Checkoff program critics eye farm bill to win new restrictions
By Noah Wicks
Sen. Cory Booker, D-N.J., (left) and Sen. Mike Lee, R-Utah, (right) confer on the sidelines of a 2018 Senate Judiciary Committee hearing. (AP Photo/J. Scott Applewhite)
Critics of commodity checkoffs are making a fresh run at imposing new restrictions on the programs, including a prohibition on contracting research and promotion work out to organizations that lobby Congress or federal agencies.
The Opportunities for Fairness in Farming (OFF) Act, which was debated during consideration of the 2018 farm bill and reintroduced since then, is sponsored by an unlikely assortment of lawmakers from both ends of the political spectrum. Sens. Mike Lee, R-Utah, and Cory Booker, D-N.J., are leading the push in the Senate, while Reps. Nancy Mace, R-S.C., and Dina Titus, D-Nev., have proposed the bill in the House.
The OFF Act would also prohibit board members or employees of checkoff programs from engaging in "any act that may involve a conflict of interest”, require checkoffs to publish their budgets, require contracts to describe the goods and services provided, and require periodic audits by the General Accountability Office and the USDA’s inspector general.
“It is critical that we have transparency and openness for American families, farmers, and taxpayers on Commodity Checkoff funds,” Mace told Agri-Pulse in a statement. “Like any federal program, our job in Congress is to ensure the money is spent prudently.”
The bill was proposed as an amendment to the Senate version of the 2018 farm bill, but received votes from only 38 members, whose ranks included Sens. Chuck Grassley, R-Iowa, and Jon Tester, D-Mont. Michigan Democrat Debbie Stabenow, the current chair of the Senate Agriculture Committee, urged her colleagues to oppose the amendment, according to a transcript of the proceedings.
Checkoffs are programs operated under the supervision of the USDA that are responsible for marketing the commodities they represent, as well as conducting research into their uses. Twenty-two of these programs currently exist, representing a diverse mix of products ranging from eggs to Christmas trees, that are all funded through mandatory fees paid by producers.
Organizations that contract with checkoff programs can’t use the funds they receive to “influence legislation or government policy”, though they are allowed to use non-checkoff dollars to lobby, according to guidelines published by the USDA. Checkoff board members acting in their official capacity are also prohibited from lobbying, though they are allowed to do so as individuals, the guidelines say.
Checkoff boards are also required to submit regular accounting reports to the USDA’s Agricultural Marketing Service and are subjected to independent audits, which are reviewed by the Agricultural Marketing Service, the guidelines say.
Checkoff programs can be established or dismantled through referendums, which are typically held every 7 years or so, though they can also be requested by 10% or more of assessment payers, according to AMS. The secretary of agriculture also can call a referendum at any time.
Individual checkoff programs have long been tangled in politics — with proponents arguing that the research and marketing efforts they fund are important to keeping farmers competitive, while opponents have expressed distrust over whether the money from the mandatory fees producers pay is properly spent. But this year in particular, groups on both sides — whether they represent agricultural, environmental or animal rights interests — have been engaged in vigorous debate over the OFF Act, despite it not gaining much traction in Congress in previous years.
An unlikely alliance that includes cattle producer group R-Calf USA, the National Farmers Union, environmental groups like the Environmental Working Group and a number of different animal rights organizations, including the American Society for the Prevention of Cruelty to Animals, Mercy for Animals and Attorneys for Animals, sent a letter in late March to the chairs and ranking members of the Senate and House Agriculture Committees urging them to enact “meaningful reforms” to checkoff programs.
The coalition of around 131 groups, which also included the Institute for Agriculture and Trade Policy, the National Family Farm Coalition, Farm Action Fund and the National Dairy Producers Organization, argued that the programs have “well-documented histories of waste, conflicts of interest, misuse of funding, anti-competitive behavior, and other related issues.”
“For these reasons, farmers and ranchers across the country have grown disillusioned with the effectiveness of many of these checkoff programs as they operate today,” the groups said in the March 29 letter.
The letter’s signers also included some local cattle producer groups such as the Kansas Cattlemen’s Association, the Iowa Stock Growers Association, the South Dakota Stockgrowers Association and the Southern Colorado Livestock Association.
One important figure in the effort could be Marty Irby, who served on Mace’s campaign steering committee and has been chief operating officer for FreedomWorks, a conservative organization, as well as a lobbyist for the Humane Society Legislative Fund. He was recently hired by Farm Action Fund to lobby for including the OFF Act in the upcoming farm bill. Irby also serves on the board of the Organization of Competitive Markets.
Opponents of the OFF Act followed with their own letter to the committee leaders. Eighteen trade groups within industries served by checkoff programs argued the bill would “set producers back decades in the work which has been done to promote our commodities and improve the businesses and livelihoods of our members. They also said that the bill “would not create any new checks and balances to ensure compliance and fairness,” which they said are “already subjected to rigorous compliance protocols, both internally and by USDA.”
