Farmers Fight Checkoff Rip-Off

Jeane and Steve Charter have been raising cattle on their Montana ranch for decades. Steve is a third-generation cattle farmer. So they think they know what's good for farmers like themselves, as well as for the land and the industry.

The Charters' vision differs from that of the National Cattlemen's Beef Association (NCBA), a private industry trade group, which many say primarily represents the interests of multinational companies and large factory farming operations.

The NCBA is against almost all government regulation of the meat industry, including the proposed ban on packer ownership of livestock and other anti-trust laws, which most small farmers support. The NCBA supports the North American Free Trade Agreement, Fast Track, the World Trade Organization and other free trade measures, which most family farmers oppose. It is also against country of origin labeling and supports government approval of irradiated beef, both positions most family farmers oppose for economic and ethical reasons.

For every head of cattle or calf sold by Jeane and Steve Charter or other farmers, $1 is required to be paid to the Beef Checkoff. The checkoff, started as a voluntary program in the Farm Bill of 1985 and made mandatory in 1988, is meant to promote the interests of all farmers through research, advertising and education about beef, pork or other industries. Those billboards saying "Beef: What's for Dinner" or "Pork, the Other White Meat" are just two examples of checkoff dollars at work.

The NCBA is in charge of spending the approximately $90 million that is collected every year through the beef checkoff. It in turn gives grants and contracts to other companies and organizations to carry out education, promotion and research. Some 89 percent of the NCBA's budget comes from checkoff funds, according to the Northern Plains Resource Council. The Council also says that the NCBA's 230,000 members represent only about three percent of U.S. beef producers, primarily multinational companies and large operations rather than independent farmers.

So the way the Charters see it, they are essentially giving money to an organization that doesn't represent them and opposes most of their viewpoints.

"Essentially we're being forced to fund our own demise," said Jeane Charter. "They're serving people who want to buy cattle in South America and break our markets. They promote processed beef, which is very low quality beef used in sauces and microwaveable dishes. It's basically pushing beef as a cheap ingredient, which is completely against our interests. Checkoff dollars are used to position these poor-quality, heavily processed products in direct competition with pure, American beef. They are promoting large companies like Sysco and Sara Lee rather than serving us."

Linda Rauser, a North Dakota cattle rancher with about 100 head of cattle, also is angry that her checkoff dollars are used to promote imported beef. "I think there should be a checkoff, but it should only go to promote those who pay into it," said Rauser, who is a member of a grassroots farmers group called the Dakota Resource Council. "Imported beef is destroying my market, so essentially I'm paying for my own destruction."

In 1997 the Charters refused to pay the $250 checkoff fee for 250 of their cattle. For that act of protest, the U.S. Department of Agriculture has fined them $12,000. Under USDA regulations, the fine could have been as high as $1.25 million, or $5,500 per head.

"They're very punitive on this issue," said Jeane Charter. "This is a good way for them to take a ranch, and silence our right to free speech."

The Charters are among the 130 ranching families and nine farmers' organizations that have filed a lawsuit in federal district court demanding an end to the beef checkoff, or in lieu of a total end, the placement of checkoff funds into an escrow account with independent oversight.

The effort began when the Livestock Marketing Association started a petition drive in which 146,000 signatures were submitted to the USDA asking for a vote on whether the beef checkoff should continue. Under USDA regulations, the signatures of 108,000 producers were needed to call a vote. However, the USDA refused to hold a vote, alleging that there were not enough valid signatures.

In late June, South Dakota federal district judge Charles Kornmann decided not to rule on the vote issue, on the grounds that a vote was not needed since in his view the checkoff is unconstitutional. He based his decision on a 1999 Supreme Court ruling that found the mandatory mushroom checkoff violated the right to free speech, since it forced people to pay for advertising and other speech they did not agree with.

Kornmann's ruling said "cattlemen should not be required to pay for commercials -- a form of speech -- that they oppose...cattle producers are being forced to pay for ads that benefit others that sell beef such as restaurants and other retail outlets."

In a similar case involving the tree fruit industry, the checkoff was allowed to stand, since the fruit industry was considered to be a highly collectivized and regulated one. Opponents of the beef and pork checkoffs say that like the mushroom industry, beef and pork are relatively individual and unregulated arenas.

After Kornmann's ruling, the NCBA appealed and a district appellate court put a stay on Kornmann's decision. So now the case is tied up in the appellate courts, and the Charters' case is on hold pending the outcome. Meanwhile, the Campaign for Family Farms has also been fighting to end the pork checkoff.

"Our checkoff dollars help packers and retailers, not hog farmers," said hog farmer Monica Kahout, a member of the Land Stewardship Project and Campaign for Family Farms. "That's why our share of the pork dollar has declined, while packers' profits are up."

