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Funded by the <strong>Beef</strong> Checkoff.<br />

Working to strengthen beef’s<br />

position in the marketplace<br />

Cattlemen’s <strong>Beef</strong> <strong>Board</strong> • <strong>2012</strong> <strong>Annual</strong> <strong>Report</strong>


Dear Fellow Producers,<br />

As we reflect back on Fiscal Year <strong>2012</strong>, the beef industry has seen changes throughout the<br />

market chain. Our <strong>Beef</strong> Checkoff Program has been there to represent our industry <strong>and</strong><br />

share our story with consumers in the U.S. <strong>and</strong> around the world. As <strong>Beef</strong> <strong>Board</strong> members,<br />

I share your commitment to our industry: To perform research, education <strong>and</strong> promotion<br />

that enhances producer profitability. CBB’s main responsibility is to make sure our checkoff<br />

dollars are spent correctly, provide oversight for checkoff expenditures, <strong>and</strong> get the most<br />

mileage that we can out of each dollar invested.<br />

Looking back on <strong>2012</strong>, here are a few of the highlights of checkoff work you can be proud of:<br />

• Discovering new, h<strong>and</strong>-held products: J.M. Garret Foods, Inc., worked with the checkoff’s <strong>Beef</strong> Innovations<br />

Group to roll out three new fun appetizer products loaded with beef <strong>and</strong> other quality ingredients, including the<br />

Philly Cheesesteak Bites, <strong>Beef</strong>y Queso Bites <strong>and</strong> Reuben Bites.<br />

• Sharing the findings of the BOLD nutrition study <strong>and</strong> how lean beef fits a healthy lifestyle: The BOLD study<br />

was published in the American Journal of Clinical Nutrition.<br />

• Conducting the 2011 National <strong>Beef</strong> Quality Audit that shows our industry’s continued commitment to quality:<br />

The checkoff has issued a number of fact sheets <strong>and</strong> final reports detailing what we as producers can do to<br />

improve quality on our farms <strong>and</strong> ranches <strong>and</strong> then communicate that back to the consumer.<br />

• Exports into foreign markets: The population outside the U.S. is growing steadily <strong>and</strong> expected to continue to<br />

do so through at least 2050. If you calculate the population on a country-by-country basis, you’ll discover that<br />

the population of the United States represents just 4.5 percent of the world population. All told, there are 22<br />

times as many consumers outside of the U.S. as there are within our borders, which gives us a clear sense of the<br />

opportunities to grow sales of our end product through exports. Today, the checkoff is promoting U.S. beef in<br />

more than 80 of the 228 countries across the globe, <strong>and</strong> working toward exp<strong>and</strong>ing that wherever <strong>and</strong> whenever<br />

opportunity knocks.<br />

Another thing I want to reemphasize is the importance of our checkoff’s state/national partnership. I’m proud that<br />

since the start of the checkoff 26 years ago, producers in the U.S. have contributed millions of dollars every year to<br />

help keep the beef industry competitive with other proteins. That money has helped us target heavily populated urban<br />

areas, like New York <strong>and</strong> California. And, with these dollars we’re reaching “millennials” — those born between 1980<br />

<strong>and</strong> 2000 — a priority target group for the beef industry as they will soon become the dominant group in society.<br />

Checkoff-funded market research has also found that perceptions about beef are more positive than perceptions about<br />

the way cattle are raised. This gap will be a critical, ongoing measure of the effects of communications <strong>and</strong> issues<br />

management programs designed to inform <strong>and</strong> reassure consumers about beef production. To address these everchanging<br />

consumer needs in the coming year, the checkoff has developed a new committee structure that will make us<br />

more focused on consumer preferences in order to achieve greater program results. <strong>Beef</strong> is the No. 1 protein <strong>and</strong> our<br />

checkoff programs are geared to keep it that way!<br />

We have been charged with feeding our nation <strong>and</strong> the world. That requires you to spend time away from your farms,<br />

ranches <strong>and</strong> businesses, but in doing that, we keep beef top-of-mind with consumers around the globe. So get to<br />

know your checkoff better through this <strong>2012</strong> annual report. And, from my ranch in New Mexico to yours, thank you<br />

for your investment in this industry we all care so much about. I’m looking forward to a wonderful 2013.<br />

Warm regards,<br />

Wesley Grau<br />

Grady, New Mexico<br />

<strong>2012</strong> Chairman<br />

Cattlemen’s <strong>Beef</strong> Research <strong>and</strong> <strong>Promotion</strong> <strong>Board</strong>


<strong>2012</strong> Cattlemen’s <strong>Beef</strong> <strong>Board</strong> Leadership<br />

Seated left to right: Vice Chairman Weldon Wynn, Arkansas; <strong>Beef</strong> <strong>Board</strong> Chairman Wesley Grau,<br />

New Mexico; Secretary/Treasurer Kim Brackett, Idaho; CBB Chief Executive Officer Polly Ruhl<strong>and</strong><br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> Members<br />

<strong>Beef</strong> <strong>Board</strong> members are nominated by fellow producers in their respective<br />

states or regions. The U.S. Secretary of Agriculture appoints producers to the<br />

<strong>Board</strong> from these nominations, <strong>and</strong> the U.S. Department of Agriculture oversees<br />

the <strong>Board</strong>. Each <strong>Board</strong> member serves a three-year term <strong>and</strong> may serve a<br />

second consecutive term if reappointed. <strong>Beef</strong> <strong>Board</strong> members serve without<br />

compensation. In <strong>2012</strong>, <strong>Beef</strong> <strong>Board</strong> members represented 10 different sectors of<br />

the beef industry with the largest being cow-calf. There are no packer seats on<br />

the <strong>Beef</strong> <strong>Board</strong>.<br />

Barbara Jackson<br />

Tucson<br />

AZ<br />

Leo Sutterfield, Jr.<br />

Mountain View<br />

AR<br />

AR<br />

Weldon Wynn<br />

Star City<br />

Wayne Buck<br />

Ignacio<br />

Phyllis Snyder<br />

Cortez<br />

Andy Wick<br />

Austin<br />

Sarah Childs<br />

Lake Placid<br />

Jim LeFils<br />

Osteen<br />

Kim Brackett<br />

Buhl<br />

Dan Hinman<br />

Emmett<br />

Jeanne Harl<strong>and</strong><br />

LaFayette<br />

Andrew Banchi<br />

Kenosha, WI<br />

CO<br />

CO<br />

CO<br />

FL<br />

FL<br />

ID<br />

ID<br />

IL<br />

Importer<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong><br />

3


OVERVIEW<br />

The aim of the <strong>Beef</strong> Checkoff Program is building beef dem<strong>and</strong>. Dem<strong>and</strong> often is confused with<br />

per capita consumption — a different measure. Consumption is driven by supply <strong>and</strong> is the result<br />

of market conditions, which are affected by many factors, including cattle inventory, natural<br />

disasters, changes in imports <strong>and</strong> exports, <strong>and</strong> growth in the U.S. population — all of which<br />

make less beef available per capita.<br />

Dem<strong>and</strong>, on the other h<strong>and</strong>, is driven by consumer preference, the amount of beef that consumers<br />

will purchase combined with the price they are willing to pay for that beef.<br />

Why Dem<strong>and</strong> Matters<br />

We consume our beef supply in the United States every year, but the benefits to beef producers<br />

<strong>and</strong> the rest of the industry are based on the price at which that supply is sold. The variable is<br />

the price at which we are able to sell that beef to clear the market. If consumer<br />

preference, or dem<strong>and</strong>, for beef is high, we will sell the supply at a higher price.<br />

To have an impact on producers’ bottom lines, consumers have to want beef<br />

products enough to pay strong prices for them.<br />

Do Consumers Prefer <strong>Beef</strong><br />

The short answer is Yes.<br />

U.S. per capita beef consumption has declined in recent years, but that does<br />

