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. With the prospect of a smaller cattle herd for the foreseeable future, the National Cattlemen’s Beef Association (NCBA) is working through the challenge of reducing its budget by nearly 10% for the fiscal year starting October 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 approved 20 projects administered by NCBA for the 2013 fiscal year, including consumer advertising, product enhancement, nutrition research and consumer public relations efforts.
Those projects, totaling nearly $35 million for FY2013, represent more than 80% of the authorization requests approved by the Beef Promotion Operating Committee (BPOC) last September. More to the point for NCBA, those projects represent 80% of the organization’s 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 $4-4.3 million dollars; 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.”
Fewer checkoff dollars
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 FY2013 were down $1.7 million from the same period in 2012, or roughly 7.7%; import assessments were down 6.4%, off $225,000 from last year.
Frazier said that 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 held by the Federation in reserve, he explained, have helped overcome assessment shortfalls more than once in recent years, but the projected shortfall in 2014 was 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 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 included 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, though those details will be known in a matter of weeks. Checkoff and Federation committees will meet at the Cattle Industry Summer Conference in Denver Aug. 7-10 to review checkoff-funded 2014 work plans, 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 June, the BPOC earmarked $37.9 million for authorization requests to be conducted by approved contractors such as NCBA, a reduction of more than 5.6% from FY2013. With the U.S. Department of Agriculture reporting the smallest January 1 cattle inventory since 1952, smaller Beef Checkoff assessments – and smaller NCBA contracts – may just be “the new normal.”