A bill intended to reform the operations of agricultural checkoff programs was reintroduced in the U.S. Senate on March 28. The bipartisan Opportunities for Fairness in Farming (OFF) Act of 2019 was again brought forth by Senators Mike Lee (R-UT) and Cory Booker (D-NJ). Cosponsors include presidential candidate hopeful Elizabeth Warren (D-MA) and Rand Paul (R-KY).
Senators Lee and Booker said the legislation would “bring much needed transparency and accountability to the federal government’s commodity checkoff programs,” calling it a direct response to the “egg board scandal” and “past checkoff program misconduct.”
Specifically, the OFF Act would prohibit checkoff programs from contracting with lobby organizations; create standards prohibiting anticompetitive behavior; and require more transparency through publication of budgets, expenditures, and compliance audits.
“Checkoff programs force farmers to pay into a system that sometimes actively works against their interests,” Senator Lee said. “On top of that, the boards for these programs have come under fire for a lack of transparency and for misuse of their funds.”
The Organization for Competitive Markets (OCM) praised the reintroduction of the OFF Act citing a 2017 Government Accountability Office report that found that the USDA should do more to audit and monitor the use of checkoff funds across all commodities.
“The evidence is clear: commodity checkoff programs abuse the very farmers and ranchers who are mandated to pay into them,” OCM founding member Fred Stokes said. “The over $850 million these programs take from farmers each year have become the cash cow for organizations that work against fair competition and market transparency. So long as checkoff funds remain hidden from accountability and in the hands of trade and lobbying groups, independent family agriculture is in peril of being wiped from the face of the countryside.”
In a press release stating the need for checkoff reform, OCM also cited a Drovers Journal poll in which over half of the respondents (54 percent at the time the magazine closed the online poll) said the Beef Checkoff was not “helping to stimulate beef demand and support cattle business.”
Beef industry organizations weighed in on the OFF Act, either opposing it entirely or hoping to see more reform.
United States Cattlemen’s Association (USCA), an organization that has repeatedly voiced support for value of the Beef Checkoff program but notes needed reform, said of the 22 congressionally authorized commodity checkoffs the Beef Checkoff is most consistently under threat. Of those threats to the beef program, USCA said many are staged by outside parties including the Humane Society of the United States (HSUS). The group said HSUS supports the reintroduced version of the OFF Act.
Still, USCA was “encouraged by the legislation’s attempt to curb abuses of checkoff dollars, but the OFF Act does not specifically address the necessary enhancements and changes within the Beef Checkoff Program that must be implemented for the program to remain effective and operate efficiently for all U.S. cattle producers.” The group also said not all 22 checkoff programs, which are listed in the bill text, share the issues that “plague” the Beef Checkoff Program.
USCA said successful reform, specifically to the Beef Checkoff program, would include three changes. First, “the Federation must be separated from a policy organization.”
Currently, the Federation of State Beef Councils, made up of 44 Qualified State Beef Councils, is a division of National Cattlemen’s Beef Association (NCBA). This merger, approved by the USDA, is stated to “provide operational efficiencies, such as sharing offices and other business resources.” The Federation adopted a resolution that states it “should operate in a more independent structure while maintaining the synergies and efficiencies of the current relationship with the NCBA and strongly opposes any effort to sever the relationship.”
But USCA believes “the Federation should be a standalone group. Any funds allocated to the national effort should go before the beef operating committee (as it operates as a joint committee).”
Among the other two changes USCA would like to see are “improved efficiencies in enabling change” and “direct contracts.” USCA said “any changes to the Checkoff must be done via feedback from the entire cattle industry.” They also suggested that the Cattlemen’s Beef Board be granted the ability to contract directly with individual vendors and companies rather than “being required to contract through industry group organizations for services and programs.”
R-CALF USA, another cattle organization that has voiced concern about the current Beef Checkoff program — and even filed suit on state beef councils — said they support the effort to make needed changes to checkoff program, “but the OFF Act falls short.” R-CALF USA CEO Bill Bullard offered up their group’s suggested changes to the current checkoff system and said the group will withhold support for the OFF Act until the reforms are included.
“There are two fundamental problems with all the current checkoffs that are not addressed by the Act,” Bullard explained.
First, he said, since the majority of the mandatory checkoff taxes are paid by U.S. farmers and ranchers producing exclusively in the U.S., a “significant portion” of the funds should be used to promote U.S. produced products specifically.
“Second, as our ongoing beef checkoff litigation has so far disclosed, checkoff programs violate the Constitution when they compel farmers or ranchers to subsidize the private messages of private corporations that receive checkoff taxes without first obtaining the farmers or ranchers consent,” Bullard said. The group’s ongoing litigation now requires that Montana producers sign a consent form in order for half of their checkoff dollar to be returned to the state beef council.
Bullard said R-CALF USA would rather see a voluntary checkoff system and noted that Senator Warren “is also floating this approach.” He said a voluntary program “would better fit our beliefs that we should allow independent farmers and ranchers to remain independent by allowing them to make their own decisions as to whether a checkoff program deserves financial support.”
NCBA does not support the OFF Act that was recently reintroduced and strongly opposed it when it was a suggested amendment in the 2018 Farm Bill process. Booker and Lee supported the amendment in the Senate and Representatives Dave Brat (R-VA) and Earl Blumenauer (D-OR) sponsored the amendment in the House, but none were successful in incorporating it into the final version of the 2018 Farm Bill.
At the time, NCBA President Kevin Kester said, “it is a sad day when Congress attempts to wrest control of an industry self-help program away from those who manage and pay for it. But by removing the ability of the Beef Checkoff to contract with any organization that engages in agricultural advocacy, the Brat-Blumenauer amendment would do precisely that.”
Kester said the representatives were ignoring the Beef Checkoff’s “substantial record of success.” He called the amendment a “classic case of a government solution in search of a problem.”
Kester cited existing law that requires USDA oversight of checkoff programs; “strict prohibition on using any checkoff dollars to fund lobbying activities;” annual audits; and reviews of internal controls every three years.
“Producers expect attacks on checkoff programs from opponents of animal agriculture. Groups like HSUS have tried to dismantle checkoff programs for years. They hate that producers have found an effective way to pool their resources and grow demand for their products. It is regrettable that some members of Congress have chosen to follow in their footsteps,” Kester said of the rejected amendment.
NCBA is currently the largest contractor of Beef Checkoff funds, receiving just under 70 percent of the 2019 appropriations, or $27.4 million. NCBA submitted five proposals for projects that include promotion, producer communication, and research.
Kester said nationally the Beef Checkoff program is supported by three out of every four producers. USCA said with an estimated 70 percent approval rating, the Beef Checkoff has a return on investment of $11.2 for every one dollar collected. After making changes similar to what USCA suggests the Beef Checkoff undergo, the pork industry recently increased their approval rating to 91 percent and their return on investment is $25 for every one dollar.
“These programs provide much needed support to our nation’s agricultural producer and should be rightfully managed,” USCA said. The group strongly urged their suggested amendments just to the Beef Checkoff “before Congress is forced to consider sweeping changes to all of our nation’s commodity checkoffs.”