In recent weeks there have been a plethora of articles in the farm media promoting the value of organizations like the Canada Beef Export Federation (CBEF) and the Beef Information Centre (BIC). The underlying theme is the necessity for cattle producers to continue to fund these organizations through checkoffs. We are told that these organizations are so successful at promoting Canadian beef and at leveraging additional funding, that the return to “the industry” is many times the initial seed money. Undoubtedly this campaign is designed to coincide with the introduction of the refundable levy in Alberta. With that in mind cattle producers should maybe be asking some hard questions before deciding where their checkoff dollars go.
Why should cattle producers be paying the majority of beef promotion costs? Most ranchers sell weaned calves or feeder cattle, most feedlots sell live fed cattle to the packing oligopsony – only the packer and retailer actually sell beef. The complete domination of the marketplace by a handful of players in the packing and retailing sectors ensures that any enhanced revenue earned by increased marketing efforts for beef does not trickle back to the sellers of live cattle. To add insult to injury the “export members” of CBEF (predominantly large packers) demonstrate their leveraging skills when funding their organization by extracting more than $5 out of cattle producers’ pockets for every dollar they contribute themselves.
A second question might be to ask for evidence of success. Successful North American and export promotion should have resulted in good demand for Canadian beef and higher prices for cattle. Instead we have cattle prices lingering at the lowest levels since the Great Depression and ongoing liquidation of the national herd. Agriculture Canada recently predicted an average net operating income of negative $5,195 for all beef cattle operations across the country in 2010! If this is the result of successful marketing and promotion of Canadian beef perhaps it’s time cattle producers redirected their checkoff dollars elsewhere rather than supporting the status quo which has so clearly failed.