In 1998 the Campaign for Family Farms started a petition drive to force a USDA vote on the issue. In the fall of 2000 over 30,000 pork producers voted 53 percent to 47 percent to end the checkoff, leading U.S. Secretary of Agriculture Dan Glickman to order the end of the program. The National Pork Producers Council (NPPC), which carried out the checkoff program until the organization split and that duty went to the National Pork Board, challenged the results of the vote, saying that there weren't enough valid signatures on the petition calling for a referendum. They also cited the USDA's reports that between 3 and 16 percent of ballots were invalid or spoiled in six states, comparing it to the dubious election of President Bush.

"Even the rate of spoiled ballots in Florida's general election of 2000 was only 2.86 percent," said an NPPC press release. In February 2001, new Bush-appointed U.S. Agriculture Secretary Ann Veneman "cut a backroom deal with the National Pork Producers Council," in the words of a press release from the Land Stewardship Project, and reinstated the checkoff. Now the Campaign for Family Farms has a lawsuit pending saying the pork checkoff violates the right to free speech.

"Judge Kornmann's ruling is a victory for family farm livestock producers, and will help sustain hog farmers as we move forward in our lawsuit," said hog and cattle producer Rhonda Perry, a member of the Missouri Rural Crisis Center and a Campaign for Family Farms spokesperson, in a press release. "The beef checkoff, like the pork checkoff, has taken money out of the pockets of independent producers without their choice, and worked against their interests."

Both the NPPC and the NCBA have staunchly defended the checkoff services as necessary to the well-being of producers of all sizes.

"We are solidly behind the beef checkoff," said Walt Barnhart, spokesman for the NCBA. "It's important consumers understand the facts about beef." He said that "zero dollars" from checkoff funds go to lobbying, and that in 2001 $49.5 million of checkoff funds went to promotion, $5.1 million to research and $4.9 million to consumer information.

"It is illegal to use checkoff money for lobbying purposes," he said. "If anyone was doing that the government would be down on us. Another division of the NCBA does lobbying, and that division is funded by members, trade shows and businesses that support what we're doing. People feel that if they come out and destroy the checkoff, they can destroy the NCBA. But that's not the case. It would be a smaller organization without the checkoff, but the part of the organization that does lobbying would still exist."

Farm lawyers note that checkoff funds constitute about 90 percent of the NCBA's budget, meaning that it would indeed be a much different organization without that source of income. Barnhart said the NCBA contracted an independent organization to do a survey about the checkoff in June and July, and found that 66 percent of farmers supported it. "Obviously the cattle market right now is hurting, it's in bad shape for a number of reasons," he said. "There is the decreased export market, the supply of other proteins on the market, the drought. Even with all that, two thirds of farmers support the checkoff."

The NPPC also says anti-checkoff advocates are misrepresenting the situation. "Activists who work to end the pork checkoff continue to try to distort the facts and use empty rhetoric in an attempt to deliberately confuse and mislead," said Barb Determan, president of the NPPC, in a statement on the group's web site. "We want to set the record straight so that pork producers have the facts and understand exactly how they are being led astray by the activists."

Various farmers' organizations have asked that in lieu of a total ban on checkoffs, farmers be given complete open access to records of how their checkoff money is spent. In Montana, the Montana Beef Council, which gets funding from the NCBA for checkoff programs, said that farmers could look at financial records only under supervision from the executive director, and that any request to look at the files could be vetoed.

"The way it was set up, we can't amend the checkoff," said Rauser. "We have to strike it down and start all over. I'm for a checkoff that promotes American beef, and that is producer-driven. There should be periodic votes, and the money should be directable to the organizations that represent the farmers' interests. It should also be refundable if the farmer doesn't like how it's being spent."

During the referendum on the beef checkoff, farmers complained that the NCBA was using checkoff funds specifically in its campaign to defeat the repeal of the checkoff. The NCBA argued that their ad campaign was designed just to help people understand the checkoff, not to defeat the repeal measure. Jeane Charter said she thinks that despite the David versus Goliath nature of their battle, they will win eventually. But it could take a long time.

"Once it's in the appellate courts it takes forever," she said. "It's in [the NCBA's] interest to drag it out as long as possible, so they can keep collecting money."

Meanwhile, she said, it is crucial for farmers to keep resisting a program that she sees as about a lot more than $1 per head of cattle. "The NCBA is representing the big factory farms," she said. "They've decided the only future is a more corporate structure like you have with chicken, where you go from a market-based competitive system to a centrally controlled system. We figure we're damned if we go that way, so we might as well fight now. This isn't a fight about beef promotion, per se. It's about the future of the industry."

Kari Lydersen is a Chicago-based journalist who has written for many publications, including the Washington Post, Chicago Ink, the Chicago Reader and In These Times.

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