Bipartisan Effort Seeks Reform of Commodity Checkoff Programs

Over the past fifteen years, the agricultural industry has seen a rise in the establishment of “checkoff programs,” quasi-governmental organizations that have the authority to assess compulsory dues on producers of a given commodity and use the revenue for product promotion and research. Producers are unable by law to opt out, and can even be fined by the federal government for failure to pay the assessed dues. Consequently, checkoff programs are controversial, with concerns ranging from transparency to allegations of misuse of funds by program heads. Robust oversight is needed to address cronyism within these promotion boards.

Back in 2011, NTUF counted that the United States Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) oversaw 18 checkoff programs. AMS currently oversees 22 checkoff programs for a variety of commodities: beef, blueberries, Christmas trees, cotton, dairy, eggs, milk, Hass avocados, honey, lamb, mangos, mushrooms, paper and packaging, peanuts, pecan, popcorn, pork, potatoes, lumber, sorghum, soybeans, and watermelons. There is also a pending proposal to create a new checkoff program for natural grass sod.

When enough producers of a particular commodity request to establish a checkoff marketing and promotion program, membership dues become mandatory assessments under federal law, resembling a tax per unit sold. These funds are then allocated towards research and advertising campaigns. Examples of checkoff programs in action include the “Beef - it’s what’s for dinner” ads from the Cattlemen’s Beef Board  and "The Incredible Edible Egg" campaign by the American Egg Board.

Checkoffs have also initiated campaigns on social media platforms to influence younger audiences. For example, Politico reported on recent ads that “show women marathoners boasting about chocolate milk’s recovery drink status on TikTok and cattle ranchers joyously sharing their land with rock climbers on Instagram. A young woman, dancing to pop tunes, appears shocked to hear that pork has mood-boosting powers.”

There are also other checkoff programs outside of the USDA. The Concrete Masonry Products Research, Education, and Promotion Act of 2018 authorized the Department of Commerce to create the Concrete Masonry Checkoff Program, established in December 2022. The National Oilheat Research Alliance was authorized by the National Oilheat Research Alliance Act of 2000 and extended in the 2018 farm bill. This spends $6 million a year on research and promotion financed by a statutorily-mandated fee of $0.002 on every gallon of heating oil sold.

There is also a Propane Education and Research Council (PERC) checkoff authorized by Congress in 1996 and expanded in a 2014 law. It assesses fees on “each gallon of propane gas at the point it is odorized or imported into the United States.” Last year, the New York Times reported that PERC planned a $13 million campaign promoting the use of propane as states and the federal government push towards more electrification.

Proponents of checkoff programs point to the programs’ allegedly impressive return on investment, with USDA estimates indicating returns as high as $18 for every $1 spent. However, the absence of clear guidelines for expenditure and oversight has led to allegations of misuse of funds, including accusations of officials using checkoff money for personal vacations and illegal lobbying efforts. 

However, As NTUF wrote previously on checkoffs, “when there is a lack of transparency in a government-backed program, there is the opportunity for questionable conduct.” Similarly, the Organization for Competitive Markets notes that inadequate oversight by the USDA has fostered collusive relationships, raising concern that despite statutory prohibitions, checkoff funds are being used for lobbying. The absence of clear guidelines and oversight mechanisms can potentially lead to misuse of funds and conflicts of interest.

Recent news articles and commentaries have highlighted the challenges faced by small producers within checkoff regimes, shedding light on issues of transparency and fairness. In the Lansing State Journal, a Michigan dairy farmer notes that the dues he is forced to pay are essentially taxes, expressing concerns about transparency and oversight in the government-mandated dairy checkoff program. Similarly, the Iowa Capital Dispatch reports that the National Pork Board's funding of $17 million in land-grant university research over the last decade disproportionately benefits larger pork producers, leaving small family farm producers feeling marginalized.

Tensions between large and small producers is likely what led the baking industry to withdraw a request for a wheat checkoff. The Grain Foods Foundation has decided to withdraw its petition for establishing a checkoff program, effectively ending a decade-long effort. 

Checkoffs can also impact educational programs designed to teach kids and teenagers about agriculture and farming. Just as young entrepreneurs running lemonade stands can encounter unexpected tax obligations, Michigan State University’s College of Agriculture warns that “4-H members and other youth exhibitors who take market livestock projects to the fair are considered producers and must pay checkoff fees.” These fees not only strain already limited resources within the 4-H community but also exacerbates the financial challenges faced by aspiring young farmers and agriculturists.

In response to these concerns, bipartisan efforts have emerged to reform agricultural checkoff programs and instill greater transparency and accountability. Senators Cory Booker (D-NJ) and Mike Lee (R-UT) introduced the Opportunities for Fairness in Farming (OFF) Act of 2023 (S.557) to address anti-competitive behavior and promote transparency within checkoff programs. In a joint op-ed featured in The Hill, Booker and Lee stated:

[W]ell-intentioned as the checkoff program may have been at the beginning, its eventual corruption has transformed it into yet another mechanism of control over our food system by powerful corporations.

Representatives Nancy Mace (R-SC) and Dina Titus (D-NV) introduced a companion bill (H.R.1249) in the House. Rep. Titus commented, “I’m pushing this bipartisan legislation to increase federal oversight, prevent conflicts of interest, and stop ag lobbyists from squeezing small producers out of business.”

The challenges facing agricultural checkoff programs underscore the need for reform and greater oversight. By implementing measures to enhance transparency, accountability, and fairness, policymakers can restore trust in these programs and ensure that they serve the best interests of farmers, consumers, and the agricultural industry as a whole.