NOT mean that consumer preference or dem<strong>and</strong> has waned. In fact, quite<br />

the opposite: Lately, we’ve seen beef prices increase much faster than the rate<br />

of inflation while consumption declined only slightly, which means that<br />

beef dem<strong>and</strong> has remained steady.<br />

Where the <strong>Beef</strong> Checkoff Comes In<br />

The <strong>Beef</strong> Checkoff Program focuses on maintaining strong consumer preference for beef by<br />

providing products <strong>and</strong> qualities in beef that consumers dem<strong>and</strong> — like taste, nutrition,<br />

consistency <strong>and</strong> tenderness — so that consumers are willing pay more for that same quantity<br />

of beef.<br />

In this report, you’ll get information<br />

about some programs your beef<br />

checkoff dollars were invested in<br />

during FY <strong>2012</strong> — <strong>and</strong> how those<br />

investments helped move the<br />

needle on consumer perference.<br />

Industry<br />

Information<br />

$3,866,591; 9.1%<br />

Program<br />

Evaluation<br />

$131,674; 0.3%<br />

Producer<br />

Communications<br />

$1,745,326; 4.1%<br />

Foreign<br />

Marketing<br />

$6,129,529;<br />

14.4%<br />

Program<br />

Development<br />

$198,499; 0.5%<br />

USDA Oversight<br />

$211,065; 0.5%<br />

Administration<br />

$1,632,467; 3.8%<br />

Consumer<br />

Information<br />

$4,513,478;<br />

10.6%<br />

Research<br />

$5,719,714;<br />

13.4%<br />

<strong>Promotion</strong><br />

$18,497,849;<br />

43.4%<br />

Laurie Bryant<br />

Reston,VA<br />

Andrew Burtt<br />

McLean, VA<br />

Stephen Edwards<br />

Washington, D.C.<br />

Kim Holzner<br />

Windsor, CO<br />

Chris Hutton<br />

Chicago, IL<br />

Al Senosiain<br />

Coconut Creek, FL<br />

Don Gurtner<br />

Fremont<br />

Dean Black<br />

Somers<br />

Will Frazee<br />

Emerson<br />

4<br />

Importer<br />

Importer<br />

Importer<br />

Importer<br />

Importer<br />

Importer<br />

IN<br />

IA<br />

IA


Nutrition Research<br />

The “<strong>Beef</strong> in an Optimal Lean Diet (BOLD) study: Effects on lipids,<br />

lipoproteins, <strong>and</strong> apolipoproteins” manuscript was published in the<br />

January <strong>2012</strong> issue of the American Journal of Clinical Nutrition<br />

(AJCN), a top-tier, peer-reviewed nutrition science journal, known as<br />

one of the 100 most influential journals in biology <strong>and</strong> medicine.<br />

The BOLD study, conducted by Penny Kris-Etherton, PhD, RD, <strong>and</strong><br />

her team at The Pennsylvania State University, provides evidence that<br />

the inclusion of lean beef as part of a heart-healthy diet is as effective in<br />

lowering heart disease risk as the DASH (Dietary Approaches to Stop<br />

Hypertension) diet — the most recommended heart-healthy diet.<br />

Research<br />

The BOLD study manuscript on the AJCN website was downloaded<br />

nearly 18,000 times — double that of similar studies —<br />

demonstrating the impact of the checkoff-funded research study.<br />

Product Enhancement<br />

An important component of this effort is benchmarking <strong>and</strong> tracking<br />

attributes of beef that contribute to overall quality <strong>and</strong> palatability<br />

as determined by tenderness, juiciness <strong>and</strong> flavor. Tenderness is also<br />

a critically important economic factor, since consumers may pay a<br />

premium for guaranteed‐tender meat products. With funding from<br />

the beef checkoff, the industry has tracked beef tenderness for 20 years<br />

through a series of four National <strong>Beef</strong> Tenderness Surveys. In 2010,<br />

the latest tenderness survey was conducted, <strong>and</strong> despite the increased<br />

prevalence of round cuts in the marketplace <strong>and</strong> less stable aging times,<br />

most steaks evaluated in the 2010 survey were considered tender.<br />

<strong>Beef</strong> Safety<br />

The 10th anniversary of the <strong>Beef</strong> Industry Safety Summit, funded in<br />

part by the beef checkoff, is considered the premier beef safety event<br />

in the country, with more than 230 representatives from all sectors of<br />

the beef supply chain attending. The event featured a special session to<br />

reflect on the pledge the beef industry made 10 years ago committing<br />

to reducing E. coli O157:H7. A new pledge was signed in <strong>2012</strong> to<br />

recommit to reducing the presence of any foodborne pathogens in beef.<br />

Market Research<br />

Checkoff market research has established an annual tracking survey<br />

— the Consumer Image Index (CII) — to measure consumers’<br />

perceptions of beef <strong>and</strong> the beef industry. The <strong>2012</strong> CII found<br />

perceptions about beef to be more positive than perceptions about<br />

the way cattle are raised. The size of this gap will provide an ongoing<br />

measure of the effects of communications <strong>and</strong> issues management<br />

programs designed around beef production.<br />

Kent Pruismann<br />

Rock Valley<br />

Danny Herrmann<br />

Dodge City<br />

Brittany Howell<br />

La Crosse<br />

Steve Irsik<br />

Ingalls<br />

Stacy McClintock<br />

Soldier<br />

Larry Oltjen<br />

Robinson<br />

Perry Owens<br />

Minneapolis<br />

Julianna Jepson<br />

Franklin<br />

Daniel Smith<br />

Stamping Ground<br />

IA<br />

KS<br />

KS<br />

KS<br />

KS<br />

KS<br />

KS<br />

KY<br />

KY<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong><br />

5


<strong>Promotion</strong><br />

Consumer Advertising<br />

With a spotlight on beef’s delicious lean cuts, the FY <strong>2012</strong> beef<br />

checkoff “Profiles” advertising campaign worked to educate<br />

consumers on the healthfulness of beef while reinforcing consumers’<br />

passion for the product.<br />

The checkoff advertising campaign appeared in 26 national<br />

magazines, including Women’s Day, Parenting, Food Network<br />

Magazine <strong>and</strong> Men’s Health, <strong>and</strong> on satellite radio throughout the<br />

summer, working to shift consumer perceptions about beef in a<br />

positive way. Data from the <strong>Annual</strong> Advertising Tracking Study<br />

showed the power of the messaging with results of a 15 to 20<br />

percent increase in the positive perceptions of beef.<br />

The checkoff’s Facebook advertising campaign proved to be a huge<br />

success, generating more than 334,000 new fans on the “<strong>Beef</strong>. It’s<br />

What’s For Dinner.” page, who engaged with the beef checkoff by<br />

sharing, linking <strong>and</strong> commenting a total of 701,222 times.<br />

The consumer advertising program also secured more than<br />

$1 million worth of free media space to bring the concept of<br />

family farms to life for consumers. These full-page “advertorials”<br />

appeared in popular consumer publications such as<br />

Sports Illustrated, Cooking Light <strong>and</strong> Redbook.<br />

Foodservice<br />

Steak Verrine, one of the recipes featured in the foodservice<br />

BEEFlexible advertising campaign, ranked #1 among Flavor &<br />

the Menu readers according to the publication’s Signet AdEffect<br />

Study. Food Arts magazine recognized the ad for its outst<strong>and</strong>ing<br />

readership response measured through face-to-face interviews with<br />

a national sample of readers. The <strong>2012</strong> BEEFlexible campaign<br />

generated significant leads through the new foodservice “Idea<br />

Bank,” one of the most requested pages on <strong>Beef</strong>Foodservice.com.<br />

More than 30 leading research <strong>and</strong> development chefs from<br />

nationally recognized companies — including Applebee’s,<br />

Whole Foods Markets, HEB, Tyson <strong>and</strong> Cargill — attended the<br />

“beef-immersion” course at the Culinary Institute of America<br />

at Greystone. Chefs received training in culinary innovation,<br />

butchering techniques <strong>and</strong> cooking with alternative beef<br />

cuts. Current industry issues such as product sustainability,<br />

environmental stewardship <strong>and</strong> safety were also discussed.<br />

Genevieve Lyons<br />

Church Point<br />

Andy Salinas<br />

Marion<br />

Larry Echols<br />

Gap Mills, WV<br />

Paul Kent<br />

Mora<br />

John Schafer<br />

Buffalo Lake<br />

Mike McCormick<br />

Union Church<br />

Brenda Black<br />

Deepwater<br />

Kevin Frankenbach<br />

Hannibal<br />

Howard Hardecke<br />

Springfield<br />

6<br />

LA<br />

MI<br />

Mid-Atlantic<br />

MN<br />

MN<br />

MS<br />

MO<br />

MO<br />

MO


Retail<br />

Food City <strong>and</strong> the beef checkoff introduced four American Heart<br />

