Machiavellian Mashers at CBB, Part One- Commentary from Steve Dittmer of the AFFWed, 30 Mar 2011 21:45:29 CDT
Steve Dittmer has been a journalist down through the years that has covered the beef cattle industry. A few years back, he went out on his own and formed a group that is known as AgriBusiness Freedom Foundation.
Earlier this week, Dittmer began a three part series on what he believes is going on at the Cattlemen's Beef Board and why he believes that this could be vey bad for the beef cattle industry as a whole.
We are reprinting his email newsletter that has put out a three part series on the strange happenings at the Cattlemen's Beef Board.
Here is part one entitled Machiavellian Mashers at CBB
Those of you familiar with AFF know we have always put the interests of animal agriculture above all else. Our advocacy of free market principles has been to protect and promote the most dynamic, innovative atmosphere for all sectors of the meat industry, to preserve the widest array of options for all players.
Personally, I have driven thousands of miles, given dozens of speeches, written thousands of words, planned a ton of meetings, a couple referendum campaigns and participated in lots of committee sessions -- all in pursuit of boosting beef demand over the last 35 years. I don't pretend to be on par with some of the people who really put the beef industry on the path to success it's on now. But I was there, remember much of the struggle and so it pains me in some ways to bring up the subject I'm about to. On the other hand, maybe it should come from someone who didn't start promoting beef in 1990 or 2000 or 2010. There is nothing wrong with starting where you might have. But I have earned some knowledge and some credibility in this arena.
The hopes invested in the second national referendum, culminating in the 1985 Beef Industry Act and Order, have succeeded better than all of us who worked for it could have hoped for. This is not the time and place for a recitation of the many successes of the national beef checkoff. But the reversal of a 20-year downward demand curve beginning in the late '90s to the point we are today has been a tremendous achievement, especially on the declining purchasing power of checkoff budgets.
That said, it's not an industry secret that the Cattlemen's Beef Board has been the inappropriate battlefield for some strife between factions, some of the important organizations and some individuals pushing agendas not really focused on the needs of the beef industry first and foremost.
But we have recently come into information that we feel needs industry airing, if the CBB is going to continue its fine and vital work and pronto, instead of sideshows sidetracking everyone and hobbling the team. One board member explained that they had noticed board functionality problems for years and been complaining to leadership for several -- and the board is still fighting amongst themselves. Meanwhile, animal activist groups - as just one source of difficulties -- build their influence.
When we learned of recent events at the beef industry convention in Denver, our first question was, "Why is no one doing anything about this?" Usually, when a certain faction tries to shanghai a cattlemen's organization from its appointed business, several wise heads speak up or take action and the sideshow is over. The answer we've been getting from multiple board members is that in this situation, no one knows who they can trust. The CBB is a big board, it has a lot of new members on it, it has a significant number of members who haven't spent a lot of time getting seasoning as they came up through the ranks of other cattlemen's or farm organizations and, most critically, some board members are focused on using the CBB as a platform for fighting counterproductive turf wars and attacking other groups. It's not easy to lead a counter charge when you don't know whom you can trust with your flanks, or rear.
If the board is too fractured, the footing too treacherous for common sense cattlemen at this point, we will attempt to shed some light where it needs to shine to stimulate action from within the board. It should be noted that we will not name names. The board knows who the players are and they are the ones who need to take action.
Why now? Why not wait until the Office of Inspector General completes their audit? Several reasons. For one, multiple e-mails from CBB leadership in recent weeks indicate that it intends to act very quickly - in the next few days and weeks - to overhaul CBB's committee structure and the interrelationships among the CBB, the Federation of State Beef Councils, individual councils and contractors, among other things. Additionally, the OIG audit is to determine if USDA-AMS has done proper oversight of the checkoff. It is unlikely it will expose some of the activities cattlemen are concerned about. On top of that, the federal government doesn't not act quickly. It will most likely be next fall or later before any report is available from OIG and that may well be too late.
Consolidation is a force in economics as well as in policy execution. The National Livestock Feeders Assn. and the American National Cattlemen's Assn. merged in 1977 because the industry could cut costs and gain a stronger policy voice for cattlemen. The National Live Stock & Meat Board and the National Cattlemen's Assn. merged in 1996 to cut the costs of two boards, two headquarters and some staff duplication, while allowing more transparent and efficient exchange of the information, intelligence and strategy necessary to carry out a unified, industrywide effort to boost beef demand.
From the beginning of the checkoff, those of us familiar with its structure understood that because of the tax exemption laws, commodity checkoffs could not be involved in policy issues, legislation and lobbying.
