates and informs both consumers and producers about timely issues important to the U.S. cattle and sheep industries and rural America.
Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA) is the largest producer-only trade association in the United States. It is a national, nonprofit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle and sheep industries. For more information visit www.r-calfusa.com or call (406) 252-2516.
