Checkoff study a timely coincidence

Hot off cattle industry newslines is a news release about a recent study done on the value of checkoffs.

Hot off cattle industry newslines is a news release about a recent study done on the value of checkoffs. The industry study of the moment, commissioned by the Canadian Beef Cattle Research, Market Development and Promotion Agency and entitled, “Evaluating the Economic Benefits from the Canadian Beef Checkoff’, seems to have been released at an opportune moment considering the turmoil surrounding the newly installed refundable cattle checkoff in Alberta. Depending on which side you support, it is either just a coincidence or a calculated political move. Be that as it may, it will surely have some impact on rationalizing any changes to the checkoff refund legislation that are expected any day.

One could be cynical and note that a study commissioned by an agency to justify its own existence would probably have a predictable conclusion – that being the agency is doing a tremendous job with the checkoff money that it is spending. The credibility of the consultants always comes into question in these exercises, consultants are painfully aware that if they want to stay in business they had better pay attention to what the client wants to hear back. One could suspect that these types of studies are somewhat self-serving; but to be fair, agencies like this and commodity groups in general can’t win – they are damned if they don’t make evaluation studies and then are suspect when studies state members are getting their money’s worth.

The study reviews the conclusions made by similar agencies in the U.S., Australia and New Zealand who also carried out evaluation studies on the value of their checkoff spending. To no surprise, all of those studies concluded that those agencies were also providing substantial benefits to their members. The Canadian study one-upped all those studies by concluding that Canadian producers were receiving the most benefit of all the other agencies. That might be a bit of over enthusiasm by the consultants, being the method used to calculate benefits can best be described as somewhat esoteric or abstract, it is probably understood by very few people and certainly not the vast majority of cattle producers.

The problem with studying the effectiveness of a commodity organization is that on the whole, they do not sell a product whose economics can be easily determined. On the other hand, farmers and ranchers who support those groups all grow products that have a cost to produce and they sell for a known price that they can actually see. They can all plainly see whether an investment pays off or not. That’s not so clear when it comes to the benefits of the services of commodity organizations. In a way, it takes a leap of faith, fortunately for the ag industry, most producers are prepared to take that leap of faith, knowing all to well that the consequences of not doing so, albeit at times theoretical, are far worse.

It’s probably human nature, of course, but what annoys many producers is when a study says that their checkoff dollars invested into research and promotion have put an extra $40 into their pocket every year. When that coincides with a market price that is 10 per cent lower than the previous year, it is hard for a producer to find that extra $40 he is supposed to receive from their checkoff investment. True, it’s a simplistic perspective, being that if the original investment had not been made. returns would be even lower. All of that is covered in the study with their econometric models and “what if” scenarios and that’s fair enough. But it’s a dilemma that will confound these evaluation studies forever.

I personally don’t need evaluation studies to understand the value of checkoff expenditures. As a former manager of a livestock group, and a longtime media observer of the machinations of commodity organizations, I can state that producers are getting more value for their money than they could ever realize. The political representation and lobbying efforts on dozens of issues all the time is worth all the checkoff alone. God bless producers, but few understand how complex and Machiavellian political and trade issues have become that threaten their livelihood by friend and foe alike. Producers are blessed with organizations that have dedicated and professional staff to fight those battles everyday. But I digress.

This study does not address the above activities but sticks to research and promotion checkoff investments. Let’s keep in mind bigger dogs in the meat export business like the U.S. and Australia seemed to have decided that their agencies are worthwhile and spend a lot more checkoff dollars on research and development than we do, there is a message there for the Canadian cattle and beef industry.