HUNTBLOG NEWSLETTER
16 October 2014
THE NEED TO STRENGTHEN AUSTRALIAN
RURAL INDUSTRY ADVOCACY
The recently published Senate
Committee report into the industry structures and systems governing levies on
grass fed cattle and the State Farmer Organisation based Australian Farm
Institute (AFI) published in March 2014 has underlined the urgent need for
Australian rural industries to review and reform their rural advocacy
structures.
The Call for Change
Grass Fed Cattle Producers
The overwhelming majority of
submissions to the Senate Committee inquiry into grass fed cattle levy funded
structures and systems, including submissions from, the Cattle Council of
Australia (CCA), The Northern Territory Cattlemen’s Association (NTCA), NSW Farmers,
AgForce the Red Meat Advisory Council (RMAC), Australian Beef Association
(ABA), the Richmond river Cattlemen’s Association and the Australian Meat
Producers Group (AMPG) all recommended some form of modification to the
existing grass fed cattle levy funded structures and systems.
Australian Farm Institute
The State Farmer
Organisation-based Australian Farm Institute’s (AFI) report, Opportunities to Improve the Effectiveness
of Australian Farmers’ Advocacy Groups – A Comparative Approach[1], published in March 2014, compares the
Australian landscape of agricultural advocacy groups with examples of more
effective groups in Canada, New Zealand, and France.
The AFI report rates the farm
advocacy system’s effectiveness in each country by rating the effectiveness of a
national farm advocacy group in each country. In Canada, the report focuses on
the Canadian Federation of Agriculture (CFA). In New Zealand, the report
focuses on Federated Farmers (NZFF). In France, the report focuses on the
National Federation of Unions of Agricultural Managers (FNSEA). In Australia,
the report focuses on the National Farmers’ Federation (NFF) and the State
Farmer Organisations (SFOs).
In Canada, the Canadian
Federation of Agriculture was rated 3 out of 5 for legitimacy due to its
historic credentials and key role in official consultations, and the CFA was
rated 1.5 out of 5 for strength of business model due, in part, to its
dependence on membership fees.
In New Zealand, Federated
Farmers was rated 2.5 out 5 for legitimacy due to government and media trusting
its knowledge of policies and advocacy, and the NZFF was rated 2 out of 5 for
strength of business model due to its lack of new services and reliance on
existing assets.
In France, the FNSEA was
rated 4 out of 5 for legitimacy due to its transparent election every six
years, and the FNSEA was rated 4 out of 5 rating in strength of business model
due to historic assets and public funding.
These ratings can then be
compared to the ratings for Australia. The NFF and SFOs were rated 1.5 out of 5
for legitimacy due to falling numbers and public opinion, and the NFF and SFOs
were rated 1 out of 5 for strength of business model due to the failure to
offer members services and a failure to use resources effectively.
The AFI report uses six
criteria to assess the effectiveness of the farm advocacy groups: strength of
business model, coverage, legitimacy, consistency, competition, and e-capacity.
In four out of six of the criteria the NFF and SFOs were ranked last when their
ratings were compared to Canada, New Zealand, and France. Only in coverage
(where they were ranked third ahead of Canada) and in e-capacity (where they
were ranked second behind France) were the NFF and SFOs not ranked last.
The AFI report found that,
compared to almost all farming sectors worldwide, “the Australian farm sector
is the least ‘organised’, and has very few examples of successful collective
action – either in pursuit of policy or commercial objectives.”[2] The
AFI report underscores the considerable difficulties facing farmer
representation and advocacy organisations in Australia, “exemplified by
declining membership, fragmentation, and perceived ineffectiveness.”[3]
The AFI report found that the
factors contributing to the difficulties facing rural advocacy groups in
Australia include: reduced national economic importance of agriculture,
deregulation of the agricultural sector, increased scrutiny being imposed on
agriculture by environmental and animal welfare organisations, the digital
revolution, and, importantly, the “centralisation of major issues affecting
agriculture towards the Australian Government and away from state governments”.[4]
The considerable difficulties
facing Australian rural advocacy groups arising from new factors like the
centralisation of agricultural issues to the Commonwealth government rather
than State governments, coupled with the lack of effectiveness of current
Australian State Farmer Organisation-focused rural advocacy groups illustrate
that there is a need to strengthen Australian rural industry advocacy, and
illustrate why there is a need to look for other examples, both internationally
and domestically at industry-specific models, of effective rural advocacy groups.