Association (AHA)-certified extra-lean beef cuts that meet the<br />

AHA criteria for saturated fat <strong>and</strong> cholesterol. Ninety-four Food<br />

City retail stores in Kentucky, Virginia <strong>and</strong> Tennessee displayed the<br />

powerful Heart-Check mark on fresh beef packages, promoting beef’s<br />

role in a healthy diet <strong>and</strong> driving nutrition-conscious shoppers to the<br />

meat case.<br />

A refreshed version of <strong>Beef</strong>Retail.org was launched to make it easier<br />

for retailers to access information to support beef sales at the retail<br />

meat case, <strong>and</strong> as a resource for market intelligence, shopper trends<br />

<strong>and</strong> more.<br />

New Product & Culinary Initiatives<br />

Convenient Fresh <strong>Beef</strong> provides consumers with a variety of fresh<br />

<strong>and</strong> convenient beef product ideas, which help make beef a “fast<br />

food” by allowing consumers to have a delicious fresh beef meal<br />

in less time than it would take using st<strong>and</strong>ard cooking methods.<br />

<strong>Beef</strong> will be sold either in “starter kits” with seasoning packets or in<br />

special microwave packaging.<br />

<strong>Promotion</strong><br />

The checkoff partnered with Garret Foods to launch three new<br />

h<strong>and</strong>-held products this summer: <strong>Beef</strong>y Queso Bites, Philly Steak<br />

Bites <strong>and</strong> Reuben Bites. These products are great for on-the-go<br />

consumers or as appetizers “at-home” or at casual theme restaurants.<br />

The checkoff’s Culinary Innovations Team developed over 15 new<br />

recipes responding to culinary trends <strong>and</strong> popular ethnic flavors.<br />

These new recipes turn simple ground beef <strong>and</strong> top sirloin steak into<br />

chef-caliber dishes <strong>and</strong> can be found on <strong>Beef</strong>ItsWhatsForDinner.com.<br />

Veal<br />

To date, more than 1 million people have read how chefs across the<br />

country are inspired to create fresh veal dishes.Veal breast was the<br />

spotlight ingredient in Food Arts magazine’s “Mystery Basket,” a<br />

feature that provides three chefs with a box of mystery ingredients<br />

<strong>and</strong> challenges them to create an innovative dish. A National<br />

Culinary Review article titled, “Veal’s the Real Deal,” showcased<br />

interviews with top corporate chefs, including Bravo/Brio Restaurant<br />

Group <strong>and</strong> Fleming’s Prime Steakhouse. “Veal Made Easy” was launched<br />

on Twitter <strong>and</strong> Facebook <strong>and</strong> reached over 1,000 “likes.”<br />

Leon Kreisler<br />

Salem<br />

Leo McDonnell<br />

Columbus<br />

Linda Nielsen<br />

Nashua<br />

Lyle Peterson<br />

Hathaway<br />

Al Davis<br />

Hyannis<br />

Kristy Lage<br />

Arthur<br />

Judy Reece<br />

Valentine<br />

Doug Temme<br />

Wayne<br />

Sherry Vinton<br />

Whitman<br />

MO<br />

MT<br />

MT<br />

MT<br />

NE<br />

NE<br />

NE<br />

NE<br />

NE<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong><br />

7


Consumer Information<br />

Public Relations<br />

Your public relations program is the good news engine for beef.<br />

With materials such as monthly media pitches, fact sheets,<br />

delicious recipes, social media <strong>and</strong> online engagement, positive<br />

beef information is spread across the entire country. In FY <strong>2012</strong>,<br />

the national consumer public relations program generated more<br />

than 2.7 billion media impressions — the number of times<br />

consumers may see or hear a message.<br />

Relevant Content for Media <strong>and</strong> Consumers<br />

Consumers increasingly turn to media <strong>and</strong> online resources for<br />

food inspiration <strong>and</strong> education. Through the “<strong>Beef</strong>. It’s What’s<br />

For Dinner.” social media channels — Facebook (with more<br />

than half a million fans), Twitter, <strong>Beef</strong> So Simple <strong>and</strong> blogger<br />

outreach — the checkoff drives content that helps maintain<br />

<strong>Beef</strong>ItsWhatsForDinner.com as a top-ranked page on Google.<br />

From the Wall Street Journal to Food Network Magazine, there<br />

is no shortage of publications looking to the checkoff for<br />

recipe inspiration, preparation techniques <strong>and</strong> cooking tips.<br />

The checkoff held a deskside tour in New York City, meeting<br />

with more than 10 publications, including Food Network<br />

Magazine, Every Day with Rachael Ray <strong>and</strong> Family Circle, to<br />

re-emphasize the checkoff’s role as an expert resource <strong>and</strong><br />

perform recipe demonstrations.<br />

National <strong>Beef</strong> Cook-Off<br />

The National <strong>Beef</strong> Cook-Off gained nationwide exposure with a<br />

live segment on “Good Company” featuring Chef Jason Roberts.<br />

The segment showcased four beef dishes, <strong>and</strong> Roberts spoke<br />

about why he loves beef <strong>and</strong> how to cut <strong>and</strong> prepare it.<br />

This television component of the “Fabulous Food Show”<br />

sponsorship created awareness <strong>and</strong> additional<br />

media through the Cook-Off’s endorsement<br />

by Chef Roberts.<br />

Retail recipe promotions in nearly 90<br />

grocery stores also created awareness of<br />

the National <strong>Beef</strong> Cook-Off. And, the<br />

promotion paid off in beef sales. In<br />

HAV, Inc. stores, pound sales of top<br />

sirloin increased 65 percent during<br />

this promotion as compared to a<br />

year ago.<br />

Chef Jason Roberts<br />

David Wright<br />

Neligh<br />

Wesley Grau<br />

Grady<br />

Tamara Ogilvie<br />

Silver City<br />

Patty Bikowsky<br />

Madison<br />

E.B. Harris<br />

Warrenton<br />

Woody Barth<br />

Solen<br />

Pat Becker<br />

Selfridge<br />

Jane Clifford<br />

Starksboro, VT<br />

Pete Guglielmino<br />

Kettle Falls, WA<br />

8<br />

NE<br />

NM<br />

NM<br />

NY<br />

NC<br />

ND<br />

ND<br />

Northeast<br />

Northwest


Nutrition Public Relations<br />

Thanks to an educational webinar, thous<strong>and</strong>s of registered<br />

dietitians <strong>and</strong> other health professionals received factual,<br />

scientifically supported nutrition information about beef in a<br />

heart-healthy diet. The webinar was based on the checkoff-funded<br />

<strong>Beef</strong> in an Optimal Lean Diet (BOLD) research study. Also,<br />

following publication of “Evolution of Lean <strong>Beef</strong>” in the journal<br />

Meat Science, more than 9,000 registered dietitians learned how<br />

changes made by the beef community in breeding, feeding <strong>and</strong><br />

trimming practices have increased access to leaner beef choices.<br />

Two other research studies — one on protein <strong>and</strong> another on<br />

healthy aging <strong>and</strong> nutrient-rich foods — were shared with more<br />

than 4,000 subscribers of <strong>Beef</strong> Nutrition News, the beef checkoff’s<br />

e-newsletter for health professionals.<br />

<strong>Beef</strong> Gets BOLD<br />

The checkoff-funded <strong>Beef</strong> in an Optimal Lean Diet (BOLD)<br />

study has realized ongoing media attention since its publication.<br />

The BOLD study findings were included in a feature article titled<br />

“The Meat Manifesto” in Men’s Fitness as well as mentions in<br />

Shape, Reuters, FoxNews.com <strong>and</strong> WebMD.<br />

As part of an online promotion of the study’s results, five<br />

consumer nutrition blogs — She’s A Fit Chick, Sweet Tooth<br />

Sweet Life, Hungry Runner Girl, Green Lite Bites <strong>and</strong> Then<br />

Heather Said — shared with their followers the BOLD study<br />

findings through recipes,<br />

giveaways of The Healthy <strong>Beef</strong><br />

Cookbook <strong>and</strong> how the challenge<br />

changed their preconceived<br />

notions of beef nutrition.<br />

The checkoff hosted its first<br />

Facebook Q&A <strong>and</strong> Twitter<br />

party — resulting in 647,337<br />

impressions — to give consumers<br />

the chance to learn more about<br />

the BOLD study by interacting<br />

with nutrition expert Dr. Mike<br />

Roussell, one of the study’s lead<br />

investigators.<br />

Consumer Information<br />

Davis Denman<br />

Cortl<strong>and</strong><br />

Terry Detrick<br />

Oklahoma City<br />

Brian Healey<br />

Davis<br />

Barbara Jacques<br />

Shidler<br />

Brett Morris<br />

Ninnekah<br />

Terry Wyatt<br />

Hollister<br />

Pat Venable<br />

Klamath Falls<br />

Joyce Bupp<br />

Seven Valleys<br />

Dan Kniffen<br />

Spring Mills<br />

OH<br />

OK<br />

OK<br />

OK<br />

OK<br />

OK<br />

OR<br />

PA<br />

PA<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong> 9


Industry Information<br />

Issues <strong>and</strong> Reputation Management<br />

A hub that addresses top beef myths, FactsAbout<strong>Beef</strong>.com launched in<br />

