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Federal judge grounds beef checkoff

by Robert Schubert
CropChoice editor

(June 26, 2002 -- CropChoice news) -- Rancher Linda Rauser is thrilled by a judge's ruling that the mechanism collecting money for beef promotion and research is unconstitutional. But the decision potentially has bigger implications, says a Nebraska lawyer, for it could encourage challenges to other producer-funded checkoffs.

South Dakota Federal District Court Judge Charles B. Kornmann on Friday struck down the federally mandated beef checkoff on the grounds that it obliges farmers and ranchers who raise cattle to pay for speech with which they may disagree. Checkoff collections must stop by July 15. The U.S. Justice Department likely will appeal.

"The beef checkoff is undemocratic because the farmers and ranchers who pay it didn't have a vote in selecting those who decide how to spend the money, and they were denied the right to vote on its continuation," says Rauser, who ranches with her sister near Keen, in northwestern North Dakota.

Following World War II, various agricultural crop and commodity sectors wanted to expand international and domestic promotion of and research into their products. To fund those efforts, they created programs that assess producers a portion of the value of their products. A wool checkoff – the first such nationwide effort – began in the 1950s. The egg, cotton, honey, mushroom, dairy, fluid milk, pork, potato, watermelon, popcorn and soybean growing industry have since followed. Various state programs exist, as well.

Congress created the beef checkoff as part of the 1985 farm bill. The Beef Promotion and Research Act of 1985 mandated that all producers, regardless of the size of their operations, pay $1 per head each time they sell cattle.

The Cattlemen's Beef Promotion and Research Board oversees collection of the assessment, which annually amounts to about $86 million. Each year, the Secretary of Agriculture appoints one third of the 110 members of the Board.

Rather than create a new bureaucracy, the enabling legislation stipulated that the Beef Board contract with national, non-profit, industry-governed organizations to implement the promotion and research programs.

One of those organizations is the National Cattlemen's Beef Association, which gets more than 60 percent of its $62.5 million budget from the national assessment on producers, says Walt Barnhart, director of trade media for the organization.

The problem, as opponents of the checkoff see it, is not so much the amount of money that the Association gets from the program. The bigger issue is its support for policies that they say further monopolistic control and corruption of markets, which harms independent producers.

"It is unfair that producers are taxed to support the National Cattlemen's Beef Association, an organization that consistently opposes their interests, most recently on mandatory country of origin labeling, banning packer ownership of livestock, and fast track trade legislation," according to the Western Organization of Resource Councils and the Livestock Marketing Association, both of which brought the lawsuit on behalf of independent cattle producers.

But checkoff dollars never could support the Beef Association's lobbying efforts, says its president.

"Country-of-origin labeling and the ban on packer ownership have nothing to do with checkoff," Wythe Willey says. "They're policy issues. Checkoff has to do only with promotion and research."

He's confident that the appeal by the U.S. Justice and Agriculture departments will succeed. But failure would "bring an end to farmers and ranchers doing their own promotion through checkoffs and through the Cattlemen's group. Instead of ‘Beef. It’s What’s For Dinner.®’ ads, we would have Tyson and other companies advertising beef."

What's more, the checkoff is popular, says Willey, noting that all the surveys he's seen show 3-to-1 support among producers.

Some don't see it that way.

"When the NCBA claims to speak on behalf of American ranchers but then opposes born, raised and processed requirements for the U.S. label, that puts me in the position of paying a checkoff that promotes imported beef equally to domestic beef," Rauser says.

The beef industry is not united. Producers, packers and retailers are competing for their share of consumer beef expenditures.

"Producers are at the losing end right now," she says. "We're getting at or below the cost of production for our product. The packers and retailers do not pay the beef checkoff, yet they benefit from the generic beef promotion. The producer is footing the advertising bill for them."

She also disagrees with Willey about the popularity of the assessment.

In 1999, the Livestock Marketing Association and the Western Organization of Resource Councils collected the signatures of 146,000 cattle producers who wanted to vote on whether to continue the payment program. Then-Secretary of Agriculture Dan Glickman denied their request, an action that rankled many producers and perhaps helped to spur the South Dakota lawsuit.

The January 3, 2001 edition of the Western Livestock Reporter quoted John Willis, president of the Livestock Marketing Association, as saying: "Secretary Glickman delayed for more than a year in starting the verification of the petition...This unconscionable delay violates both the Constitution and the federal Administrative Procedure Act."

What's in store?

Judicial setbacks for the beef and mushroom checkoffs (Farming, checkoffs and freedom of expression; http://www.cropchoice.com/leadstry.asp?recid=637) could encourage producers of other agricultural commodities to challenge checkoff programs they might have to fund, says Dan Alberts, a Nebraska lawyer.

"It is clear that mandatory checkoffs are unconstitutional because they force individual producers to speak through their dollars in ways they don't want to, which is averse to First Amendment free speech protection," Alberts says.

Nebraska is one of 20 states that have checkoff programs for corn. They collect anywhere from a quarter of a cent to half a penny on each bushel that farmers deliver to the elevator. In Nebraska, the governor appoints the nine members of the Corn Board, which oversees the program.

He cites his father, a life-long Nebraska farmer, as one of many growers who were obligated to support the Freedom to Farm policy (euphemism for the 1996 farm bill) through the government-mandated payment even though he disagreed with its design.

This opposition to the assessment in no way means that farmers are averse to promoting their products. But there is a big difference between forcing farmers to pay for marketing over which they have little if any input and providing them with opportunities to help themselves, he says.

"The corn checkoff system, like the beef checkoff system, has crossed this line," he says. "These [assessment programs] have become a cozy method to tie the agribusiness system together and to minimize counter speech. The boards control the 'speech' in each state. Agribusiness knows exactly whom to influence, and if you don't hold their viewpoint, you get screened out. My dad has no means to use his checkoff dollars to speak as he would like. I do not blame him or others for being angry. I am glad the South Dakota judge was able to see this mandatory checkoff system for what it is."

Meanwhile, back on the ranch in North Dakota, Linda Rauser sees last week's ruling as an important initial victory in her struggle and those of independent family ranchers and farmers to keep going.

"I will not be the generation that loses this ranch because of market matters beyond my control," she says. "This was my grandfather's and my father's. I appreciate what they left to me."