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Merger Meltdown

The friendly merger between the Beef Information Centre (BIC) and the Canada Beef Export Federation (CBEF) morphed toward a bad divorce at a special meeting in Toronto last month. The meeting was called so the CBEF members could sanction the plan for a merger recommended by the Canada Beef Working Group.

Bad blood was in the air before the doors opened. The funders, representing the provincial cattlemen organizations who raise the checkoff dollars to support these marketing groups arrived with signed letters of resignation in their pockets. They favoured the merger but knowing other CBEF members did not, they were prepared to pull their support and money if the meeting didn’t go their way.

Given the importance of what was being decided most CBEF member organizations sent a representative or a proxy to the meeting.

The details of the meeting are given elsewhere in this issue. Simply put it was a fiasco. It started out as scheduled. After the plan for the merger was laid out, the chairman accepted a special motion to dissolve CBEF and turn its assets over to the reconstituted National Checkoff Agency. It was in the middle of this discussion that another motion was made to adjourn the meeting. The commotion started when it passed in a close vote.

Depending on whom you talk to you get varying stories about why the rug was pulled on the CBEF vote.

The pro-CBEF side saw it as a way to keep negotiations open with the Beef Working Group. They were sure the vote was going to go against the merger resulting in a flurry of resignations so they engineered an early adjournment. While they supported a merger they were hoping for a governance model that left room to elect smaller exporters and importers to the board of directors. And they wanted one more shot at convincing the Beef Working Group to rethink its plan for an appointed board.

The funders (except for Quebec) and their supporters saw this as just another stalling tactic and were having none of it. So they resigned, en masse. Joining them was Ben Thorlakson, the past chairman and Rob Meijer of Cargill and Brian Read of XL Foods. The packers supplied in handwritten letters of resignation. So CBEF was left without the support of the producer groups who generate most of its budget and Canada’s two major packers who sell much of our exported product.

In hindsight you’d have to say adjournment was a questionable negotiating tactic. Another past board chairman and representatives from other producer groups, smaller packers and exporters stepped up to fill the empty board chairs at CBEF but they can’t replace the money.

CBEF’s money comes from two sources, the National Checkoff Agency (NCA) and government. The NCA was set up under federal legislation to accept the mandatory national $1 checkoff from the provincial cattle organizations and disperse it to CBEF, BIC and the Beef Cattle Research Council in the proportions set down by each province. Most cattle groups have a March 31 year-end, to coincide with government budgets. But the NCA year-end is in June raising some legal questions as to how fast the cattlemen could cut off the funds.

As with most divorces this one has been good for the lawyers. CBEF had two on hand at the special meeting to make sure things were done properly. And the funders have been consulting their own legal teams since then to see just how quickly they can shut off the tap.

If CBEF thought there still was room for a negotiated settlement they lost that hope on February 24 when the Canada Beef Working Group disbanded its operations. With no one left to negotiate with, the new CBEF board threw in the towel. In a statement CBEF “welcomed” the merger and was “eager” to work with the NCA to develop a new marketing and promotion arm for the industry.

At press time we were still awaiting a response from the funders or the Canadian Cattlemen’s Association as to whether they are equally eager to put the merger back on the rails. I hope they decide quickly to patch over the cracks and start putting this new marketing agency in place. The people who work for them at BIC and CBEF have waited long enough to find out what their future holds.

Mergers are always spelled out in terms of assets but in organizations like this one the only asset of value is the collective talents, contacts and experience of the people who have spent much of their careers marketing and promoting Canadian beef. They can’t be expected to wait much longer before they start looking for other options. That is something industry leaders should go out of their way to avoid.

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Gren Winslow

Gren Winslow is a past editor of Canadian Cattlemen.

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