The AFI report reached a
number of conclusions “that appear necessary in order to enhance the
effectiveness and long-term sustainability of the Australian farm advocacy
‘system’.”[5]
The conclusions in the report include:
1. Agricultural
advocacy groups need to deliver a range of services and benefits which can act
as an attraction to encourage membership.
2. Providing
attractive opportunities for local engagement is a powerful way to gain and
retain members.
3. Direct-membership
models of national agricultural advocacy organisations are highly unlikely to
be successful unless they offer a wide array of commercially attractive
products and services for members.
4. Legitimacy
is derived from the relationship between the organisation and its members –
relies on continuing engagement of members.
5. An
organisation providing a range of services and products to members in addition
to advocacy services will be less prone to lose membership as a consequence of
disagreements over policy.
OTHER INTERNATIONAL EXAMPLES OF EFFECTIVE RURAL
ADVOCACY GROUPS
Canada
While only noted in the AFI
report, the Canadian Cattlemen’s Association operates on the second largest
budget out of all national agricultural advocacy groups in Canada. One of the
Canadian Cattlemen’s Association’s primary functions is engaging with
government and lobbying the government. About 80% of the Canadian Cattlemen’s
Association’s funds come from the levy-funded member groups – the eight
provincial member cattle associations.
A primary difference between
the Canadian levy system and the Australian levy system is that, while the levy
is $3, only $1 is mandatory and goes to Canada Beef Inc. and the Beef Cattle
Research Council for market research, development, and promotion. The remaining
$2 of the levy can be requested back by the levy payer as a refund, but
otherwise stays with the provincial cattle association who then pays some of it
to the Canadian Cattlemen’s Association.
A further difference between
the Canadian levy system and the Australian levy system is that the Canadian
levy goes to beef industry-specific groups for market research, development,
and promotion. This situation stands in stark contrast to Meat and Livestock
Australia who receives the levy funds, and is to promote simultaneously the conflicting
interests of beef and lamb to the Australian public.
United States
There are two further
examples of agricultural advocacy groups in the United States that are useful
to consider in addressing the AFI’s conclusions outlined above. First, is the
United States beef industry advocacy comprised of the Cattlemen’s Beef
Promotion and Research Board (Cattlemen’s Beef Board or CBB), the Federation of
State Beef Councils (the Federation), and the National Cattlemen’s Beef
Association (NCBA). Second, is the American Farm Bureau Federation (AFBF).
Important Differences Between the U.S. and Australia
There are, however, four
important differences between the U.S. and Australia that are pertinent to the
issues of rural advocacy groups, and that are important to keep in mind.
The first important
difference between the U.S. and Australia is the continued strength of State
governments in the United States, and the continued importance of U.S. State
governments to issues affecting agriculture. In contrast, Australia has seen
increasing centralisation of power and major issues affecting agriculture in
the Commonwealth government. This centralisation has largely pushed Australian
States to the periphery of many agricultural issues. This difference explains
why the NCBA emphasises a more federalist structure, because the individual
State cattlemen’s associations need to lobby the U.S. State governments.
The second important
difference between the U.S. cattle levy system and the Australian cattle levy
system is that in the U.S., as is the case in Canada as well, the Checkoff levy
funds go to beef industry-specific groups for promotion of beef, market
research, and development. MLA, in contrast, promotes, develops, and researches
for directly competing lamb and beef products.
The third important
difference between the U.S. and Australia is that both the lobbying group is
also beef-industry specific. The NCBA represents and lobbies Congress on behalf
of, and primarily concerned with issues affecting, cattle producers in
particular, which is different to the National Farmers’ Federation and their
State affiliates who lobby for farmers more generally. Also, the NCBA and the
State cattlemen’s associations are independent and membership in them does not
depend on membership in another organisation. All that is necessary to be a
voting member of a State cattlemen’s association or the NCBA is to be a cattle
producer.
The final important
difference between the U.S. and Australia is that less than 20% of cattle
producers are members of the State Farmer Organisation based Cattle Council of
Australia. In contrast, the NCBA represents more than 175,000 cattle producers
and feeders. The NCBA represents more than 60% of all farming operations in the
U.S. that have 20 head of beef cattle or more and had contributed to cattle
sales in the previous year from the 2012 Census (287,000 operations).[6]
Benefits of the U.S. Beef Advocacy Structure
The U.S. Beef advocacy
structure comprises of the Cattlemen’s Beef Board, the National Cattlemen’s
Beef Association, and the Federation of State Beef Councils Division of the
NCBA.
