Grounds For Divorce
By Lee Pitts
Reprinted from the January 15, 2010, edition of Livestock Market Digest
As with most marriages, the one between the Cattlemen's Beef Board and the NCBA seems to be going through some tough times. Although they've been doing their fighting behind closed doors for years, if you listened hard enough you could hear their squabbling. But recently their marriage problems exploded worse than Mrs. Woods when she learned of Tiger's extracurricular activities. The only thing different is that the NCBA and CBB spat hasn't surfaced in the media. Until now.
Although our detractors will probably call us the livestock industry's equivalent of the National Enquirer, we'd argue that what follows was not something we made up. It came straight from letters from the Beef Board to the NCBA. And since it's your money they are fighting over, we thought you deserved to know what's going on.
As previously reported, the NCBA formed a Governance Task Force that's been working since July 2008 on recommendations for changing NCBA's governance structure. These were the first visible signs that the marriage wasn't working. When the Task Force unveiled their "conceptual framework" it became obvious to anyone who could read that their goal wasn't so much about improving anything, but was more about stealing the rest of the checkoff money they couldn't stuff in the bag the first time around. And from all indications, the NCBA really needs the money.
Sometimes when you plant seeds good things grow. Two months ago we wrote about what NCBA was trying to get away with and in response we received information from, not just one, but two very disgruntled folks who shared documents with us that you were, no doubt, never meant to see. Even though it's your money. We think these tipsters are real heroes, as is the Cattlemen's Beef Board who are putting up a good fight on your behalf. It's finally dawned on them that marrying the checkoff with the NCBA might not have been a good idea after all. It's not just us saying this... it's them.
After NCBA's Executive Committee sent out the task force's recommendations the Cattlemen's Beef Board Executive Committee wrote a letter back to them expressing their concerns about the recommendations. Here are a few tidbits from that letter, dated October 31, from the Cattlemen's Beef Board Executive Committee and addressed to Jan Lyons and John Queen, Co-Chairs of the Governance Task Force.
CBB: "We were gratified to hear of your strong commitment to the maintenance of the "firewall" between checkoff and non-checkoff funds at NCBA. As we discussed this important issue, we realized there are two facets to the firewall. One facet of the firewall relates to the expenditure of funds, and the other facet relates to the firewall of governance over checkoff funds at the Federation. Since there is an expectation of a separation of governance over Federation funds, we are very distressed to observe the proposed elimination of this separation. When the leadership of CBB met with 12 industry organizations over the past 18 months, the strongest and most consistent message we heard was the insistence on a greater separation between the Federation of State Beef Councils (Federation) and the policy activities of NCBA. Your current proposed conceptual model is diametrically opposed to the expressed desire of the leadership of organizations representing an overwhelming majority of beef producers. We are, therefore, extremely concerned that you have not given adequate attention to this important issue."
CBB: "In 2004-2005, NCBA went through an exercise to identify steps that needed to be taken to build a stronger identity and ownership of the Federation by members of the Federation and state beef councils. NCBA went so far as to have a separate session for Federation directors and a great deal of excitement and energy resulted. The structure you are now proposing totally rejects the valuable lessons learned over the past several years about the importance of a Federation whose directors feel a sense of purpose and ownership in the Federation. Several of our Executive Committee members were involved in those Federation exercises and are convinced that your current direction is misguided. In addition, your gap analysis indicated the need for a stronger identity for the Federation, yet your proposed structure basically eliminates the Federation."
CBB: "The merger of the Beef Industry Council and the National Cattlemen's Association in 1996 was a partial merger in that separate divisions were maintained. The separate divisions were maintained because of the strong desire of the state beef councils to retain the identity of the Federation and the control of the Federation over checkoff funds managed by NCBA. Your current proposal results in more of a takeover of the Federation than a merger, which is a 180-degree reversal of the structure previously embraced by state beef councils."
