NEMAHA COUNTY, Kan. – From their small farms in the rolling hills of northeast Kansas, two ranchers are raising a few cattle, and a lot of Cain.
David Pfrang and Jim Dobbins turned themselves into activists, launched a shadow corporation, got hauled into federal court and had to hire a lawyer.
All over $1.
That buck divides the beef industry, and it ay influence what you have for dinner.
The federal “beef checkoff” mandates a $1 payment every time a head of cattle is sold. That adds up to about $80 million a year nationwide, money that is supposed to be used to convince us to buy more beef. Nobody in the beef industry argues much about that idea.
Checkoff officials say a recent study calculated that every dollar collected by the checkoff delivers $11.20 in return. Among its successes is a series of iconic commercials known as “Beef, it’s what’s for dinner.”
But there is a lot more to the beef checkoff than meets the eye. That $1 assessment, critics like Pfrang and Dobbins say, flows with limited oversight to state and national interests.
Sellers must pay even if they don’t believe they have any say over who gets the money, or why. And they must pay even if they believe the fund advances the interests of multi-millionaire ranchers against their own.
“I call it the liberty tax,” Pfrang said. “We just lost some freedom and we’re not being represented.”
As many as a fourth of the nation’s 730,000 ranchers – mostly small independent farmers – have complained for years that the checkoff has become a billion-dollar bonanza for big ranchers, industry executives and giant beefpackers. Larger and efficient cattle operations are forcing out smaller ranchers and feedlots. This integration has already altered the U.S. chicken and hog industries.
Polly Ruhland, chief executive officer of the Cattlemen’s Beef Board, which oversees the checkoff, says the program is working as it should. She declined to be interviewed for this story.
Opponents have fought the checkoff to the U.S. Supreme Court, which ruled that it is legal “government speech.” But that has not deterred small ranchers.
A beef over politics
The federally authorized collection agents for the checkoff are state groups like the Kansas Beef Council in Topeka, which is at the forefront of the battle Pfrang and Dobbins are waging.
They say their beef started when the Kansas council refused to give them detailed financial records on how they spend the $10 million a year they collect from them and 20,000 other Kansas producers.
Kansas and other state beef councils keep 50 cents of every dollar they collect and use it to run their own statewide programs. The other 50 cents goes to the national Cattlemen’s Beef Board, which runs the national beef promotion campaign.
Because the collections are mandated by federal law, Congress built in safeguards to prevent checkoff dollars from being misused for lobbying or political contributions.
And therein lies the rub for many small ranchers, including Pfrang and Dobbins.
The state beef councils – and the national program – have strong ties to politically oriented beef industry lobbying groups up and down the line.
The Kansas Beef Council is a division of the Kansas Livestock Association, a Topeka lobbying shop since 1894. At the national level, the majority of checkoff dollars is funneled into the National Cattlemen’s Beef Association (NCBA), headquartered outside Denver.
But the NCBA’s Washington, D.C. office has been a strong political voice. In the 2014 mid-term elections, the NCBA gave nearly $800,000 to mainly Republican political candidates.
Yet as the prime contractor for the national beef checkoff program, the NCBA has gotten checkoff-funded contracts for research and promotion in each of the last 26 years. That amounts to more than 98 percent of total checkoff revenue and 82 percent of NCBA’s budget, according to a recent lawsuit filed by small producers.
And the arrangement appears likely to continue. That same lawsuit claims that the NCBA controls half the seats on the beef checkoff’s contracting committee.
“I don’t want them using my money to fight my livelihood like they have been,” said Wil Bledsoe, president of the Colorado Independent CattleGrowers Association and a rancher who raises 900 head of cattle near Wild Horse, Colo.
“What’s good for packers isn’t usually good for the little guy, and vice versa. So how can they claim to represent both?”
For its part, checkoff officials say no checkoff money leaks to lobbying.
Checkoff officials at all levels insist that firewalls built inside the lobbying organizations prevent any misuse of those funds.
But critics say those firewalls sometimes work more like revolving doors.
And government monitors overseeing the program are aware of the problems, said Dudley Butler, who resigned as a top USDA official in 2012.
Butler, a lawyer, says the checkoff is nothing more than an “illegal cattle tax.”