Of course, this wasn't even a question when the Act was passed because policy was the province of the National Cattlemen's Association. Other national groups like the American Farm Bureau Federation and National Farmers Union had their own policy groups. The dairy industry had separate groups to handle both areas. Beef promotion, education and research was handled by the Beef Industry Council of the National Live Stock & Meat Board and the various state beef councils.
When the Meat Board/BIC and NCA merged, careful structure was put in place to put a "firewall" between the dollars funding the two groups so no violation of tax laws would occur. Big deal. In the days of sophisticated computers and software, auditing CPAs and oversight committees, this was not a serious technical challenge, just something requiring care and attention. It was complicated by NCBA becoming a contractor for the CBB but again, technology and attention was all that was necessary to do the bean counting. USDA, the government agency charged with making sure the Act and Order was adhered to, agreed to the structure and kept the watch.
But when some organizations and individuals could not find fault with the accomplishments and stellar results of the CBB and the Federation, complaining about the mere possibility of misuse of funds was all they had to go on. Predictably for malcontents, they went with it. And continue to go with it. Because their primary goal is not boosting beef demand. Their primary goal is mayhem, in particular, separating NCBA from CBB.
Which brings us to the issues at hand. The checkoff brings in around $60 million a year, half to the state beef councils and half directly to the CBB. A significant part of the states' share also ends up at the CBB, in the interest of leveraging dollars, consolidating efficient media buys, etc. If one percent of say, $40 million is charged to the wrong expenditure accounts during the year and has to be journaled into the proper expense accounts after the end-of-year audits, that's $400,000.
Last year, an audit showed roughly a mere $20,000 needed re-allocating at the end of the year between CBB and its primary contractor, NCBA, with NCBA owing the CBB. Instead of the accountants handling the settling of accounts as has been normal for over 20 years, the CBB officers called a news conference and cried foul, implying that skullduggery was afoot. Of course, that unprecedented action was a symptom of underlying intent, not the real issue.
A later, even larger audit would conclude that NCBA owed more like $200,000. But while the CBB yelled again, they carefully did not mention that the audit from the previous year had revealed the opposite situation, wherein CBB owed NCBA some $360,000.
Again, symptoms. Minor amounts blown up. But handled in a fashion designed to most damage the industry's credibility and ability to work together, not contribute to primary demand building goals. Instead, the story lands in the New York Times, questioning the industry's ability to handle funds, repeating the charge - earlier denied by the CBB leadership itself - that NCBA had "breached the financial firewall," between marketing and policy activities. "Extremely troubling," was the quote from the leadership over a fraction of one percent of the funds expended.
HSUS, PETA, Public Citizen and a host of other activists and the political left must have loved that kind of publicity for their avowed adversarial industry. The telltale footprints of R-CALF-style demagoguery concluded the New York Times story, referring to "multinational packers" as members of NCBA and the notation that "some cattle producers think its views are skewed in favor of the packers..." Again, the tired old saw that three packer members on NCBA's board could lead 120 or so cattlemen around by the nose. Perish the thought that people who raise the animals could actually work with those that process and sell meat, to improve the industry!
And none of it necessary or preferable to be discussed in the New York Times, unless your goal is mayhem, disarray, revenge or nearly anything but building beef demand and inspiring the confidence of consumers in the credibility, ability and efficiency of cattlemen raising the beef they eat.
Of course, the same story, in excruciating detail, played out in dozens of industry publications throughout the nation -- manufacturing a national scandal out of $20,000 out of a budget of $40 million or so. Was this an attempt to build demand or an attempt to damage the CBB, the state beef councils and the overall industry?
Much of the rest of this story revolves around technology. Much of the world has been slow to understand that e-mails can reveal true motives hidden behind banal blandishments and fiery passions behind careful masks. We have seen written evidence that certain CBB members are much more concerned about winning turf wars than building beef demand, about bringing down an organization than developing fruitful relationships, about personal aggrandizement rather than the straight shooting selflessness of the cowboy legend. And frankly, this industry has neither the time nor the lead on our competitors and adversaries to put up with this... stuff.
And for the record, we have also seen written evidence that some CBB members are hoping this information gets aired so that people know what's going on and the proper remedial action can be taken and the incidents closed. That's as opposed to the current CBB leaderships' desire - and multiple entreaties by e-mail -- to keep certain actions and incidents quiet. This after some of the same leadership did everything but hire a public address sound truck and run up and down the streets of New York and small town main drags broadcasting the small batch of -- alleged dirty -- laundry they wanted exposed.
Part two of his series will be about The Nuts & Bolts Of Disassembly of a Board and Reassembly in Different Form- we will publish it on our website in the near future.
This commentary is written by Steve Dittmer, who has given us permission to reprint this newsletter commentary in full.
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