Checkoffs brace for tighter 2014

Checkoffs brace for tighter 2014

Drought-whittled inventories and softer hog markets mean livestock producers will have fewer checkoff dollars to invest next year.

WITH fewer head of cattle in the U.S. herd and moderating hog prices expected in 2014, the beef and pork checkoff programs are counting on fewer dollars for marketing and promotion next year.

Releasing its plan of work for the upcoming fiscal year, the Cattlemen's Beef Board (CBB) cut more than $1 million from its budget for authorization requests, generally by reducing funding to existing contractors such as the National Cattlemen's Beef Assn. (NCBA) and the U.S. Meat Export Federation.

"Our budget continues to tighten every year, but we have tightened our processes along with our belts to leverage every checkoff dollar to the greatest extent possible," said Weldon Wynn, chairman of CBB and its operating committee. "Our new committee structure and process helped us devise a coordinated plan of work for 2014 that points their checkoff investments directly at the goals of the beef industry's long-range plan."

In total, CBB will invest roughly $38.5 million in programs for beef promotion, research, consumer information, industry information, foreign marketing and producer communications.

The board's Beef Promotion Operating Committee submitted its budget last week following a two-day meeting in Denver, Colo. The full beef board and U.S. Department of Agriculture must approve the plan prior to its implementation.

NCBA remains the beef checkoff's largest contractor, receiving approval for $27.2 million in authorization requests. NCBA, knowing that a reduction in checkoff funding was likely for 2014, underwent its own belt-tightening earlier this year, which resulted in the voluntary separation of several NCBA employees.

"We're reacting to the economic uncertainty in our industry that has been caused by several years of drought and the liquidation of our cow herd and cattle population," Kendal Frazier, NCBA senior vice president of planning, governance and leadership development, told Feedstuffs in July.

"Cow numbers in the U.S. are at their lowest levels since the early 1950s, and we've gone through three or four years of significant drought. We have fewer animals being sold, and we're projecting a national checkoff budget that will be down $4.0-4.3 million; we've got to react to that," he added. "We've put a plan in place that will result in less staff at NCBA in our federation division of the organization."

CBB-funded NCBA proposals totaling nearly $35 million for fiscal 2013 represent more than 80% of the authorization requests approved by board; next year, that funding looks to be more like 70% of the requests approved.

 

Doing more with less

CBB will not be alone in finding fewer dollars in its coffers for the upcoming fiscal year. National Pork Board (NPB) chief executive officer Chris Novak told Feedstuffs that his organization is also anticipating an 8% reduction in checkoff revenues next year.

"Moderating grain and hog prices will lead to lower revenues, but we're still anticipating a budget that will be well above historic averages," he said. However, "the reduction will mean a slight drop in dollars available for programming."

What goes up must come down, as the cliche goes, and NPB revenues have been at or near record highs for the past few years, with checkoff incomes greater than $80 million per year.

Access to those record funds allowed NPB to spend an additional $3 million to create and extend a summer marketing campaign designed to increase consumer spending on pork at a time when producers are struggling with razor-thin or negative profit margins. Novak said real per-capita expenditures on pork were up 6.5% in June and are up 2% for the year.

"We're doing programs that matter to producers," he said. "We have been moving the needle in the direction we want to go."

For both checkoff organizations, then, 2014 will be about the effectiveness of their spending plans, in essence attempting to positively influence consumer beef and pork purchases using fewer dollars.

Volume:85 Issue:40

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