The structure whereby the
CBB’s membership is nominated from the NCBA’s State affiliates,[7]
and the Federation is a division of the NCBA, ensures efficiency and synergy
between the NCBA, its grassroots membership, and its political advocacy and
lobbying, and the CBB and Federation’s use of Checkoff levy funds to promote
beef and conduct research.
One benefit of the NCBA
structure is that not only are there affiliated State cattlemen’s associations
(e.g., Florida Cattlemen’s Association), but these State cattlemen’s
associations are often made up of cattlemen’s associations in individual
counties in the State. Membership in the State cattlemen’s associations is
through these county associations, which set their own membership fees (e.g.,
in Florida the memberships range from $60 - $100 per year). These individual
State and county associations, with their meetings, scholarships, cook-outs, etc.,
provide a level of local engagement that the AFI report highlights as an
important way to gain and retain members.[8]
Further, the NCBA itself is
structured so that its own policies are first introduced by individual members
at the State level, and then before a policy is adopted it goes to a ballot to
the individual members. In this way, the NCBA relies on the continuing
engagement of members, which the AFI report concludes is essential for an
agricultural advocacy group to maintain its legitimacy with its members.[9]
Given the central importance
of the Commonwealth government with respect to issues affecting agriculture, in
adapting a similar NCBA model to Australia these local associations would
ideally be directly connected to the national organisation. This adaptation
would still provide a high level of local engagement, and yet deal with the
reality that most issues affecting agriculture are dealt with at the
Commonwealth and not the State level.
Beyond these benefits, the
NCBA offers commercial benefits to members such as discounts on John Deere,
Caterpillar, Ram trucks, Cabela (outdoor store), among others. In providing
these sorts of commercial benefits, the NCBA partially realises what the AFI
report believes is vital to gain and maintain membership.[10]
However, the American Farm Bureau Federation takes these sorts of benefits to
members to another level.
Benefits of the American Farm Bureau Federation
Structure
The American Farm Bureau
Federation (AFBF) is a very powerful rural advocacy group in the U.S. While its
main purpose is lobbying government, it maintains and increases its membership
and thus its funds, by offering a number of commercially attractive discounts
and services.
The American Farm Bureau
Federation has a membership of 6 million “member families”,[11]
and a presence in all 50 U.S. States. The U.S. has a total of 2.1 million
farms.[12]
The AFBF’s success in gaining membership can largely be attributed to the large
commercial benefits that members of the AFBF’s State branches receive. Once
again, the success of the AFBF in this way provides evidence for the AFI
report’s belief that providing commercial discounts and services is vital to
gain and maintain membership.[13]
As an example, the Georgia
Farm Bureau offers commercial discounts and services to members in categories
such as: travel discounts, health and wellness, family entertainment, home and
auto, farm, and financial. The Georgia Farm Bureau offers not only commercially
attractive discounts, but also commercial services such as car insurance, life
insurance, crop insurance, banking services, marketing services. Further, the
AFBF also offers help with legal advocacy to landowners in protection of
private property rights.
All of these discounts and
services do not detract from the main service that the AFBF offers which is
legislative advocacy – and the AFBF with its large membership base and
commercial services is a very powerful lobbying force in the individual States
and at the national level in Washington.
Checkoff
The Checkoff in America is a
$1 levy per head of all cattle sold in the U.S., and an equivalent amount on
imported cattle, beef, and beef product. This levy is collected by the State
beef councils, and at least 50 cents of each dollar must be sent to the
Cattlemen’s Beef Board. The remaining 50 cents may be retained by the State
beef councils. Beef importers send the entire $1 to the CBB.
Cattlemen’s Beef Promotion and Research Board (CBB)
The Cattlemen’s Beef Board
was established by the Beef Research and
Information Act 1985, and is thus a statutory creation.[14]
The CBB is an independent body of 103 members, 95 members must be cattle
producers and 8 members are beef importers.The CBB members are responsible for
setting and delivering the CBB’s policy for the promotion and research of beef.
Members are elected to three year terms, and may only serve two consecutive
terms.
