THE U.S. Department of Agriculture's Office of the Inspector General (OIG) has concluded, from an audit of the beef checkoff program, that there were no compliance issues associated with the beef checkoff over the 2008-10 period and that the Cattlemen's Beef Board and its contractors had followed the rules that govern the checkoff.
OIG said the relationships between the Beef Board and its contractors, including its primary contractor, the National Cattlemen's Beef Assn. (NCBA), over the audit period were in compliance with legislation that established the checkoff in 1985 and provide guidance for the use of checkoff funds.
"Funds were collected, distributed and expended in accordance with the legislation," OIG said.
The checkoff collects $1 per head in all cattle selling transactions to fund beef advertising and promotion, consumer information, industry research and producer education. The checkoff is not permitted to be used for influencing government and public policy matters.
The Beef Board manages the beef checkoff, and USDA's Agricultural Marketing Service (AMS) has oversight responsibility for the beef checkoff and 19 other commodity programs. OIG's audit of the beef checkoff was included in audits of all 20 programs and was released last week.
In the beef checkoff audit, OIG noted that the Beef Board commissioned "an attestation engagement" in 2010 to review expenses NCBA submitted for reimbursement for checkoff work in the three years from 2008 to 2010. OIG said the review, which is routinely conducted, did find that NCBA mistakenly coded and submitted certain expenses that were improper (Feedstuffs, Aug. 2, 2010).
The review was submitted to AMS, and OIG said AMS, Beef Board and NCBA representatives subsequently met to develop corrective actions, which included NCBA reimbursing the checkoff for those specific expenses and a decision by NCBA to hire a compliance officer to manage and oversee checkoff expenses (Feedstuffs, Aug. 8, 2011).
OIG reported that, during the course of its audit, it received three complaints from beef industry interests alleging misuse of checkoff funds. OIG said it assessed the allegations and found no evidence that the Beef Board and/or NCBA were in non-compliance with the checkoff governing legislation.
OIG said it also assessed 1,005 invoices requesting reimbursement for checkoff work that amounted to $20.5 million and found that the requests and reimbursements were appropriate.
OIG did find problems with certain AMS oversight practices and recommended that AMS develop oversight procedures and reviews specific to the beef checkoff program and urge the Beef Board to improve document transparency.
Beef Board chair Weldon Wynn, a cow/calf producer from Star City, Ark., said the board is pleased "to receive this validation of the effectiveness" of the processes that are in place to ensure compliance.
He added that the board is continuously improving the robustness of those processes and said producers and beef importers "can be assured ... that checkoff dollars are being invested appropriately and effectively."
(The checkoff collects a fee on imported beef comparable to the $1 per head that's assessed on cattle selling transactions.)
The complete OIG audit report is available at www.usda.gov/oig/rptsauditsams.htm.
The findings of the 2008-10 expense review are at the center of a lawsuit brought by Kansas cattle feeder Mike Callicrate, with the assistance of The Humane Society of the United States, against USDA and Agriculture Secretary Tom Vilsack alleging misuse of checkoff funds (Feedstuffs, Oct. 29, 2012).
The suit charges that NCBA has consistently used checkoff funds for government and public affairs and claims that the checkoff is being exhausted on advancing NCBA's "political interests" rather than going into programs to increase beef demand and stabilize the beef industry.
Attorneys for Callicrate and the U.S. Department of Justice, which is representing USDA and Vilsack in the case, had agreed to a delay in the trial until the OIG report was released.
Callicrate last week told Feedstuffs the OIG report was "as we were expecting," calling it a "whitewash" that "redirected the focus" from NCBA's misuse of checkoff funds to AMS oversight.
He said he plans to continue with his suit.