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Q and A with Beef Board chairman Nelson Curry
Today's Farmer gets an update on beef demand, Beef Board activities and current checkoff litigation.
Prognosticators say that the court case against the national beef checkoff will be heard by the Supreme Court in the next few months with a decision coming
down as early as late winter. So when we got a call from Nelson Curry, chairman of the Cattlemen's Beef Board (CBB), announcing he'd be driving through town,
we invited him to stop for a few questions and answers. Curry is the 2004 chairman of the CBB, an organization set up by Congress to oversee the beef
checkoff. Back at home, he is farm manager for Clay Charolais, a 2,200-acre intensive grazing beef operation in Paris, Ky. While the checkoff is maligned by
some sectors of the industry and cheered by others, the question the court will be rendering is whether the funds collected represent individual free speech
or government-regulated speech. We asked Curry about the situation as well as an update on current work from the Beef Board.
TF: Litigation is hot in the agricultural news cycle, but let's start with what the Beef Board does. The average producer is aware of the dollar per head paid
in. And the average producer knows there is a promotional effort on his behalf, but maybe not some of the more detailed efforts. Explain how the Beef Board is
set up and the overarching goals. NC: There are some long range goals. The goals we're working on now were set in 1998 and included turning around the 20-year
decline in demand the beef industry faced. Another was to gain more value out of the chuck and round. With initiation of that long range plan, we started
working on new products, the heat-and-eat products you see today. Since then, we've had a hand in more than 2,100 of those convenience-based products. They've
been very successful, and we feel that is part of the current demand picture. The other thing is that we were able to start using more of the chuck. Using
muscle profiling, we went in and found the flat iron steak that you're seeing on a restaurant menus.
TF: The meat case has changed-'more ready-to-eat items on the beef side. That's not just a shift in demand, but a generation of demand. And what has it meant
to the producer? NC: The main point is that rather than a 6 percent increase in demand, which was the goal for the time frame, there has been a 15.4 percent
increase in demand [since 1998]. We ended up extending the long-range plan for another year. Right now we are in the processes of appointing a new long-range
planning commission to extend the vision another 5 or 6 years. Cattle Fax distilled it this way: In 2003, that additional demand added $150 to $200 per head
to a 5-weight calf. In other words, it is pretty significant. If you look at it from the promotional campaign that is familiar to everyone, the "it's what's
for dinner" ads, traditionally those ads have gotten between 40 and 60 percent of the promotion budget. It's expensive to advertise. But studies at the
University of Florida indicate for every dollar spent the producer gets back a $5 to $5.40 return.
TF: But there are non-ad influences in today's market. Beef producers owe a debt to the late Dr. Atkins. NC: Sure, high-protein diets had something to do with
increased demand; however, if the consumer didn't have some of these 2,100 new products available, if he didn't have beef in a convenient form, would he have
been able to use beef in the high-protein diet? When we talk about 2,100 products, of course, the beef checkoff didn't fund every one of those. We were
instrumental in answering questions from food service purveyors. We got them jump started and helped them see some of the [sales] potential out there if they
invested some of their own money. What happens in these partnerships is that we'll put up maybe $100,000 or $200,000, and [the food company] puts up $3
million to $4 million in advertising. We help them to develop which part of the carcass to use, which cuts, to make sure they have a good, saleable product.
The cheese-steak pizza at Dominos was the biggest intro they'd ever had. Taco Bell's carne-asada [steak burrito] was popular, too. Again, we're putting up a
miniscule amount of money for the kind of leverage we get.
TF: So research plays heavily into what gets promoted? What's new in research? NC: Nutrition is one of our big areas this year because there is the
nutritional "perfect storm." Dietary guidelines are being published and the food guide pyramid revised. The ad campaign we started a year ago in May [is an
example of the importance of research]. It compared 19 different lean beef cuts to a 3-ounce boneless, skinless chicken breast. Research showed beef had 1
more gram of saturated fat than the chicken breast; however, it had six times the amount zinc, three times the dietary iron, and eight times the Vitamin B12.
So you give up 1 gram of saturated fat, but you get so much more nutrients in return.
TF: Some producers are strong supporters of the checkoff. Some vehemently oppose the idea. Some don't pay too much attention. What's the current atmosphere
around litigation of the checkoff. NC: The industry, I think, is reflected in this: Each year we do a 1,000-producer survey. In January 2003, the approval
rating was 63 percent. One year later, it was 69 percent. That's been the typical range. The lowest was a one-time 59 percent. So you can say that two-thirds
of beef producers out there are behind the checkoff-'want to see it continued and think it is worth the investment. If I was speculating, I think there is
another 15 percent which, if I could get in the room and visit with, I could convince them it is a good idea. And there's probably 15 percent who I could
spend 3 weeks with and never convince. That's just my opinion. And I think it was that [second] 15 percent that brought the litigation.
TF: So at dispute is the fact they don't think there is a return for their investment? NC: Unfortunately, we're in a flow through system. If the guy on the
top doesn't make money, the next guy can't. We've got to be able to make the retail, the food purveyor, the packer, the feeder and the stocker profitable to
push it back to the cow/calf guy. Unfortunately, that's just the way it is. I'd be one of the first to agree that it should have been food service's idea to
come up with new products. They should have seen the need for heat-and-serve items 15 or 20 years ago at the same time such items became popular in poultry.
But they were making adequate dollars doing what they were doing, so there wasn't much incentive. However, we came in with the checkoff and we showed them how
to move more product. That's why there has been 2,100 products [because they were successful]. And then there's the new muscle cuts we've come up with through
research-'demand pushed from going into the meat cutter and demonstrating how to cut these things and put them on the shelf.
TF: So if demand has been increased, the valid complaint falls to the execution of the checkoff being free speech or government speech? NC: In the litigation
we are trying to point out that we are government speech. We are governmentally regulated, and this is a good case. We get approval on all of our ads through
the USDA. All 108 members of the Beef Board are appointed by the USDA. Every press release, every word gets a look-over and approval by the USDA.
TF: So the promotional arm is regulated. How will that play in court? NC: The complication is that we as producers of the checkoff want it to be a
producer-driven program, and it is. There are 600 producers involved in the budgetary process. We form [the budget] and send it to the USDA. And as far as
budgetary issues [the USDA] has been satisfied with our budgets because the budgets comply within the bounds of the acting order. What will be decided is what
to do when you have an organization that is run by producers and the decision on how to spend funds is directed by producers, but still has a high degree of
government intervention. That's what the judges will sort out.
TF: Has the fact that litigation is under way affected this year's budgeting process? NC: We are approaching this as if we are going to win. We'll keep doing
business. So we've got our budget put together. What the Supreme Court will do is open. They could pull pork into it. They could pull dairy in. Almost all
checkoffs are being challenged. I think the judges have seen enough to know that they have to be broad enough in the ruling to allow them all to continue or
to say that they must all be eliminated. The checkoff was formed by the 1985 farm bill, an act passed by Congress. The decision will confirm that it is
government speech or free speech, regardless of its success and the record of increased beef demand.
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