Role and Function
The aims of the Cattlemen’s
Beef Board are: to encourage the sale of more beef; to encourage the
consumption of more beef; to encourage consumer confidence, commitment to
quality, and beef safety; and to maintain and grow a positive image for the
beef industry.
In order to obtain these
ends, the CBB is able to use Checkoff levy funds for the promotion of beef,
market research, human nutrition research, new product development, consumer
information, industry information, foreign marketing, and producer
communications. Further, the CBB is permitted to contract with established
national non-profit industry governed organisations to conduct programs. One
well known and successful marketing campaign for the promotion of beef is the
“Beef It’s What’s For Dinner” campaign, which the CBB has conducted with the
National Cattlemen’s Beef Association.
National Cattlemen’s Beef Association (NCBA)
The National Cattlemen’s Beef
Association is a consumer-focused, producer-directed marketing organisation and
trade association. The NCBA (through direct membership and its State
affiliates) represents more than 175,000 cattle producers and feeders. Given
that there is a total of 287,000 operations in the U.S. that has a herd of 20
head of cattle or more and had sold cattle the previous year,[15]
the NCBA is regarded as being highly representative of cattle producers and
feeders.
Voting memberships in the
NCBA are open to all cattle producers, and dues are based upon the head of
cattle that a producer owns. Non-voting memberships are also open to
non-producers and allied industries. Voting operates on a one person, one vote
basis.
Function and Political Action
The NCBA aims “to advance the
economic, political, and social interests of the U.S. cattle business and to be
an advocate for the cattle industry’s policy positions and economic interests.”[16]
The NCBA lobbies Congress to achieve its aims, and funds full-time lobbyists in
Washington, D.C.
Beyond the normal lobbying
activities of the NCBA there is also a related NCBA – Political Action
Committee (PAC), which raises money and accepts donations to help fund
political lobbying. The NCBA – PAC aims to raise $1 million per election cycle
(every two years). The NCBA – PAC asks candidates to fill out a questionnaire
and explain their positions on policy issues important to the NCBA, and then
the NCBA – PAC supports political candidates (from both political parties) who
support the U.S. beef cattle industry.
Policy
NCBA policies are first
introduced by individual members through their State affiliates. Policies that
are passed by the State affiliate are then sent to an NCBA Committee, which,
when passed, then go to the Resolutions Committee and NCBA Board of Directors
for approval and/or modification. A ballot is then mailed to all members for
consideration.
Through this process the NCBA
attempts to maintain connections to the grassroots members, and they emphasise
that their policies start and end with individual members.
Federation of State Beef Councils – Division of NCBA
(the Federation)
The Federation of State Beef
Councils oversees beef and beef production promotion, research, information,
and related activities funded by the beef Checkoff levy. Individual State beef
councils, which collect the Checkoff levy, may contribute to the Federation any
portion of the 50 cents per dollar that they are permitted to retain from the Checkoff
levy funds.
The Federation is a Division
of the NCBA. The Federation Division Board of Directors Resolution from 31 July
2010 describes the Federation’s view on the relationship between the Federation
and the NCBA: “the Federation should operate in a more independent structure
while maintaining the synergies and efficiencies of the current relationship
with the National Cattlemen’s Beef Association and strongly opposes any effort
to sever that relationship.”[17]
Since Checkoff levy funds
cannot be used to influence government policy or action, including lobbying, or
to promote any particular breed, brand, or production system, the Federation
maintains separate Checkoff levy and non-Checkoff levy bank accounts. Further,
the NCBA utilises an integrated/segregated voting system, whereby the
Federation Division directors will not vote on matters which do not involve the
Checkoff levy, and Policy Division directors will not vote on matters that do
not involve policy.
However, the Checkoff levy
funds do help to pay for at least some of the overhead that is shared between
the Federation and NCBA, which means that, in this way, some of the Checkoff
levy funds do support a lobbying organisation.
International Examples of Levy Funded Lobby Groups
South Africa
The Red Meat Industry Forum
(RMIF) is a self-proclaimed, levy funded lobby group for the industry, and its
Red Meat Levy Admin Pty Ltd collects and manages levies on red meat on its
behalf.
Ireland
The Irish Farmers’
Association (IFA) is a levy funded lobbying organisation. Approximately 35% of
the IFA’s annual income is derived from levies. The IFA then uses these funds
to represent and defend Irish farmers’ interests.
