Crops Insights Livestock

The story behind agriculture’s commodity checkoff programs

jaclyn krymowski

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Checkoff program funding has made a big impact on farming and American pop culture, but it is also often plagued with concerns

 

You may not know how they got there or the minds behind them, but chances are generic commodity-based advertisements have impacted your buying choices in some way or another. From the cultural icon that was the Got Milk? campaign through Pork. The Other White Meat and Cotton: The Fabric of Our Lives, these campaigns and the funds backing them are much more than clever corporate marketing.

What you see taking the forms of flashy, professional advertisement is in fact the back end of what’s known as checkoff programs. These programs are designed to promote and provide research funds for various commodities without backing any particular individual producer, company, or brand. According to the National Agricultural Law Center, the “checkoff” namesake of these programs traces back to any era where producers could voluntarily check a box to contribute to this kind of program. Ironically, these are now federally mandatory for producers to pay into, making checkoff dollars an entire sub-genre in the world of agri-politics.

Making the money

Funding these very extensive programs, as you might imagine, is no small feat. Combined, these checkoff programs amount to around the tune of several hundred million dollars — $900 million in 2018 if you want a specific stat. While the concept of checkoffs have been around for a while, as far back as the 1930s, much of what shapes the programs today goes back to the 1995 Farm Bill and the subsequent Commodity, Promotion, Research and Information Act of 1996, also known as the “Generic Act,” which allowed for the different commodity interest groups to create individual programs.

Regardless of the groups individual statutory authority, each program is actually overseen by the U.S. Department of Agriculture’s Agricultural Marketing Service (AMS). Currently AMS oversees 21 different research and promotion boards (like the United Soybean Board or the American Egg Board, for example). Out of those programs, 12 have their own federal statues, including soybeans, corn, beef, dairy, pork and cotton. The other nine operate directly operate solely under the “Generic Act,” these are more “offbeat” commodities like lamb, honey, peanuts, Christmas trees, and even paper. Some of the big 12 commodities contain both federal boards and state-level associations and organizations. If your state has its own beef council or dairy board, this is where they come from.

The money is collected when a commodity is produced and sold. For example, the beef checkoff is $1 from every head of cattle sold. The buyer typically handles sending the subsequent check to the checkoff after deducting it from the invoice, but both the seller and the buyer are technically responsible for seeing that the dollar gets collected and paid. According to Utah Beef, “No producer is exempt from the checkoff. Buyers who resell cattle no more than 10 days from the date of purchase may file a non-producer status form and avoid paying an additional dollar. Remember: A dollar or a document! All selling/purchase transactions must be reported. In each case, either $1-per-head or non-producer status form document must be collected by the brand inspector or auction to show the dollar has been collected and paid within the past 10 days.”

Other commodities follow a similar trend based on units (like hundredweight) sold.

Where does it go?

Now we get to one of our obvious issues — who decides where and how those millions upon millions of dollars are utilized? As you can imagine, this has caused quite a bit of friction with lots of complicated politics. Amazingly the issues that crop up are both extremely specific to each commodity but also strikingly similar.

While AMS is responsible for overseeing the checkoffs, the federal, regional, and state boards and councils are made up of members who are supposed to reflect the industry — mostly producers, stakeholders and importers. Part of the idea behind this is that individuals in the fields of these industries can have a voice on the issues that they need those dollars to help resolve.

According to the USDA, every $1 of checkoff funds spent on research and promotion campaigns can have a rate of return as high as $18. And this can be more or less proven to a certain extent through value-added products and brand building. For example, the flat iron steak was “invented” thanks to dollars from the National Cattlemen’s Beef Association. Likewise, the Cotton Board partnered with an insulation manufacturer to create sustainable denim insulation from recycled jeans. We probably don’t even need to comment on dairy’s huge impact when the Got Milk? commercials and advertising were broadcast. In fact, more than 20 years later, it is still dissected and explored as an example of impactful marketing.

The checkoff money that is used for industry-wide research often explores topics such as the nutritional value of products, as well as food safety and economic impacts.

On its face, checkoffs may not sound like such a bad idea. Generic promotion and research with the end goal of encouraging greater consumer engagement for products, unbiased to a particular brand or company certainly seems like it should benefit everyone. But this hasn’t always been the case and for many producers. Many laude the whole checkoff program has breeding more ill-feelings and bad politics than anything else.

Incidents of bad blood

Time and time again, concern has been raised that these federal programs are hurting the very farmers and agribusinesses they are supposed to be helping. The issues are very politically complex, and each of the commodities and the boards under them are extremely specialized yet facing strikingly similar issues at the same time. Nearly every one is littered with their own unique rabbit holes of lawsuits, public discourse and controversy. In fact, you can find entire lists of notable abuses related where legal action was taken or threatened in regard to misuse of these funds.

Some of the more vocal commodities that have been in the spotlight include the beef and dairy. High-profile examples include outcry about executives’ salaries while the contributing farmers in crisis didn’t feel those dollars were doing their job. A suit in the state of Montana argued against the USDA saying the checkoff that requires producers to pay the federal beef board and the Montana Beef Council was unconstitutional because it violated First Amendment rights, due to the latter being a private organization.

The whole concept of generic promotion isn’t without its issues either. For example, in 2016 a ruling allowed products labeled “organic” and “100 percent organic” to be exempt from paying into the checkoffs because the organic industry didn’t consider itself contributing to the conventional market the checkoffs are promoting. However, there has been a push to create an organic-specific checkoff, which isn’t exactly being met with gusto.

Solutions aren’t clear cut and the whole mess of dollars and opinions gets to be quite murky. Some independent groups have taken it upon themselves to “reform” the checkoff system as they see fit, breaking off from their state and federal board. In 2020, legislation was introduced to the House of Representatives to place greater restrictions and monitoring on the checkoff programs, backed largely by unimpressed groups and dissatisfied producers.

While they have caused a lot of division among politicians and farmers, checkoff funding has certainly made its mark on American culture and food business. While the concept may have initially been well-intentioned, it seems the controversy and contention will continue as long as we are the government has a say in commodity marketing and mandated payments. It may not be an ideal option from an industry standpoint, but unfortunately most farmers and companies simply do not have the means or the capabilities to do as much self-promotion of their products in the way they would like.

 

Jaclyn Krymowski is a graduate of The Ohio State University with a major in animal industries and minor in agriculture communications. She is an enthusiastic agvocate, professional freelance writer, and blogs at the-herdbook.com.

Any views or opinions expressed in this article are those of the author and do not reflect those of AGDAILY. Comments on this article reflect the sole opinions of their writers.
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