CBB: "While we understand the need for a membership organization to ensure its "members" are fully engaged in and support the decisions of the organization, we view the requirement for the NCBA Board of Directors to sign an oath of loyalty to NCBA to be excessive and dangerous to the well-being and integrity of the beef checkoff. It is true that NCBA represents many beef producers who own a significant number of cattle, but NCBA as an organization, does not represent the majority of the producers and importers who pay into the beef checkoff. As a result, we are very concerned with your proposal that NCBA board members, who would only be loyal to NCBA, would also be responsible for approving the Federation budget.
CBB: "We think this loyalty oath would constitute a conflict of interest of a magnitude that could destroy the very foundation of the beef checkoff program in the eyes of many beef producers who are not members of NCBA. As CBB members, we have sworn an oath on behalf of the U.S. Secretary of Agriculture that we will ensure the accountability and integrity of the beef checkoff and ensure the checkoff works for the benefit of all beef producers and importers. As such we feel compelled to tell you that we believe the proposed structure will create a conflict of interest so significant that it could ultimately cause the demise of the beef checkoff program for which we have all worked hard and a program which NCBA itself has frequently touted as helping to improve beef demand and has even paid to defend. We strongly urge you to protect the identity of the Federation and maintain its responsibility to all beef producers by retaining the Federation as a separate body, which has as one of its duties the approval of its own budget. Insofar as Federation funds are voluntary investments from state beef councils to be used for the benefit of all producers, we are obligated to point out that the expenditure of Federation funds must be determined by Federation directors only."
CBB: "In connection with the proposed Councils, we encourage you to take this opportunity to make checkoff-related Councils more open to other industry organizations rather than remaining so exclusive. A more inclusive or open approach to obtaining input to programs funded by the checkoff will be well received by producers who are not members of an NCBA affiliate, but who have a vested interest in the success of checkoff programs. This will also provide an opportunity for all producers to begin working together as we deal with well-funded adversaries who wish to turn consumers away from our product and ultimately eliminate animal agriculture in the U.S. We also encourage you to further develop your proposal concerning the manner in which other beef checkoff contractors would participate in the proposed structure because this issue is significant to many of the organizations that currently work with CBB and many of the state beef councils."
CBB: "In an effort to fully express how seriously we take our responsibilities, we are providing you with the oath that all Cattlemen's Beef Board members swore to uphold when they accepted their appointments to the Board."
THE SECRETARY OF AGRICULTURE HAS APPOINTED EACH OF YOU ON THE RECOMMENDATION OF YOUR FELLOW BEEF INDUSTRY PARTNERS, TO CARRY OUT THE BOARD'S RESPONSIBILITIES ON BEHALF OF THE SECRETARY AND FOR THE BENEFIT OF THE ENTIRE BEEF INDUSTRY. YOUR NOMINATION AND SELECTION DEMONSTRATES THE RESPECT AND CONFIDENCE THAT YOU HAVE EARNED AS AN EFFECTIVE LEADER IN THE BEEF INDUSTRY. THIS IS A NATIONAL BOARD AND YOU HAVE AN OBLIGATION TO REPRESENT ALL PERSONS WHO PAY THE CHECKOFF."
Wow! Repeating their marriage vows, in capital letters, no less!
So the NCBA Governance Task Force went back into counseling to try and save their marriage with the checkoff. From this reporter's view, it appears that the marriage may be too far broken to save. To show that everyone is not living happily ever after we present tidbits from the next love letter that was dated December 8, 2009, and was the CBB's response to the minor changes the Task Force made after the letter you just read. Again it was addressed to Jan Lyons and John Queen.
CBB: "We are gratified to learn that you revised some of your Recommendations in response to certain concerns expressed by our Executive Committee in its October 31, 2009 letter to the Governance Task Force (GTF), specifically removing the requirement for the Board of Directors to sign a loyalty oath to NCBA and creating more openness in program committee participation by allowing non-NCBA members to participate. However, we remain concerned about the following issues:
CBB: "We agree that a stronger Federation (of state beef councils) should be the cornerstone of any changes made to NCBA's governance structure. However, we do not agree that current recommendations would strengthen the Federation. In fact, we remained concerned about a loss of identity for Federation members since their only responsibility would be choosing two officers plus eight additional members to the Beef Promotion Operating Committee.