Australian Agricultural Industry Examples of Levy
Funded Lobby Groups
The levy funded Australian
Pork Limited, and, in practice, the levy funded Egg Corporation both combine
advocacy marketing and research and development functions under one levy funded
roof.
The only advocacy limitation
that Australian Pork Limited (APL) has in its levy Funding Agreement with the Commonwealth government are those
limitations that prevent APL from financing any form of external or internal
political campaigning. The APL Funding Agreement specifically states that
agri-political activity does not include
strategic policy development.
Australian Wool Innovations
and Dairy Australia are levy funded marketing and research and development
corporations with levy payer elected boards. Both corporations do not have any
oversight by their industry Peak Councils and set and deliver their own
marketing and research and development policies, and when relevant, lobby
government to assist them in the implementation of those policies.
The AMPC and LiveCorp are
both levy funded marketing and research and development corporations with a
levy payer elected board that sets its own marketing and research and
development policy in consultation with their Peak Councils, AMIC and ALEC.
Cattle Council of Australia
(CCA), Australian Meat Industry Council (AMIC), Sheep Council of Australia
(SCA), Australian Lot Feeders Association (ALFA), and the Red Meat Advisory
Council (RMAC) have all been receiving interest off the RMAC levy revenue fund
since 1998, and they have been using these levy funds for advocacy. CCA is
advocating for an additional $4 million from the cattle transactional levy
funds to fund their policy setting and advocacy.
There is no conceivable reason
why Australian cattle producers should not have a similar levy funded combined
advocacy, promotion, research, and development organisation.
Conclusions
If we are to have an
agricultural advocacy group that is able to effectively lobby government, while
simultaneously maintaining membership levels and legitimacy in the eyes of
producers, then the AFI report’s conclusions outlined above are important to
keep in mind when thinking about the structure that the advocacy group should
take.
The U.S. beef advocacy
structure, comprising of the National Cattlemen’s Beef Association, the
Federation of State Beef Councils Division of the NCBA, and the Cattlemen’s
Beef Board, and the interplay between the groups that ensures efficiency and
synergy to policy setting, lobbying, and research and development among the
three groups, together with the provision of commercially attractive discounts
and services that the American Farm Bureau Federation provides, affords a
possible model that would result in a powerful and legitimate agricultural
advocacy group.
Another possible model is
found in the Australian agricultural industry examples of levy funded advocacy
groups. In particular, Australian Pork Limited offers a model for combined
policy setting, lobbying, and research and development under one levy funded
roof.
Further material on the RRAT Senate References
Committee into industry structures and systems governing levies on grass fed
cattle submissions hearings and report can be found at www.HuntBlog.com.au and on www.cattlelevysenateinquiryinformation.com.
[1]
Australian Farm Institute, Opportunities
to Improve the Effectiveness of Australian Farmers’ Advocacy Groups – A
Comparative Approach, March 2014.
[2] Ibid.,
pg iii.
[3] Ibid.,
pg 1.
[4]
Ibid.
[5]
Ibid., pg x.
[6]
USDA Census of Agriculture for 2012, pg 20.
[7] 7
U.S.C. § 2905 defines a Certified Nominating Organisation as: (b) A State
cattle association or State general farm organisation: (1) where cattle
producers comprise a majority of the total paid membership, or the total paid
membership represents a majority of cattle producers in the State; (2) that
represents a substantial number of producers that produce a substantial number
of cattle in the State; (3) that has a history of stability and permanence; and
(4) a primary purpose of which is to promote the economic welfare of cattle
producers.
[8]
See point 2 outlined above.
[9]
See point 4 outlined above.
[10]
See points 1, 3, and 5 above.
[11]
Ian T. Shearn, The Nation, ‘Whose
Side Is the American Farm Bureau On?’, 16 July 2012.
[12]
USDA Census of Agriculture for 2012, pg 7.
[13]
See points 1, 3, and 5 above.
[14] Beef
Research and Information Act 1985 (US), 7 U.S.C. §§2901-2911.
[15]
USDA Census of Agriculture for 2012, pg 20.
[16]
National Cattlemen’s Beef Association,
, accessed 14 October 2014.
[17]
Federation Division Board of Directors Resolution 31 July 2010,
, accessed
14 October 2014.
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