July with more than 10 myths posted, including one about “Meatless<br />

Mondays.” Along with the new site, a new Twitter h<strong>and</strong>le —<br />

@<strong>Beef</strong>Facts — was created to help drive users to answers for their<br />

beef questions. In August, the site received 2,250 views, compared to<br />

1,997 for the top page on Explore<strong>Beef</strong>.org during the same time period.<br />

This year, 26 influencers — major retailers, foodservice operators,<br />

conservationists, chefs <strong>and</strong> health professionals — participated in<br />

farm/ranch tours. Prior to the tour, only 42 percent of attendees gave<br />

producers top marks on animal care; post-tour that number more than<br />

doubled. Kansas rancher Debbie Lyons-Blythe was featured in a Girl<br />

Scouts of the USA video series about women entrepreneurs, created by<br />

a past tour attendee.<br />

<strong>Beef</strong> Quality Assurance (BQA)<br />

The 2011 National <strong>Beef</strong> Quality Audit (NBQA) had extensive<br />

enhancements made to its design to provide the industry with direction<br />

on factors beyond the physical characteristics of beef, including food<br />

safety, sustainability <strong>and</strong> animal well-being. To roll out audit results,<br />

the NBQA Executive Summary was published, a 10-minute video<br />

created <strong>and</strong> placed on YouTube, <strong>and</strong> social media messages developed<br />

for Facebook <strong>and</strong> Twitter. Ongoing communications efforts include<br />

audit webinars for specific industry sectors <strong>and</strong> the release of 12 fact<br />

sheets outlining opportunities <strong>and</strong> challenges within the sectors.<br />

The BQA Facilities Design video was created to help<br />

farmers, ranchers <strong>and</strong> cattle feeders better underst<strong>and</strong><br />

how to properly design <strong>and</strong> build facilities for specific<br />

needs. Experts such as Curt Pate <strong>and</strong> Dr. Temple<br />

Gr<strong>and</strong>in shared tips to enhance an operator’s ability to<br />

work cattle in a low-stress environment <strong>and</strong> in a timely<br />

manner to improve the overall experience for the<br />

cattle <strong>and</strong> the h<strong>and</strong>ler. The second video, entitled<br />

BQA Cattle H<strong>and</strong>ling Tips for Cow/Calf<br />

Producers, features Dr. Ron Gill, Curt<br />

Pate <strong>and</strong> Dr. John Maas discussing various<br />

production settings <strong>and</strong> cycles of a cattle<br />

operation to better underst<strong>and</strong> how<br />

the h<strong>and</strong>ler <strong>and</strong> the cattle react to these<br />

differing situations.<br />

Danni Beer<br />

Keldron<br />

Linda Gilbert<br />

Buffalo<br />

Vaughn Meyer<br />

Reva<br />

Gary Sharp<br />

Bath<br />

Linda Crumley<br />

Winder, GA<br />

Craig Kesler<br />

Newberry, SC<br />

Eric Smith<br />

Reform, AL<br />

Willie Bylsma<br />

Oakdale, CA<br />

Ted Greidanus<br />

Tipton, CA<br />

10<br />

SD<br />

SD<br />

SD<br />

SD<br />

Southeast<br />

Southeast<br />

Southeast<br />

Southwest<br />

Southwest


Northeast <strong>Beef</strong> <strong>Promotion</strong> Initiative (NEBPI)<br />

<strong>Beef</strong> was present in a big way at the Boston Marathon. The beef<br />

checkoff partnered with Johnnie’s Foodmaster’s 11 retail stores for a<br />

beef promotion that included recipes <strong>and</strong> nutritional information.<br />

Additionally, 655 sweepstakes entries vied for a gr<strong>and</strong> prize of an<br />

“I Heart Lean <strong>Beef</strong>” engraved iPod <strong>and</strong> a $200 steakhouse gift card.<br />

During the three days leading up to the marathon, an estimated<br />

85,000 runners <strong>and</strong> their families came to the Sports & Fitness Expo,<br />

which provided the perfect opportunity to speak with the world’s most<br />

elite runners about lean beef as a great source of protein. The National<br />

<strong>Beef</strong> Ambassadors were on h<strong>and</strong> to talk with the runners <strong>and</strong> to serve<br />

lean beef samples to the crowd. Sixteen Team BEEF members from<br />

across the United States ran the marathon in their team jerseys.<br />

National <strong>Beef</strong> Ambassadors<br />

The National <strong>Beef</strong> Ambassador Program reached nearly<br />

295,000 consumers <strong>and</strong> 3,500 youth during beef story activities<br />

at both state <strong>and</strong> national levels, increasing the number of impressions<br />

by 19 percent above the previous year. Additionally, 70 percent of<br />

nearly 300 consumers surveyed agreed their opinions about beef<br />

improved as a result of interacting with National <strong>Beef</strong> Ambassadors.<br />

More than 6 million positive beef impressions were realized during<br />

“<strong>Beef</strong> Story” Twitter parties that featured nutrition information,<br />

recipes <strong>and</strong> production messages in <strong>2012</strong>.<br />

The National <strong>Beef</strong> Speakers Bureau exceeded its<br />

goal for consumer impressions by reaching<br />

10,141 meal-time decision makers <strong>and</strong> youth, an<br />

87.8 percent improvement over prior year results.<br />

Pre- <strong>and</strong> post-survey results indicated an 11 percent<br />

average positive shift in beef opinions.<br />

Industry Information<br />

Jimmy Maxey<br />

Fresno, CA<br />

Manuel Rodrigues<br />

Tipton, CA<br />

Annalyn Settelmeyer<br />

Gardnerville, NV<br />

Darrel Sweet<br />

Livermore, CA<br />

Rob Reviere, Jr.<br />

Ripley<br />

Ronnie Yeargin<br />

Greenfield<br />

Hughes Abell<br />

Austin<br />

Tom Alger<br />

Friona<br />

Anne Anderson<br />

Austin<br />

Southwest Southwest Southwest Southwest<br />

TN<br />

TN<br />

TX<br />

TX<br />

TX<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong> 11


Foreign Marketing<br />

Japan on the Upswing<br />

Once the mainstay of U.S. beef export markets, Japanese trade<br />

peaked in 2001, reaching more than 1.1 billion pounds of U.S.<br />

beef valued at more than $1.6 billion. Those totals declined in the<br />

aftermath of BSE, but continue to rebound despite restrictions<br />

that limit exports to beef from cattle 20 months of age <strong>and</strong><br />

younger.<br />

In Japan, the focus has been on rebuilding consumer confidence<br />

in U.S. beef while targeting markets that offer immediate growth<br />

potential — the yakiniku sector, bento boxes, <strong>and</strong> variety meats<br />

<strong>and</strong> alternative cuts for both national <strong>and</strong> regional retail stores.<br />

As a result, U.S. beef trade with Japan has rebounded to No. 2 in<br />

value <strong>and</strong> No. 3 in volume due to:<br />

• Confidence levels of Japanese consumers in the quality <strong>and</strong> safety of<br />

U.S. beef have nearly tripled over the past four years.<br />

• Exports to Japan were up 23 percent in value on steady volumes in<br />

the first nine months of <strong>2012</strong>, particularly impressive when overall<br />