Claims from Butler got some traction two years ago when a federal audit, sparked by complaints from producers, found that the NCBA had wrongly spent $216,000 on “non-checkoff activities” such as travel to non-checkoff events.
High salaries paid to NCBA officials and their lieutenants on the state level are also a spur in the side.
Federal tax forms show that NCBA’s chief operating officer, Forrest Roberts, was paid $428,319 in 2013, a sizeable chunk of the $13 million that went to NCBA salaries that year. NCBA officials say Roberts’ salary is comparable to other CEOs in similar positions.
Two-hat states
In Kansas, the politics of beef are hard to ignore.
Thomas Dee Likes is a living legend in the Kansas cattle business. Until recently he was the executive vice president of the 5,500-member Kansas Livestock Association, a powerful, 120-year-old Topeka lobbying group.
For three decades, Likes was the Kansas beef industry’s chief lobbyist in Topeka. He was the architect of state initiatives that have helped the Kansas cattle industry remain a big part of the state’s economic engine. He successfully pushed for tax reductions or exemptions on farm land, machinery, parts and labor.
He’s also the epitome of what checkoff cowboys mean by the term “two-hat state.”
On one day Likes could wear his Kansas Livestock Association hat, lobbying a state legislator over lunch. Later the same day, he could wear his Kansas Beef Council hat, riding herd over checkoff dollars.
That’s because Likes was also treasurer of the Kansas Beef Council, a subdivision of the Kansas Livestock Association. In fact they share a staff and office space in the same Topeka building.
Likes, the beef board and the USDA say there’s nothing amiss about the arrangement. He said the beef council has its own board of directors and accounting system and “no funds are commingled.”
Up in Nemaha County, the arrangement has David Pfrang pulling his hair out.
Not only that, said Pfrang, but how can there be a firewall between checkoff dollars and lobbying like the law says, when Dee Likes could walk back and forth through that wall all day and never get singed?
Audits show nothing amiss, but Pfrang isn’t satisfied.
He and his neighbor Jim Dobbins already knew that Likes was paid handsomely for his two-hat service. The most recent KLA financial report shows Likes was paid $329,937 in 2013, but in years past he’s made over $1 million in salary and other compensation.
No one will say how much of that money comes from checkoff funds, or dues paid by KLA members.
Likes retired from his role at the KLA at the end of 2014.
But the old “two hat” arrangement will continue. In fact it’s required by the bylaws of the Kansas Livestock Association. Matt Teagarden, who recently replaced Likes as executive director of the KLA lobbying organization, also serves as treasurer of its subsidiary, the Kansas Beef Council.
Trojan horse
Pfrang and Dobbins headed down to Topeka in 2011 on a fact-finding mission.
They checked to see if the Kansas Beef Council filed more detailed financial records when it registered with the secretary of state.
But there was no record of the council’s existence. It was as if the Kansas Beef Council, a government-authorized collection agent for the checkoff assessments, didn’t exist, at least as far as the Kansas Secretary of State was concerned.
That gave the Nemaha County cowboys an idea.
They registered that same name themselves with the secretary of state, then wrote bylaws and elected themselves to run their very own Kansas Beef Council, Inc. Only in their version, they said, everyone would get a vote.
Before long, Pfrang and Dobbins started getting a lot of mail from Topeka.
The Kansas Livestock Association accused them of stealing the name “Kansas Beef Council.” Washington lawyers got involved and sent them a cease and desist order.
They got hauled into federal court and had to pay a lawyer. In the end, they decided not to fight it out. But they refused the beef council’s demand for a gag order, and they’ve been talking about it ever since.
All the bickering prompted Secretary of Agriculture Tom Vilsack to let loose at a recent Kansas City press conference.
“Because they’re locking horns, tens of millions of dollars of promotion, and research and marketing isn’t getting done,” Vilsack said. “I mean, seriously, does that make sense?”
Whether all the bickering makes sense or not, critics say the battle royal over the beef checkoff is really a struggle to preserve a way of life.
They will continue to complain, they say, until the government fixes it, or they go the way of the small chicken and hog farmers who succumbed to what appears to be an inevitable march toward greater efficiency through vertical integration in American agriculture.
