THE beef checkoff's largest program contractor is reacting to a $4.3 million drop in the fiscal 2014 national checkoff budget as a drought-whittled cattle inventory reduces checkoff collections.
The National Cattlemen's Beef Assn. (NCBA) is working through the challenge of reducing its budget by nearly 10% for the fiscal year starting Oct. 1.
NCBA, through its Federation of State Beef Councils division, does the lion's share of the beef marketing and promotion activities funded by the federally mandated checkoff. According to information from the Cattlemen's Beef Board (CBB), the Beef Promotion Operating Committee (BPOC) approved 20 projects administered by NCBA for fiscal 2013, including consumer advertising and public relations, product enhancement and nutrition research.
Those projects, totaling nearly $35 million for fiscal 2013, represent more than 80% of the authorization requests BPOC approved last September. For NCBA, those projects represent 80% of its annual budget.
"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," said Kendal Frazier, NCBA senior vice president of planning, governance and leadership development. "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 million to $4.3 million; we've got to react to that.
"We've put a plan in place that will result in less staff at NCBA in our federation division of the organization," Frazier added.
Checkoff assessments are collected at a rate of $1 per head on all cattle sold in the U.S. and $1 per head equivalent on imported cattle, beef and beef products. According to CBB data, domestic assessments for the first seven months of fiscal 2013 were down $1.7 million from the same period in 2012, or roughly 7.7%, while import assessments were down $225,000 from last year, off 6.4%.
Frazier said a joint budget committee, comprised of representatives of CBB and the Federation of State Beef Councils, began working on the premise of a much leaner national checkoff budget for 2014. Funds the federation has held in reserve, he explained, have helped overcome assessment shortfalls more than once in recent years, but the projected shortfall in 2014 is far greater than reserves could prudently cover.
"This is such a steep drop — more than 10% — that we felt we've got to take some other action, and that's what we're in the process of doing," Frazier explained.
NCBA is currently implementing a plan of action centered on a voluntary separation incentive that's being offered to all NCBA employees.
While Frazier could not discuss the specifics of that offer for legal and human relations reasons, sources within the organization told Feedstuffs that the offer includes varying financial incentives based on time of service, as well as career counseling to help affected staff members transition to the job market.
Because the voluntary separation offer has not yet concluded, Frazier would not speculate on the final number of staffers likely to be separated from NCBA, although those details will be known in a matter of weeks.
Checkoff and federation committees will meet Aug. 7-10 at the Cattle Industry Summer Conference in Denver, Colo., to review checkoff-funded work plans for 2014, and Frazier said those volunteer leaders will set the direction for the checkoff moving forward.
"This will force everyone to focus and prioritize what really matters most," Frazier concluded.
In CBB's 2014 budget, approved in April and due to be presented to the full board next month, BPOC earmarked $40.7 million for authorization requests to be conducted by approved contractors such as NCBA, which is a reduction of more than $2.4 million from fiscal 2013.
With the U.S. Department of Agriculture reporting the smallest Jan. 1 cattle inventory since 1952, the smaller beef checkoff assessments — and smaller NCBA contracts — may become "the new normal."