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January 2012 Archive for Out to Pasture

RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

States Shoulder Too Much of the Promotion Burden

Jan 09, 2012

We spend too little promoting beef. Inflation and dwindling cattle numbers have reduced the $1 per head national checkoff program to ridiculousness. Let’s see—$1 is 1% of $100, so the $1 collected on a feeder calf fetching $800 at a December sale contributes 0.12% of its value to keeping beef demand up.

Floppy ear tags cost more than that. Hot-iron brands cost more than that. Salt costs more, for Pete’s sake. If we can’t do better than that, then we deserve the rump-roast kicking that poultry is giving us.

A large majority of cattle producers like the beef checkoff program. Every survey shows it. But we’re so set against each other these days that we can’t do anything about it. Well, wait.

Tennessee producers voted last month on whether to authorize a new program that would increase the checkoff by 50¢ per head in that state. We didn’t have results at press time, but if it passes, the Volunteer State will join producers in Alabama, Idaho, North Carolina, Oregon, Utah and Washington in chipping in extra money to, as checkoff supporters said in the 1980s, "keep beef king."

I suppose the argument now might to be "make beef king again." But the theory holds. It’s time for more. When the checkoff was passed, fed cattle sold in the $50 to $60 per cwt. range, about half what they were last month. There were 112 million cows and calves in the country then, 12 million more than now. Even then, $1 for a $700 fed steer was a laughably low effort to compete with the market-savvy poultry industry. Now we’re paying the same fee on cattle that are worth twice as much and expecting the checkoff to succeed in an inflated economy.

Some folks argue that if the checkoff worked so well, we wouldn’t have lost so much market share in the last 25 years. Bull. The CattleFax folks think it’s adding $200 or more per head to the value of cattle today.

The question I ask is: How much demand would we have lost had we not had a program to defend the beef industry from organized, well-funded attacks from extremists and a consumer-oriented poultry industry?

The checkoff program needs more money, and producers can afford to pay more. The problem, nationally, is that the political situation—both inside the industry and outside—has supporters scared to push too hard too fast. So the states are picking up the slack. This is heartening. It shows that whether industry leaders can get their act together or not, a lot of producers agree on the need. That’s really the way the beef checkoff program started.

I don’t know if CattleFax’s $200 per head figure is right, but industry-driven promotion and research is certainly worth more than $2 per head. The program saved us that much just in education about needle damage. Add in new products, dietary research and export promotion, and there’s no doubt the checkoff is the best investment any producer makes.

Some folks think that after the National Cattlemen’s Beef Association convention this winter, there will be enough industry goodwill to justify an effort to get Congress to make a few changes.

Meanwhile, it’s great that some states are taking the initiative to add voluntary checkoffs. More should. This offers each state a chance to control its own beef promotion efforts. And from the bottom up is the way America works best.

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