The Beef Checkoff:Where we’ve been and where we’re going

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Beef Checkoff History

• Beef checkoff programs in the U.S.

date back to 1922 … when the

assessment rate was 5¢ a carload

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Beef Checkoff History

• Voluntary state programs

• Referendum in 1977

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Referendum in 1977

• Complicated

• Value-added assessment

• Voting at ASCS offices

• Required two-thirds majority

• Failed (56.6%)

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Referendum in 1980

• Reduced assessment

• Required simple majority

• Targeted 30,000 “joiners”

• Failed (34.6%)

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Prior to 1985 Farm Bill

• Surveyed producers –

ask what they wanted

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What Producers Wanted

• Everybody pays/simple assessment

– No free rides

• Grass-roots Control

– States keep 50 cents

• Producer Control

– Nominated by fellow producers

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What Producers Wanted

• Cost-effective program– Limit on administrative expenses

• Test run to see if it works– 18-month test period before voting

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Referendum in 1988

• Simple assessment ($1 per head)

• Voting at Extension offices

• Required simple majority

• Passed (79%)

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Today’s Beef Checkoff Program

• Established as part of the 1985 Farm Bill

• Became mandatory via national referendum vote by producers in 1988

• States retain 50 cents on the dollar; forward 50 cents to Beef Board

• CBB administers program, subject to USDA approval

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Where Checkoff Dollars Come From

$1 per head invested by about 900,000 beef, dairy & veal producers – $72.1 million

$1-per-head equivalent invested by importers – $7.6 million

$1 per head invested by producers in five states without beef councils – $44,000

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Program Definitions

• Promotion

• Research

• Consumer Information

• Industry Information

• Foreign Marketing

• Producer Communications

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Beef Checkoff Guidelines

• No lobbying

• No Unfair or Deceptive Practices

• No reference to a brand or trade name

of any beef product without Beef Board

and USDA approval

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Beef Checkoff Guidelines

• No expenditures that

relate primarily to

live cattle production

or marketing – must

be directly related

beef or beef products.

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Coordinated Programs

• Nationwide industry

• Global marketplace

• Operating Committee combines

state and national leadership

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2008 Beef Industry Contractors

National Cattlemen’s Beef Association

National Livestock Producers Association

American National CattleWomen

U.S. Meat Export Federation

Meat Importers Council of America

American Veal Association

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Key Beef Checkoff

Accomplishments

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“Beef. It’s What’s for Dinner”

86 percent of consumers recognize tagline

New campaign celebrates “The Power of

Protein in the Land of Lean Beef.”

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Muscle Profiling

• Analyzed more than 5,500

muscles from chuck and

round

• Found several muscles

traditionally ground had

potential for higher-value

steaks

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44%

50%

19%

4%

0%

10%

20%

30%

40%

50%

60%

Rib Loin Chuck Round

Primal Values - 2007 vs 1992

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New Product Development

• More than 2,500 new products since 1998

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Beef Nutrition, Education

• Nutrition &

Beef:

Developing

a positive

relationship

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Leaner than Ever!

29 beef cuts meet

government guidelines

for “Lean” – including

favorites like tenderloin,

T-bone and 95% lean

ground beef.

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Leaner than Ever Before!

• Comparing 3-ounce cooked servings, these cuts have only 1.2 grams more saturated fat than a skinless chicken breast yet less total and saturated fat than the same size serving of a skinless chicken thigh

• Research shows lean beef can play the same role as skinless chicken or fish in a cholesterol-lowering diet

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Beef Quality Audit

• National Beef Quality Audit in 1991 said industry was

leaving $279.82 per carcass on the table due to:

– waste (fat)

– insufficient muscling

– taste (palatability, marbling, maturity and gender)

– management (hide defects, carcass and liver pathology, tongue

infection, injection sites, bruises, dark cutters, etc.)

– carcass weight.

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Beef Quality Audit

Follow-up audits in 1995 and 2000

showed reductions in waste from

$279.82 per animal in 1991 to

$104.92 per animal in 2000!

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Beef Quality Assurance

2005 BQA audit:

Focused on identifying needs for

BQA/producer education efforts

vs. comparison, but still found:

• 6-percent increase in cattle grading Choice or

higher and 3 percent increase in yield grades 1

and 2.