U.S. beef exports were up 2 percent in value on 12 percent lower<br />

volume.<br />

Central/South America: Up-<strong>and</strong>-Comer for Trade<br />

Working against a global market where beef imports are generally<br />

down, Central <strong>and</strong> South America have emerged as top growth<br />

markets for U.S. beef — purchasing 57.7 million pounds of U.S.<br />

beef valued at $99.2 million, increases of 36 percent in volume<br />

<strong>and</strong> 73 percent in value. That growth is even more astounding<br />

when considering that it comes on the heels of significant annual<br />

gains — more than 50 percent in volume <strong>and</strong> more than 85<br />

percent in value — over the previous two years.<br />

US beefconsumer perception<br />

Would you buy US beef<br />

70%<br />

60%<br />

50%<br />

40%<br />

30%<br />

20%<br />

10%<br />

0%<br />

22.9%<br />

Yes!<br />

64.1%<br />

Yes!<br />

2007.11 2011.12<br />

In 2011, 64% of consumers say they will buy American beef.<br />

Number of Japanese consumers who are willing to buy US beef is increasing.<br />

SourceUSMEF Online Tracking Survey, 300 samples<br />

Central/South America<br />

U.S. <strong>Beef</strong> Exports<br />

90<br />

80<br />

70<br />

60<br />

50<br />

40<br />

30<br />

20<br />

10<br />

0<br />

2007 2008 2009 2010 2011<br />

Value in<br />

Million $<br />

Bruce Dopslauf<br />

LaGrange<br />

Leroy Ezer<br />

Anahuac<br />

Chuck Kiker III<br />

Beaumont<br />

Paul Looney, Jr.<br />

Mineral<br />

Jackie Means<br />

Van Horn<br />

Larry Pratt<br />

Eliasville<br />

Andrea Reed<br />

Dodd City<br />

Sugie Sartwelle<br />

Sealy<br />

Rudie Tate<br />

Wellington<br />

12<br />

TX<br />

TX<br />

TX<br />

TX<br />

TX<br />

TX<br />

TX<br />

TX<br />

TX


“My beef checkoff can<br />

help raise consumer confidence in beef.”<br />

“Simply put, our beef checkoff promotes safe,<br />

nutritious beef. All beef producers invest in the<br />

checkoff — so folks like you <strong>and</strong> me decide how to<br />

allocate these dollars to keep our product top-ofmind<br />

with consumers,” says Ronnie Yeargin, a cowcalf<br />

<strong>and</strong> stocker producer from Greenfield, Tenn.<br />

The checkoff is working to build dem<strong>and</strong> for<br />

beef by educating consumers about beef’s role in<br />

healthful diets.<br />

My beef checkoff…reaching consumers with the<br />

benefits of beef.<br />

Ronnie Yeargin<br />

Ronnie Yeargin<br />

Yeargin Farms<br />

Greenfield, Tenn.<br />

Hear more from Ronnie at My<strong>Beef</strong>Checkoff.com<br />

or scan this QR code<br />

Funded by the <strong>Beef</strong> Checkoff.<br />

Paid Media<br />

The producer communications progam continues to feature producer<br />

testimonials with copy <strong>and</strong> video under the theme “My beef checkoff<br />

can…”. Efforts continue to be extended regionally <strong>and</strong> in cooperation<br />

with BQA efforts to help producers get to know their checkoff. A<br />

new measurement tool, called Focus Point, is helping the producer<br />

communications team measure real-time media results <strong>and</strong> make<br />

tactical enhancements to improve effectiveness. Qualified State<br />

<strong>Beef</strong> Councils (QSBCs) are rolling out the national ads, adding<br />

local testimonials or using new “generic” ads available in the newly<br />

redesigned QSBC Toolkit on My<strong>Beef</strong>Checkoff.com.<br />

Earned Media<br />

The checkoff delivered more than 73,000 pieces of mail along with<br />

daily contact with the editors <strong>and</strong> broadcasters, which resulted in<br />

7,200 news placements. Video news packages reached beyond the<br />

traditional 600 TV stations <strong>and</strong> are extended through Facebook,<br />

YouTube <strong>and</strong> other online outlets to thous<strong>and</strong>s of additional viewers.<br />

Direct Communications<br />

The checkoff website, My<strong>Beef</strong>Checkoff.com, is designed as a one-stop<br />

shop for producers to learn how their national beef checkoff dollars are<br />

invested, <strong>and</strong> continues to draw a growing number of visitors, with an<br />

estimated 80,000 unique visitors viewing more than 272,000 pages.<br />

My<strong>Beef</strong>Checkoff.com e-newsletters had an average open rate of<br />

61 percent <strong>and</strong> a click-through rate of nearly 18 percent — both<br />

measures are many times higher than industry averages.<br />

Trade Shows<br />

National producer communications staff, often coordinating with state<br />

beef councils, participates in industry trade shows, including World<br />

Dairy Expo, American Farm Bureau Federation, National Farmers<br />

Union <strong>and</strong> Livestock Marketing Association.<br />

producer communications<br />

Richard Winter<br />

Canyon<br />

Anne Wirtz<br />

Brenham<br />

Laurie Munns<br />

Snowville<br />

Joe Guthrie<br />

Dublin<br />

Hank Maxey, Jr.<br />

Chatham<br />

Marty Andersen<br />

New Glarus<br />

Alvin Bartz<br />

Shawano<br />

R<strong>and</strong>y Geiger<br />

Reedsville<br />

Spencer Ellis<br />

Lovell<br />

TX<br />

TX<br />

UT<br />

VA<br />

VA<br />

WI<br />

WI<br />

WI<br />

WY<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong> 13


Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research <strong>Board</strong><br />

Financial Statements as of September 30, <strong>2012</strong> <strong>and</strong> 2011<br />

Together with Independent Auditors’ <strong>Report</strong> Thereon<br />

<strong>Board</strong> of Directors<br />

Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research <strong>Board</strong><br />

Independent Auditors’ <strong>Report</strong><br />

We have audited the accompanying statements of assets, liabilities, <strong>and</strong> net assets — modified cash basis of the Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong><br />

<strong>and</strong> Research <strong>Board</strong> (the <strong>Board</strong>) as of September 30, <strong>2012</strong> <strong>and</strong> 2011, <strong>and</strong> the related statements of revenues, expenses, <strong>and</strong> changes in<br />

unrestricted net assets — modified cash basis for the years then ended. These financial statements are the responsibility of the <strong>Board</strong>’s<br />

management. Our responsibility is to express an opinion on these financial statements based on our audits.<br />

We conducted our audits in accordance with auditing st<strong>and</strong>ards generally accepted in the United States of America <strong>and</strong> the st<strong>and</strong>ards<br />

applicable to financial audits contained in Government Auditing St<strong>and</strong>ards, issued by the Comptroller General of the United States. Those<br />

st<strong>and</strong>ards require that we plan <strong>and</strong> perform the audit to obtain reasonable assurance about whether the financial statements are free of<br />

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts <strong>and</strong> disclosures in the financial<br />

statements. An audit also includes assessing the accounting principles used <strong>and</strong> significant estimates made by management, as well as<br />

evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.<br />

As described in Note 2, these financial statements were prepared on the modified cash basis of accounting, which is a comprehensive basis of<br />

accounting other than generally accepted accounting principles in the United States of America.<br />

In our opinion, the financial statements referred to above present fairly, in all material respects, the assets, liabilities, <strong>and</strong> net assets of the<br />

<strong>Board</strong> as of September 30, <strong>2012</strong> <strong>and</strong> 2011, <strong>and</strong> its revenues, expenses, <strong>and</strong> changes in unrestricted net assets for the years then ended, on the<br />

basis of accounting described in Note 2.<br />

In accordance with Government Auditing St<strong>and</strong>ards, we have also issued our report dated November 30, <strong>2012</strong> on our consideration of the<br />

<strong>Board</strong>’s internal control over financial reporting <strong>and</strong> on our tests of its compliance with certain provisions of laws, regulations, contracts,<br />

<strong>and</strong> grant agreements <strong>and</strong> other matters. The purpose of that report is to describe the scope of our testing of internal control over financial<br />

reporting <strong>and</strong> compliance <strong>and</strong> the results of that testing, <strong>and</strong> not to provide an opinion on the internal control over financial reporting or<br />

on compliance. That report is an integral part of an audit performed in accordance with Government Auditing St<strong>and</strong>ards <strong>and</strong> should be<br />

considered in assessing the results of our audit.<br />

Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying<br />

supplementary statements of assessment revenue by state — modified cash basis is presented for purposes of additional analysis <strong>and</strong> is not a<br />

required part of the financial statements. Such information is the responsibility of management <strong>and</strong> was derived from <strong>and</strong> relates directly to<br />

the underlying accounting <strong>and</strong> other records used to prepare the financial statements. The information has been subjected to the auditing<br />

procedures applied in the audit of the basic financial statements <strong>and</strong> certain additional procedures, including comparing <strong>and</strong> reconciling<br />

such information directly to the underlying accounting <strong>and</strong> other records used to prepare the financial statements or to the financial<br />

statements themselves, <strong>and</strong> other additional procedures in accordance with auditing st<strong>and</strong>ards generally accepted in the United States of<br />

