“Got Milk?” “The Incredible, Edible Egg.” “Beef, It’s What’s for Dinner.” These are all advertising campaigns that many Americans are familiar with, but they probably don’t know that government-authorized organizations are responsible for those campaigns. They are the product of commodity checkoff programs that are overseen by the United States Department of Agriculture (USDA).
The purpose of establishing such programs is to “provide a framework for agricultural industries to pool their resources and combine efforts to develop new markets, strengthen existing markets and conduct important research and promotion activities.” Under federal law, if enough producers in an agricultural industry agree, they can submit a proposal to USDA to establish a checkoff program for that particular industry. Once USDA approves and a referendum is agreed to, then producers in the industry must pay a fee, akin to a tax, to the promotion board. There are currently 21 checkoff programs, and recently the National Pecan Federation submitted a proposal to add one for pecans.
One major problem for checkoff programs is the lack of transparency in terms of how they spend their fee receipts. For instance, USDA was under fire in 2017 for failing to publish the legally required annual financial reports on a $400 million dairy research and promotional fund for the past four years. The person responsible for the reports, the former USDA Secretary Tom Vilsack, now serves as the president and CEO of the checkoff-funded U.S. Dairy Export Council.
When there is a lack of transparency in a government-backed program, there is the opportunity for questionable conduct. The checkoff programs are no exception. In 2018, a federal judge ruled that USDA unlawfully approved spending $60 million of hog farmers’ checkoff money to purchase trademark rights to a defunct promotional campaign. There were additional concerns that the trademark was licensed from a trade association that lobbies Congress. The money came from the checkoff fee of 40 cents for every $100 worth of pigs sold in the country. Sadly, this is not a one-time incidence. According to the Good Food Institute, checkoff dollars have repeatedly been siphoned off to fund lobbying activities and anti-competitive efforts.
The worst part of all is that many of these programs are legally mandatory. For example, the 40 cents checkoff fee mentioned above is assessed on hog farmers regardless of how badly managed the program is. Likewise, for many other checkoff programs, even if a particular checkoff program happens to be unnecessary and wasteful, the producers of the commodity can’t opt-out of it. The fees can pose a burden on cash-strapped producers, and also get passed on to consumers through higher prices.
Fortunately, two sets of legislation have been introduced to change this. The Opportunities for Fairness in Farming Act, introduced as H.R 5563 by Rep. Dina Titus (D-NV) and as S. 935 by Sens. Mike Lee (R-UT), Cory Booker (D-NJ), Rand Paul (R-KY), and Elizabeth Warren (D-MA), would implement common sense reform to bring transparency and accountability to checkoff programs. The bill would prevent corruption by clarifying and fortifying the prohibition on checkoff programs from contracting with organizations that lobby on agricultural policy. It would also establish program standards that prohibit anticompetitive behavior. Finally, it would require the publication of checkoff program budgets and expenditures so the producers who pay the fees know how their money is spent.
Regarding the compulsory aspect of checkoff programs, companion legislation H.R. 5699, introduced by Rep. Denver Riggleman (R-VA), and S. 934, introduced also by Sen. Lee, would prohibit any such mandatory programs and require producer participation to be voluntary. By making the programs voluntary, farmers and ranchers would be able to opt-out of paying fees to support unnecessary and wasteful programs.
Senator Lee said that his reform bills “will not be convenient to the giants in the agriculture industry – at least not the ones using checkoff dollars to rig the system in their favor. But they will help farmers – and particularly the little guys – to see exactly where the fees they pay are going and ensure that their hard-earned money is not being used against them.”
Since President Trump started the trade war with China, domestic farmers have been its prime victim. Production and prices of agricultural goods have fallen, and farmers are struggling immensely. The least Congress can do is stop forcing them to pay mandatory fees that support cronyistic and wasteful programs.