Checkoff reform legislation has been proposed in the US Senate, and the bill has the endorsement of several current and former presidential candidates. If passed, the bill could reshape how checkoffs operate, and would be considered a “win” for small farmers.
OFF Act Proposed
Wyatt Bechtel of Pork Business reports that the Opportunities for Fairness in Farming (OFF) Act of 2019 was proposed on March 28 by Senators Mike Lee (R-UT) and Cory Booker (D-NJ). Booker is a presidential candidate in 2020. A similar bill was first introduced for the most recent farm bill in 2018, but was not included in the final version. The OFF Act would put into place tighter financial restrictions and increase transparency for the USDA’s agricultural checkoffs.
The OFF Act also has the support of another 2020 presidential candidate- US Senator Elizabeth Warren (D-MA). It’s also supported by 2016 presidential hopeful Rand Paul (R-KY). Warren and Paul are co-sponsors of the bill.
Lee highlights how the bill would provide more transparency.
“Checkoff programs force farmers to pay into a system that sometimes actively works against their interests,” Lee says. “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 Opportunities for Fairness in Farming Act is common sense reform that would help farmers see exactly where the fees they pay are going and ensure that their hard-earned money is not being used against them.”
Booker emphasizes the bipartisan nature of the bill.
“Federal checkoff programs need to start working again for the family farmers and ranchers who are required to pay into them,” Booker says. “This bipartisan legislation will bring much needed reforms by prohibiting conflicts of interest and anti-competitive practices, and requiring more transparency in these programs.”
Checkoffs Abuse of Funds
According to a press release available from Senator Lee, the group believes checkoff funds are being misused by contractors. They point a finger at the National Pork Producers Council, the American Soybean Association and the National Corn Growers Association, saying that they lobby against other segments of agriculture that might benefit from the legislation.
According to a recent article in the Fence Post, past reviews of checkoff programs have revealed that monies have been diverted by Ag business trade organizations for salaries and lobbying activities that work against family farmers. The original intent of checkoff programs was to tax farmers and urge them to pay into federal programs that promoted their commodities. But as it played out in the real world, large trade groups control those funds and divert tens of millions of dollars each year to their own organizations for advocacy and anti-competitive measures that hurt small farmers.
One of the first signs of problems came into view when the Pork Board developed their “Pork: The Other White Meat” campaign. Checkoff funds were used to develop and promote the slogan, and the NPPC claimed title to the trademark free of charge. After the trademark had used up its market value, the Pork Board bought back the slogan with $60 million checkoff dollars. These payments are now being doled out in $3 million installments and make up one third of the NPPC’s annual budget.
The OFF Act would amend the current checkoff policy and not allow these programs to contract with organizations that promote policy advocacy, conflicts of interest, or non-compete activities that harm other commodities.
What is the OFF Act?
Beef Magazine provided a summary of what the OFF Act will do:
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Clarify and fortify the prohibition of checkoff programs contracting with organizations that lobby on agricultural policy;
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Establish program standards that prohibit anticompetitive behavior and engaging in activities that may involve a conflict of interest;
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Require transparency through publication of checkoff program budgets and expenditures and means for audits of compliance.
Current checkoff programs are mandatory for producers, managed by the USDA, and funded by fees.
Jacqui Fatka says the bill will increase transparency of the individual boards’ actions because disclosures would be required on how funds are spent. It would also require an audit every 5 years.
Arguments In Support of Off Act
Will Harris, president of the American Grassfed Association appears to be in favor of the transparency the OFF Act could provide.
“I don’t want my hard-earned dollars funneled to a quasi-governmental org that works against my best interest and represents industrial agriculture’s continued movement toward the monopolization of farming. We’ve farmed the same land in Georgia since 1855, and I want to ensure that future generations are able to continue to do the same.”
Mike Eby, chairman of the National Dairy Producers Organization was also supportive.
“It’s crisis time in agriculture where every penny counts. If farmers are going to be forced to fund checkoff programs’ ‘government speech,’ the very least farmers should expect is legitimate oversight and a system of checks and balances for all commodity checkoffs, and the OFF Act does just that.”
The Organization for Competitive Markets (OCM) argues that USDA has not been doing its due diligence when it comes to the oversight of checkoff boards and lobbying organizations. OCM founding member Fred Stokes says the OFF Act will help to save family farms.
“The over $850 million these programs take from farmers each year have become the cash cow for orgs 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. It is imperative this legislation be passed and signed into law.”
The OFF Act has not yet been endorsed by the Humane Society of the United States, but the group did endorse a similar bill that was proposed in 2016. Animal Wellness Action is one of the organizations currently backing the bill.
“USDA’s checkoff programs must be held accountable, and family farmers have a right to know where their hard-earned dollars are going,” says Marty Irby, executive director at Animal Wellness Action. “We applaud Senators Booker and Lee for introducing the OFF Act to curb the use funds to lobby for policies harmful to family farmers, and animal protection.”
Arguments Against OFF Act
There are some Ag industry organizations that don’t support the OFF Act. They say the checkoff programs are already under the supervision of the USDA. National Milk Producers Federation president and CEO Jim Mulhern is one.
“Checkoff programs provide valuable services for U.S. farmers, allowing them to pool resources for research and promotion that has helped make the U.S. the world’s biggest farm exporter and its leading agricultural producer. USDA is already required to provide oversight of checkoff programs to ensure fiscal responsibility, and fair treatment of participating stakeholders,” Mulhern says.
“Finally, current law already stipulates that checkoff dollars cannot legally be used for lobbying or influencing government policy or action of any kind. The legislation is a solution in search of a problem.”
After a similar version of the OFF Act didn’t make it into the farm bill, the National Cattlemen’s Beef Association (NCBA) was obviously pleased, and offered words of thanks to Senators who opposed the amendment. At that time, NCBA’s past president Kevin Kester said,
“The rejection of this amendment is a win for America’s cattle producers, who voluntarily created and continue to overwhelmingly support the beef checkoff system. Legislation like the Lee-Booker amendment is largely pushed by militant vegans and extreme political orgs that essentially want to end animal agriculture.”
The NCBA has also come out against Senator Elizabeth Warren this week.
“If Senator Warren’s goal is to help cattle farmers and ranchers, her policy proposals seriously miss the mark. The ideas she outlines are nothing more than recycled policies promoted by some of the leading opponents of animal agriculture. It is regrettable that Senator Warren would follow in the footsteps of groups like the Humane Society of the United States, who have launched unfounded attacks against the Beef Checkoff for years. Crippling the Beef Checkoff and resurrecting failed policies like mandatory country-of-origin labeling may be a dream for radical activists, but it would be a nightmare for cattle producers,” says Colin Woodall, NCBA senior vice president of government affairs.
Making Checkoff Program Voluntary
Senators Lee and Paul also proposed a bill this week called the Voluntary Check-Off Program Participation Act, which would make participation in checkoff programs optional.
“If farmers and ranchers want to get together and pool their resources to better promote their products, then that is the free market at its best,” Lee says. “But as soon as the power of the federal government is used to force people into a program they do not want to participate in, then that is crony capitalism at its worst.”
Just looking at recent history, the OFF Act may have an uphill battle to passage. The NCBA, the National Pork Producers Council, the American Soybean Association and the National Corn Growers Association all do important advocacy, and are critical components of successful agriculture in the US. These groups are eager to paint the OFF Act as radical and anti-agriculture.
But one has to wonder- when did transparency and accountability become a radical thing?