America. In our opinion, the information is fairly stated, in all material respects, in relation to the financial statements as a whole.<br />

In connection with our audits, nothing came to our attention that caused us to believe the <strong>Board</strong> was not in compliance with the provisions<br />

of the <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research Act of 1985 <strong>and</strong> the <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research Order (the Order) related to the use of funds<br />

collected by the <strong>Board</strong> insofar as they relate to accounting matters. Further, in connection with our audits, nothing came to our attention<br />

that caused us to believe the <strong>Board</strong> was not in compliance with the terms of Section 1260.149(f) of the Order, or with the terms of the<br />

Agricultural Marketing Service Investment Policy, which describe the type of instruments in which the <strong>Board</strong> may invest, insofar as they<br />

relate to accounting matters. However, our audits were not directed primarily toward obtaining knowledge of such noncompliance.<br />

The report is intended solely for the information <strong>and</strong> use of the members of the <strong>Board</strong> <strong>and</strong> its management, the Audit Committee, <strong>and</strong> the<br />

United States Department of Agriculture <strong>and</strong> is not intended to be <strong>and</strong> should not be used by anyone other than these specific parties.<br />

Clifton Larsen Allen LLP<br />

Greenwood Village, Colorado<br />

November 30, <strong>2012</strong><br />

14


Statements of Assets, Liabilities <strong>and</strong> Net Assets<br />

(Modified Cash Basis, Note 2)<br />

September 30, <strong>2012</strong> <strong>and</strong> 2011<br />

Assets <strong>2012</strong> 2011<br />

Cash <strong>and</strong> Cash Equivalents (Note 3) $ 8,545,965 $ 4,325,154<br />

Short-Term Investments (Note 3) 10,696,000 15,443,950<br />

Capital Assets, net of accumulated depreciation<br />

of $83,941 <strong>and</strong> $99,676, respectively 18,066 21,488<br />

Other 2,252 3,407<br />

Total Assets $ 19,262,283 $ 19,793,999<br />

Liabilities <strong>and</strong> Net Assets<br />

Due to State <strong>Beef</strong> Councils <strong>and</strong> Other $ 1,313 $ 1,517<br />

Net Assets - Unrestricted (Note 5):<br />

Designated for future expenses 10,158,245 13,044,165<br />

Designated - <strong>Board</strong> reserve 4,350,000 4,350,000<br />

Undesignated 4,752,725 2,398,317<br />

19,260,970 19,792,482<br />

Commitments <strong>and</strong> contingencies (Note 9)<br />

Total Liabilities <strong>and</strong> Net Assets $ 19,262,283 $ 19,793,999<br />

Statements of Revenues, Expenses <strong>and</strong><br />

Changes in Unrestricted Net Assets<br />

(Modified Cash Basis, Note 2)<br />

For The Years Ended September 30, <strong>2012</strong> <strong>and</strong> 2011<br />

Revenues <strong>2012</strong> 2011<br />

Assessments (Note 1) $ 41,977,438 $ 41,918,289<br />

Interest 40,812 48,640<br />

Other 96,430 196,143<br />

Total revenues 42,114,680 42,163,072<br />

Expenses<br />

Program Expenses -<br />

<strong>Promotion</strong> 18,497,849 17,782,309<br />

Research 5,719,714 5,732,492<br />

Consumer Information 4,513,478 4,333,552<br />

Industry Information 3,866,591 3,582,286<br />

Foreign Marketing 6,129,529 5,929,362<br />

Producer Communications 1,745,326 1,726,265<br />

Program Evaluation 131,674 156,700<br />

Program Development 198,499 204,923<br />

Total program expenses 40,802,660 39,447,889<br />

Supporting Services -<br />

USDA Oversight 211,065 255,941<br />

Administration (Note 4) 1,632,467 1,970,479<br />

Total expenses 42,646,192 41,674,309<br />

Change in net assets (531,512) 488,763<br />

Beginning unrestricted net assets 19,792,482 19,303,719<br />

Ending unrestricted net assets $ 19,260,970 $ 19,792,482<br />

The accompanying notes to financial statements are an integral part of these statements.<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong><br />

15


Notes to Financial Statements<br />

(Modified Cash Basis)<br />

September 30, <strong>2012</strong> <strong>and</strong> 2011<br />

(1) Organization <strong>and</strong> Operations<br />

The <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research Act of 1985 (the Act),<br />

approved on December 23, 1985, by the United States<br />

Congress, established a coordinated program of promotion <strong>and</strong><br />

research designed to strengthen the beef industry’s position in<br />

the marketplace, as well as to maintain <strong>and</strong> exp<strong>and</strong> domestic<br />

<strong>and</strong> foreign markets <strong>and</strong> uses for beef <strong>and</strong> beef products.<br />

As provided in the Act, the Secretary of the United States<br />

Department of Agriculture (the Secretary) issued the <strong>Beef</strong><br />

<strong>Promotion</strong> <strong>and</strong> Research Order (the Order), effective July 18,<br />

1986, which provides the terms <strong>and</strong> conditions for the Act’s<br />

administration. The Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research<br />

<strong>Board</strong> (the <strong>Board</strong>), which was created <strong>and</strong> approved by the<br />

Secretary to administer the Act, consists of 103 members who<br />

are representatives of the cattle industry in the United States,<br />

including importers. <strong>Board</strong> members are appointed by the<br />

Secretary.<br />

The program is financed by a $1 per head assessment on<br />

domestic sales of cattle <strong>and</strong> on imported cattle, beef, <strong>and</strong> beef<br />

products. The <strong>Board</strong>, as part of its responsibilities under the Act<br />

<strong>and</strong> Order, may certify no more than one Qualified State <strong>Beef</strong><br />

Council (Council) in each state <strong>and</strong> authorize that Council to<br />

collect such assessments. The assessments are remitted to the<br />

Councils or the <strong>Board</strong>. The <strong>Board</strong> receives one‐half of assessment<br />

monies from states with Councils <strong>and</strong> the Councils retain the<br />

remainder. The <strong>Board</strong> receives all assessment revenues from<br />

states without Councils <strong>and</strong> from imported cattle, beef, <strong>and</strong> beef<br />

products.<br />

Pursuant to the Act, the <strong>Board</strong>’s expenses for administration<br />

are limited to 5% or less of projected revenues. All remaining<br />

revenues are expended on programs related to promotion,<br />

research <strong>and</strong> information for the beef industry. The <strong>Board</strong><br />

contracts with established national cattle‐ or beef‐industrygoverned<br />

nonprofit organizations for the implementation <strong>and</strong><br />

conduct of these programs. Under the terms of these contracts,<br />

the entities which receive <strong>Board</strong> contracts are subject to annual<br />

audits <strong>and</strong> reviews.<br />

During fiscal years <strong>2012</strong> <strong>and</strong> 2011, the <strong>Board</strong> reimbursed the<br />

following industry organizations for program expenses incurred<br />

on approved projects:<br />

Name of Contractor <strong>2012</strong> 2011<br />

Meat Importers Council of America $490,239 $347,756<br />

National Cattlemen’s<br />

<strong>Beef</strong> Association (NCBA)<br />

National Livestock Producers<br />

Association<br />

$38,040,527 $36,931,474<br />

$35,000 —<br />

American National CattleWomen $161,395 $80,771<br />

The program expenses incurred by NCBA during fiscal years<br />

<strong>2012</strong> <strong>and</strong> 2011 included reimbursements for costs incurred<br />

under subcontracts with the American National CattleWomen<br />

of $408,935 <strong>and</strong> $289,208, <strong>and</strong> the U.S. Meat Export<br />

Federation of $6,129,529 <strong>and</strong> $5,929,362, respectively.<br />

(2) Summary of Significant Accounting Policies<br />

Basis of Accounting<br />

The accompanying financial statements have been prepared<br />

on the modified cash basis of accounting. Under this method,<br />

certain revenues are recognized when received rather than when<br />

earned <strong>and</strong> certain expenses are recognized when paid rather<br />

than when incurred. At September 30, <strong>2012</strong> <strong>and</strong> 2011, there<br />

were assessment receivables of approximately $5,600,000 <strong>and</strong><br />