• Significant reductions in brands, bruising and

horns

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Safety Research & Intervention

• Since 1993, checkoff has invested more than $35 million in beef-safety research

• Today, checkoff-developed food safety systems are used in processing of 90% of fed cattle in the U.S. and can reduce bacteria during processing by 99.99 percent

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Foodservice Partnerships

• Over six years, the beef checkoff allocated $2.4 million

to foodservice partnerships, while partners invested

$138.6 million

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Food Communications

• Reach consumers more than 1 billion times a year by providing editors with recipes, photos and beef facts

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Checkoff Results?

What does it all mean for the beef industry?

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Evaluation

• Specific outcomes

• Measurable

• Achievable

• Relevant

• Time bound

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Beef Demand Index

1. USDA per capita beef supplies

2. USDA Choice retail prices

3. Adjustment for inflation based on Consumer Price Index

4. Fixed relationship between beef price and quantity demanded, called elasticity

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100.00

94.19

87.9986.27

83.26

79.1976.41

70.3269.38

65.8364.6062.59

59.6358.08

56.0855.0853.25

50.6750.2751.94

53.4755.9355.21

58.39

62.9160.71

57.3757.87

1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007

0

10

20

30

40

50

60

70

80

90

100

Annual Beef Demand Index

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Beef Demand

All told, Cattle-Fax estimates that the

increase in consumer demand for beef

since 1998 has added about $250 per

head to the price of fed cattle and about

$200 per head to the price of calves

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Consumer Confidence

Percent confident U.S. beef is safe from BSE

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Beef SafetyPrevalence of E. coli O157:H7 in Ground Beef

00.10.20.30.40.50.60.70.80.91

95 96 97 98* 99** 00 01 02 03 04 05 06 07

Per

cen

t P

osi

tive

s

First BIFSCo Meeting Held

Jan. 2003

* and ** indicate a change to more sensitive sampling and methodology

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Carcass Value

• New products created through

muscle profiling contributed to

a $60- to $70-per-head

increase in value of the chuck,

and new products represent 28

percent of demand growth

since 1998

- Cattle-FaxFlat Iron $5 - $6 lb

Chuck Roast 99¢/lb

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Consumers Responding!

More than 20,000 restaurants have offered

Beef Value Cuts and about 10,000 U.S.

supermarkets are offering them – nearly

double the 5,000 offering them in 2005

and up from just 321 in 2003

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Consumer Expenditures on Beef

90 91 92 93 94 95 96 97 98 00 01 02 03 04 05 06

YEARS

35

40

45

50

55

60

65

70

75

BIL

$

Source: USDA & Cattle-Fax

99 07

Reco

rd $74 b

illion

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Accountability• Producers in the U.S. are the investors

and hold all contractors accountable for expenditures

• Important to follow procedures set by the Beef Board through USDA and the CBB Executive Committee

• Two important rules include checkoff acknowledgment and brand or trade name references

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Acknowledgment

• Critical to acknowledge funding source or sources so investors realize return on investment

• Simple “Funded by the Beef Checkoff” with Beef Check Logo with domestic use

• USMEF has a variance for multi-species international marketing

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Beef Checkoff Acknowledgment

• With the realization that the Beef Check Logo may not have particular meaning in some international arenas, it is adequate for multi-species promotional and educational materials in these markets to appear with USMEF’s U.S. Meat logo.– If, however, the materials are used in presentation in the U.S., the Beef

Check Logo and tagline must be used.

• If another funding source, such as pork or MAP funding, is recognized with a separate logo, then the Beef Check Logo must also be included, though the domestic tagline is not required. – Must be at least as prominent in size and location as other logos.

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Beef Checkoff Acknowledgment

• The “American Beef Club” logo may be used in place of the Beef Check Logo in international markets if no other protein logos are used.

• The “High Quality American Beef” logo is appropriate for use in place of the Beef Check Logo when the nature of the activity requires use of only one logo.

• When no other species’ logo is used but the activity is jointly funded by beef and pork, for example, the tagline “Funded by U.S. beef and pork producers” or similar wording may be used, and the Beef Check Logo omitted.

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Brand & Trade Name References

• Any reference to brand or trade names

where beef checkoff dollars are invested

must be approved by the Beef Board and

USDA

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Looking Ahead

What can we do better?

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Long Range Plan 2010

• Increase demand 10% by 2010

• Become a net exporter in terms of value by 2010

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Enhancing the Checkoff

• USDA asked Beef Board to gather ideas

• CBB Administration Subcommittee will make recommendations to CBB Executive Committee by November 2008

• Full Beef Board will vote on recommendation from Executive Committee in January 2009

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