Home Ken's Commentaries Checkoff Programs Should Become Voluntary

Checkoff Programs Should Become Voluntary

by Ken Root

The commodity checkoff programs for beef, pork and soybeans were designed to serve the entire grower community.  Over the years there has been great controversy as to whether they have done so.  Small pork producers went out of business while mega-farms flourished and small scale cattle producers feel the mandatory contribution that is deducted at the auction barn is a tax, not a benefit.  Entire careers have been spent managing the collection and distribution of funds for the purposes of research, advertising, promotion and communications.  With revelations of diversion of funds and blocking of political enemies from participating in contracts, I think it is time to let each commodity group form its own entity that solicits voluntary contributions and spends the proceeds in a manner that best serves the industry.

When the beef and pork checkoffs went into effect in the mid 1980’s, agriculture looked a lot different than it does today.  There were many small producers and the marketplace was open to price determination at many locations.  Now the percentage of finished cattle and pigs selling in a non-contract environment is almost zero.  That means the industry has consolidated to the point the major players are large and few.  The small grower pays in but has no impact so I think he should have the choice of stepping out of mandatory checkoff payments.

There have been a lot of good people who spent years on the checkoff boards so I’m not endorsing this position lightly.  Those same people can continue to direct spending of voluntary contributions from themselves and those entities who see the value in a consolidated promotional front.  They can, under a voluntary program, sell it to producers who can freely choose whether to participate.

I also think government should get out of the checkoff business.  The USDA sees these programs as jobs for their bureaucracy and has encouraged or allowed misappropriation on multiple occasions.  In 2006, I watched the United Soybean Board figure out a way to send unencumbered producer checkoff funds to the American Soybean Association for use in lobbying and other activities.  It is necessary to have a politically active grower organization but it is not appropriate to surreptitiously fund them with dollars that the law requires to be spent for legitimate checkoff purposes.  USB bought the export arm of ASA for six million checkoff dollars.  According to a source close to the negotiations, USDA suggested that would be a good expenditure for the checkoff and an always underfunded grower group was glad to get it.

In another case, that is going to leave a bite mark on something other than a pork chop, the Pork Board bought the advertising slogan: “The Other White Meat” from the National Pork Producers Council for thirty million checkoff dollars.  The slogan had been used for its entire run by NPB at no cost and then purchased after the fact for no apparent reason other than to transfer three million dollars per year to NPPC for lobbying purposes.  In both of these cases, those responsible in government knew fully what was happening and either ignored it or endorsed it.  Now, the Human Society of the United States (HSUS) is suing NPB for the action.  The U.S. Secretary of Agriculture gives the indication he thinks there was malfeasance and wants to negotiate with HSUS to screams from the pork industry.

We have had so much conflict in the beef checkoff between competing factions that the constitutionality of the program went all the way to the U.S. Supreme Court and was validated as “government speech”.  I see that as proof USDA can do what it wants and that is to manage and manipulate the programs to keep favor with the boards and to keep jobs in the agency.  Someday, with the growing power of consumer activists, the USDA is going to require the beef checkoff to warn consumers that eating animal products is hazardous to your health.  Is that the role of the checkoff program?

So let’s make a clean break with the mandatory government programs.  The mechanism is there to dismantle the checkoffs but it is deliberately cumbersome.  The pork checkoff was voted down in 2000 when producers petitioned and the USDA called for a vote but it was saved as the Clinton Administration changed to the Bush Administration and USDA lawyers who were to dissolve it, switched sides of the table and figured out ways to invalidate the vote.  Again, government took care of itself in spite of the wishes of the majority of producers.

The tendency of any trade association is to find easy money.  Producers of the commodity want more than they are willing to fund so they keep their dues low.  In need of funds, staff and officers move to suppliers and users of the commodity and grant them board seats and power to gain their financial support.  That diminishes the grower’s impact and disgruntled players leave the association.  Agriculturalists need to learn to pay their own way to get what they want.  The only way to do so is to have a program funded by those growers who have a strong financial stake in their future.   You don’t see the major meat packers, agrichemical or fertilizer companies soliciting money from small producers to accomplish their legislative agenda because they want specific results from their association that are not clouded by other forces.  Check their non-profit forms and you’ll see how many millions they voluntarily invest.

“Follow the money,” is an overused line but still true.  The concept of producer funded programs was a good one when initiated but now has been distorted toward the interests of insiders and government.  Small producers are taken for granted as their opposition is ignored because they have no choice but to contribute funds.  With so few farmers producing a very large percentage of our crops and livestock, the time has come for those who benefit most to ante up.