$6,400,000, interest receivables of approximately $16,000 <strong>and</strong><br />

$11,000, <strong>and</strong> accounts payable of approximately $6,200,000<br />

<strong>and</strong> $7,300,000, respectively, which are not reflected in the<br />

accompanying financial statements. Accounts payable relate to<br />

appropriated expenditures <strong>and</strong> are included in the net assets<br />

designated for future expenses in the accompanying statements<br />

of assets, liabilities <strong>and</strong> net assets (Note 5).<br />

As discussed in Note 1, the <strong>Board</strong> receives one‐half of the<br />

assessment monies collected by the Councils <strong>and</strong> the remainder<br />

is retained by the Councils. The accompanying financial<br />

statements include only the <strong>Board</strong>’s share of assessment monies<br />

<strong>and</strong> do not include amounts related to either revenues or<br />

expenses of the individual Councils.<br />

Cash, Cash Equivalents <strong>and</strong> Short‐Term Investments<br />

For purposes of classifying investments, the <strong>Board</strong> considers<br />

all highly liquid investments with an original maturity of three<br />

months or less to be cash equivalents. Cash equivalents <strong>and</strong><br />

short‐term investments are recorded at cost.<br />

Depreciation<br />

Capital assets, which include equipment <strong>and</strong> leasehold<br />

improvements, are recorded at cost. Depreciation is computed<br />

using the straight‐line method over the estimated useful lives of<br />

three to ten years.<br />

Use of Estimates<br />

The preparation of financial statements require management<br />

to make estimates <strong>and</strong> assumptions that affect certain reported<br />

amounts <strong>and</strong> disclosures, primarily those estimates included in<br />

the Basis of Accounting disclosure above. Accordingly, actual<br />

results could differ from those estimates.<br />

(3) Cash, Cash Equivalents <strong>and</strong> Short-Term<br />

Investments<br />

The Secretary has provided that excess cash may be invested,<br />

on a short‐term basis, in certificates of deposit insured by the<br />

Federal Deposit Insurance Corporation or obligations of the<br />

United States, U.S. Government agencies or U.S. Governmentsponsored<br />

corporations. Cash, cash equivalents <strong>and</strong> short‐term<br />

investments at September 30, <strong>2012</strong> <strong>and</strong> 2011, by investment<br />

type, are as follows:<br />

16


September 30, <strong>2012</strong>:<br />

Dem<strong>and</strong> Deposit<br />

Account<br />

Money Market<br />

Accounts<br />

Certificates of<br />

Deposit<br />

Less —<br />

Outst<strong>and</strong>ing<br />

Checks<br />

Cash<br />

<strong>and</strong> Cash<br />

Equivalents<br />

Short-Term<br />

Investments<br />

Total<br />

Carrying<br />

Value<br />

Total Fair<br />

Value<br />

$7,752,590 $ - $7,752,590 $7,752,590<br />

3,755,634 - 3,755,634 3,755,634<br />

- 10,696,000 10,696,000 10,690,818<br />

(2,962,259) - (2,962,259) (2,962,259)<br />

Totals for <strong>2012</strong> $8,545,965 $10,696,000 $19,241,965 $19,236,783<br />

September 30, 2011:<br />

Dem<strong>and</strong> Deposit<br />

Account<br />

Certificates of<br />

Deposit<br />

U.S. Government<br />

Securities<br />

Less —<br />

Outst<strong>and</strong>ing<br />

Checks<br />

Cash<br />

<strong>and</strong> Cash<br />

Equivalents<br />

Short-Term<br />

Investments<br />

Total<br />

Carrying<br />

Value<br />

Total Fair<br />

Value<br />

$5,922,436 $ - $5,922,436 $5,922,436<br />

- 13,942,002 13,942,002 13,922,093<br />

- 1,501,948 1,501,948 1,500,117<br />

(1,597,282) - (1,597,282) (1,597,282)<br />

Totals for 2011 $4,325,154 $15,443,950 $19,769,104 $19,747,364<br />

In accordance with the <strong>Board</strong>’s policy, the dem<strong>and</strong> deposit<br />

accounts, the money market accounts <strong>and</strong> the certificates<br />

of deposit are insured by the Federal Deposit Insurance<br />

Corporation <strong>and</strong>/or fully collateralized by U.S. Government<br />

securities held at the Federal Reserve Bank in the <strong>Board</strong>’s name.<br />

(4) Administration Expense<br />

The Act limits expenses for the administration of the program<br />

to 5% or less of projected revenues. Projected revenues were<br />

$40,870,000 for <strong>2012</strong> <strong>and</strong> $41,000,000 for 2011. Accordingly,<br />

the administrative expenses incurred by the <strong>Board</strong> were limited<br />

to $2,044,000 in <strong>2012</strong> <strong>and</strong> $2,050,000 in 2011. Administrative<br />

expenses incurred by the <strong>Board</strong> on the accrual basis (versus<br />

modified cash basis amounts reflected in the accompanying<br />

statements of revenues, expenses <strong>and</strong> changes in net assets)<br />

were approximately $1,630,000 (4.0% of projected revenues)<br />

in <strong>2012</strong> <strong>and</strong> $1,950,000 (4.8% of projected revenues) in<br />

2011. Expressed as a percentage of actual revenues, the <strong>Board</strong>’s<br />

administrative expenses were 3.9% in <strong>2012</strong> <strong>and</strong> 4.7% in 2011.<br />

The <strong>Board</strong> has entered into an Administrative Services<br />

Agreement with NCBA whereby NCBA agreed to provide<br />

certain administrative services to the <strong>Board</strong> in return for<br />

reimbursement of all direct <strong>and</strong> indirect costs related to the<br />

provided services. During <strong>2012</strong> <strong>and</strong> 2011, respectively, the<br />

<strong>Board</strong> paid NCBA approximately $58,000 <strong>and</strong> $59,000 related<br />

to this agreement.<br />

The <strong>Board</strong> leases office facilities <strong>and</strong> equipment from outside<br />

third‐parties under operating leases. Payments required under<br />

the leases were approximately $91,000 during <strong>2012</strong> <strong>and</strong> $97,000<br />

during 2011. Future annual payments related to the leases are<br />

approximately $97,000 in 2013, $100,000 in 2014, $46,000 in<br />

2015 <strong>and</strong> $4,000 in 2016.<br />

(5) Unrestricted Net Assets<br />

Unrestricted net assets represent amounts currently available for<br />

the use in the <strong>Board</strong>’s operation in accordance with the Act <strong>and</strong><br />

those resources invested in fixed assets. Designated net asset<br />

balances represent tentative plans of the <strong>Board</strong> for future use of<br />

financial resources, as follows:<br />

Designated for Future Expenses<br />

This balance relates to unexpended program appropriations.<br />

Designated ‐ <strong>Board</strong> Reserve<br />

On October 6, 2010, the <strong>Board</strong> has approved the establishment<br />

of a reserve in the amount of $4,350,000 to be used as the <strong>Board</strong><br />

may deem necessary, with the approval of the Secretary.<br />

Undesignated<br />

As of September 30, <strong>2012</strong> <strong>and</strong> 2011, $4,752,725 <strong>and</strong><br />

$2,398,317 of the net assets had not been designated by the<br />

<strong>Board</strong> <strong>and</strong> is available for budgeting to the various program<br />

areas. Of these amounts, $18,066 <strong>and</strong> $21,488 represent net<br />

assets invested in fixed assets as of September 30, <strong>2012</strong> <strong>and</strong><br />

2011, respectively.<br />

(6) Income Tax Status<br />

The <strong>Board</strong> has received a ruling from the Internal Revenue<br />

Service stating that it is classified as a tax‐exempt entity that<br />

engages in activities under the aegis of the United States<br />

Department of Agriculture.<br />

(7) Pension Plan<br />

The <strong>Board</strong> provides a defined contribution plan for all of its<br />

employees under which annual contributions are provided<br />

based on a percentage of each employee’s salary. Contributions<br />

required <strong>and</strong> funded by the <strong>Board</strong> were approximately $118,000<br />

<strong>and</strong> $120,000 in <strong>2012</strong> <strong>and</strong> 2011, respectively.<br />