CBB: "We also came to understand that you are recommending that state beef councils investing in the Federation would have only a 40% vote in determining the expenditure of the checkoff funds they have invested in the NCBA. We are not sure we communicated our concern adequately in our discussion and wish to restate it here; namely, we are apprehensive that state beef councils will be less inclined to continue their current levels of investment in the Federation if they don't see a strong role for the Federation and this could result in fewer funds available for national checkoff programs. This opinion is voiced based on Federation history."
CBB: "In addition, your Recommendations would result in 60% of the votes in the proposed House of Delegates at NCBA being controlled by membership and service organizations, not state beef councils. This recommendation is extremely troubling to us since the non-checkoff representatives of the proposed House of Delegates could recommend a Federation budget which would not be acceptable to 100% of the Federation representatives since they only have a combined 40% of the vote."
CBB: "We think it is very likely that members of other beef-industry trade organizations paying into the beef checkoff would be very distressed to learn that some of the monies they have invested in programs of beef promotion, research and education are being expended to develop regulatory or membership policies of NCBA to which they may be diametrically opposed. We strongly encourage additional consideration by the GTF about the wisdom of using checkoff funds to reimburse expenses incurred while participating in policy development."
CBB: "While we recognize the desire to more fully achieve an additional level of integration, efficiency, unity and sense of ownership that is represented by one interpretation of the 1996 merger of BIC and NCA, we wish to offer some information for your further consideration. As noted in the third paragraph of CBB's Executive Committee letter of October, 31, 2009 to the GTF, there remains the stated desire of many in the industry for a greater separation of Federation and policy/membership activities so there is a clearer understanding in the industry of Federation processes and expenditures. Your Recommendations appear to move in the opposite direction of those views and this change may elicit a very divisive reaction. It is possible that moving Federation Directors into one NCBA policy organization, as has been proposed, may create more difficulties than solutions. We also ask that you keep in mind there are a significant number, and in some states a majority, of state beef council directors who represent non-NCBA affiliate organizations. It would be unfortunate if the Recommendations yielded some unintended consequences."
CBB: "Your Recommendations for the NCBA Board of Directors to approve all Federation budgets raises concerns because there would be no requirement for a certain portion of the NCBA Board of Directors to be elected from Federation representatives and there would be no requirement for the NCBA Board of Directors to approve a Federation budget that was recommended by the Federation. Under NCBA's current structure, Federation division members approve Federation budgets. We acknowledge that the current bylaws authorize the full NCBA Board of Directors to modify the Federation budget, but that requires a super majority vote (66.6%). We continue to think the Federation should control its budget and expenditures without the risk of modification by non-Federation representatives."
CBB: "Your Document indicated a recommendation for the NCBA Board of Directors to approve committee formation and appointments of committee leadership, but was silent about the process for determining the committees and appointing committee leadership. Should CBB, the Federation and NCBA choose to continue working together through a joint committee structure, we think our current processes of jointly determining the committee structure and jointly appointing committee leadership would need to continue."
CBB: "As you arrive at a final set of Recommendations, we encourage you to share your conceptual framework not only with state beef councils and affiliates, but also with other organizations within the beef industry whose members also feel a sense of ownership and pride in the Beef Checkoff Program."
We realize at the Digest that the content of the two letters is a lot to digest, (pun intended), but reread this story a couple times and what you'll discover is that the newly proposed structure the NCBA came up with would effectively "allow a restructured NCBA Board to have final say over expenditures of the checkoff." And that was in their words, not ours.
We say "Hurray for the Cattlemen's Beef Board," who are simply trying to save your other pocket from being picked by the NCBA. It's a tragic irony really that once again the NCBA Convention will be held in San Antonio . You may recall, that's the place where the illegitimate NCBA was born. We'll say again what we said then, "This was, and is, a marriage that never should have taken place and the sooner the CBB finds a good attorney and divorces this gold digger the better off we'll all be.
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