(8) Subsequent Event<br />

Management evaluated subsequent events through November<br />

30, <strong>2012</strong>, the date the audited financial statements were available<br />

to be issued. Events or transactions occurring after September<br />

30, <strong>2012</strong>, but prior to November 30, <strong>2012</strong>, that provided<br />

additional evidence about conditions that existed at September<br />

30, <strong>2012</strong> have been recognized in the financial statements for<br />

the year ended September 30, <strong>2012</strong>. Events or transactions<br />

that provided evidence about conditions that did not exist at<br />

September 30, <strong>2012</strong>, but arose before the financial statements<br />

were available to be issued, have not been recognized in the<br />

financial statements for the year ended September 30, <strong>2012</strong>.<br />

In October <strong>2012</strong>, the <strong>Board</strong> <strong>and</strong> the Secretary approved<br />

$3,713,205 of the September 30, <strong>2012</strong> net asset balance as<br />

designated for expenditures in 2013.<br />

(9) Litigation<br />

The <strong>Board</strong> is a defendant in connection with certain legal<br />

actions. While the final outcome of these actions cannot be<br />

determined at this time, management is of the opinion that the<br />

outcome of such matters will not have a material effect on the<br />

financial statements.<br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong> 17


Supplementary Statements of Assessment Revenues By State<br />

For the Years Ended September 30, <strong>2012</strong> <strong>and</strong> 2011<br />

ASSESSMENT REVENUES (Modified Cash Basis) <strong>2012</strong> 2011<br />

Qualified State <strong>Beef</strong> Councils:<br />

Alabama $ 346,952 $ 391,848<br />

Arizona 335,717 285,322<br />

Arkansas 475,693 476,534<br />

California 1,921,761 1,704,276<br />

Colorado 1,668,611 1,651,922<br />

Delaware 6,082 4,566<br />

Florida 317,331 315,411<br />

Georgia 287,163 317,478<br />

Hawaii 16,409 20,596<br />

Idaho 798,165 789,069<br />

Illinois 334,433 343,084<br />

Indiana 239,238 242,663<br />

Iowa 1,680,340 1,755,267<br />

Kansas 3,832,633 3,878,885<br />

Kentucky 706,724 701,259<br />

Louisiana 189,728 163,644<br />

Maine 13,912 13,890<br />

Maryl<strong>and</strong> 47,453 47,479<br />

Michigan 268,879 260,357<br />

Minnesota 660,911 713,397<br />

Mississippi 290,594 383,118<br />

Missouri 1,340,534 1,329,132<br />

Montana 881,788 851,928<br />

Nebraska 3,688,045 3,568,242<br />

Nevada 128,037 137,399<br />

New Jersey 4,738 4,941<br />

New Mexico 655,304 627,241<br />

New York 311,564 299,525<br />

North Carolina 176,464 188,048<br />

North Dakota 538,942 568,096<br />

Ohio 308,475 305,767<br />

Oklahoma 1,936,502 2,208,993<br />

Oregon 417,904 406,192<br />

Pennsylvania 394,712 394,303<br />

South Carolina 80,269 89,502<br />

South Dakota 1,538,686 1,566,257<br />

Tennessee 453,117 456,271<br />

Texas 5,685,045 6,197,659<br />

Utah 293,827 262,192<br />

Vermont 55,809 55,429<br />

Virginia 389,340 391,475<br />

Washington 539,116 538,513<br />

West Virginia 98,355 84,561<br />

Wisconsin 718,343 712,462<br />

Wyoming 530,110 487,399<br />

Total Qualified State <strong>Beef</strong> Councils 35,603,755 36,191,592<br />

States Without Qualified State <strong>Beef</strong> Councils:<br />

Alaska 133 238<br />

Connecticut 13,041 11,486<br />

Massachusetts 18,891 19,920<br />

New Hampshire 15,112 15,765<br />

Rhode Isl<strong>and</strong> 526 656<br />

Total States Without Qualified State <strong>Beef</strong> Councils 47,703 48,065<br />

Importers 6,325,980 5,678,632<br />

Total Assessment Revenues $ 41,977,438 $ 41,918,289<br />

See the accompanying independent auditor’s report.<br />

18


Independent Auditors’ <strong>Report</strong> on Internal Control Over Financial <strong>Report</strong>ing<br />

<strong>and</strong> on Compliance <strong>and</strong> Other Matters Based on an Audit of Financial<br />

Statements Performed in Accordance with Government Auditing St<strong>and</strong>ards<br />

<strong>Board</strong> of Directors<br />

Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research <strong>Board</strong><br />

We have audited the statements of assets, liabilities, <strong>and</strong> net assets — modified cash basis of the Cattlemen’s <strong>Beef</strong><br />

<strong>Promotion</strong> <strong>and</strong> Research <strong>Board</strong> (the <strong>Board</strong>) as of September 30, <strong>2012</strong>, <strong>and</strong> the related statements of revenues,<br />

expenses, <strong>and</strong> changes in unrestricted net assets — modified cash basis for the year then ended, <strong>and</strong> have issued<br />

our report thereon dated November 30, <strong>2012</strong>. As described in Note 2, these financial statements were prepared on<br />

the modified cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted<br />

accounting principles in the United States of America. We conducted our audit in accordance with auditing<br />

st<strong>and</strong>ards generally accepted in the United States of America <strong>and</strong> the st<strong>and</strong>ards applicable to financial audits<br />

contained in Government Auditing St<strong>and</strong>ards, issued by the Comptroller General of the United States.<br />

Internal Control Over Financial <strong>Report</strong>ing<br />

Management of the <strong>Board</strong> is responsible for establishing <strong>and</strong> maintaining effective internal control over financial<br />

reporting. In planning <strong>and</strong> performing our audit, we considered the <strong>Board</strong>’s internal control over financial reporting<br />

as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements,<br />

but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial<br />

reporting. Accordingly, we do not express an opinion on the effectiveness of the entity’s internal control over<br />

financial reporting.<br />

A deficiency in internal control exists when the design or operation of a control does not allow management<br />

or employees, in the normal course of performing their assigned functions, to prevent or detect <strong>and</strong> correct<br />

misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal<br />

control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will<br />

not be prevented, or detected <strong>and</strong> corrected on a timely basis.<br />

Our consideration of internal control over financial reporting was for the limited purpose described in the first<br />

paragraph of this section <strong>and</strong> was not designed to identify all deficiencies in internal control over financial reporting<br />

that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in<br />

internal control over financial reporting that we consider to be material weaknesses, as defined above.<br />

Compliance <strong>and</strong> Other Matters<br />

As part of obtaining reasonable assurance about whether the <strong>Board</strong>’s financial statements are free of material<br />

misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, <strong>and</strong> grant<br />

agreements, noncompliance with which could have a direct <strong>and</strong> material effect on the determination of financial<br />

statement amounts. However, providing an opinion on compliance with those provisions was not an objective of<br />

our audit, <strong>and</strong> accordingly, we do not express such an opinion. The results of our tests disclosed no instances of<br />

noncompliance or other matters that are required to be reported under Government Auditing St<strong>and</strong>ards.<br />

This report is intended solely for the information <strong>and</strong> use of the members of the <strong>Board</strong> <strong>and</strong> its management, the<br />

Audit Committee, <strong>and</strong> the United States Department of Agriculture <strong>and</strong> is not intended to be <strong>and</strong> should not be used<br />

by anyone other than these specified parties.<br />

Clifton Larsen Allen LLP<br />

Greenwood Village, Colorado<br />

November 30, <strong>2012</strong><br />

<strong>2012</strong> <strong>Beef</strong> <strong>Board</strong> <strong>Annual</strong> <strong>Report</strong><br />

19


Cattlemen’s <strong>Beef</strong> <strong>Board</strong><br />

Mission Statement<br />

The Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> & Research <strong>Board</strong><br />

is dedicated to improving producer profitability,<br />

exp<strong>and</strong>ing consumer dem<strong>and</strong> for beef, <strong>and</strong><br />

strengthening beef’s position in the marketplace.<br />

My<strong>Beef</strong>Checkoff.com<br />

Funded by the <strong>Beef</strong> Checkoff.<br />

Cattlemen’s <strong>Beef</strong> <strong>Promotion</strong> <strong>and</strong> Research <strong>Board</strong><br />

9000 East Nichols Avenue, Suite 215 • Centennial, Colorado 80112 • Phone: 303.220.9890 • Fax: 303.220.9280

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