Ariel Wiegard, American Soybean Association
The American Farm Bureau Federation, the American Honey Producers Association, the American Mushroom Institute, the American Sheep Industry Association, the American Soybean Association, the International Fresh Produce Association, the National Cattlemen’s Beef Association, the National Christmas Tree Association, the National Cotton Council, the National Milk Producers Federation, the National Pecan Federation, the National Pork Producers Council, the National Potato Council, the National Sorghum Producers, the National Watermelon Association, the North American Blueberry Council, United Egg Producers and the U.S. Peanut Federation all signed onto the letter opposing the legislation.
Ariel Wiegard, the director of government affairs for the American Soybean Association, told Agri-Pulse that every grant application for research that goes to the United Soybean Board must be approved by a panel of farmers, who she says must go through “regular” and “rigorous” compliance training.
She also said there are “strict walls” within ASA that provide separation between the organization’s use of checkoff funds and its lobbying efforts. For example, when the United Soybean Board sponsored a tent on the National Mall last year to promote soybeans, she and other ASA policy staffers had to stay outside the tent due to checkoff funding requirements.
“There are very strict walls around what the money can be used for and who uses it, as well as very strict oversight to make sure that none of the outputs from that funding do anything that would be counter to the intent of the checkoff,” Wiegard said.
Wiegard called the OFF Act a “hammer searching for a nail.”
“A lot of the things that the bill is purporting to do — maintaining that separation between research and promotion and advocacy, ensuring that there is sufficient government oversight of checkoff funds, all of those things are already being done by the checkoff and the USDA,” she said.
Nebraska Farmers Union President John Hansen, on the other hand, told Agri-Pulse the bill would “reestablish where the clear line is” between the checkoff’s goals of research and promotion and lobbying efforts made by those that they contract with. He said producers whose beliefs do not align with the commodity organizations that contract with checkoff boards often feel uncomfortable about where their money is going.
“If you’re not in support of the public policy positions of the organizations that are receiving checkoff money, that really rubs the hair in the wrong direction,” Hansen said.
Wayne Watkinson, a lawyer who represents many checkoffs, said he believes the bill will increase program costs and create new avenues for programs to be sued.
He said boards not only use their funds to contract out research and promotions work, but also must pay for independent audits. which cost around $75,000, and reimburse AMS for its oversight duties. The bill’s requirement for audits by GAO and the USDA inspector general could add more costs, he said.
Watkinson said it may be difficult for checkoffs to find advertising agencies to contract with, since the lobbying provision of the bill would limit the number of contractors they can use. Advertising agencies also may be reluctant to sign contracts with checkoffs for fear of their rates being revealed, he said. Watkinson said it would be too costly for checkoffs to do that all that work with their own personnel.
Watkinson also said the bill, if it became law, would generate a number of legal challenges to test its provisions.
“This is insane,” Watkinson said of the proposal. “This has nothing to do with transparency. USDA reviews every contract, USDA goes through the expenditures of the board to match it up against the budget. This is nothing more than trying to create opportunities for litigation.”
But Joe Maxwell, president of the Farm Action Fund, told Agri-Pulse that the audit and budget information that checkoffs post online are often only summaries, rather than the full audit. He said Farm Action and other organizations have attempted to obtain full audit documents in the past through the Freedom of Information Act, but were denied because they were considered “proprietary information.”
Maxwell also said the budget and audit information published by checkoffs can be vague. He said some programs provide only broad descriptions of how funding is used, using terms such as “promotions” or “services."
“The goal is to peel back, to provide information of how money is being expended and who is receiving the funds,” Maxwell said.
Maxwell, in a recent letter to the House Agriculture Committee, also pointed to a 2017 GAO report that found that AMS “does not consistently review subcontracts—a legal agreement between a contractor and third party—or ensure that certain documents are shared with stakeholders on program websites.”
AMS has since amended checkoff board guidelines and procedures to ensure "key documents" are displayed on checkoff websites and established criteria in its management review procedures to include a review of checkoff program subcontracts, according to the GAO’s website.
The beef checkoff, in particular, has been a target of several groups. The National Cattlemen’s Beef Association, which often contracts with the beef checkoff, and R-Calf have clashed repeatedly in the past over the checkoff program, with R-Calf even attempting to force a producer referendum to terminate it. The group was unsuccessful in getting enough signatures.
Leaders from both organizations have spent the last couple of months writing dueling op-eds over the OFF Act for the Salt Lake Tribune, the Reno Gazette Journal and Drovers Magazine. NCBA President Todd Wilkinson also mentioned the bill at a recent House Agriculture Committee farm bill hearing, saying it would “substantially undermine producers’ ability to market their products and stymie critical research, including in the field of human nutrition.”
NCBA CEO Colin Woodall told Agri-Pulse that his organization has a “dedicated compliance director” whose role is to make sure that checkoff dollars are spent appropriately and said that the beef checkoff is a “producer-led” program. He said the reason NCBA has become so active on this issue this year is to clear up what he calls “disinformation” about how the checkoff works.
“These individuals, these members of Congress, do not know what they’re talking about,” NCBA CEO Colin Woodall told Agri-Pulse of the OFF Act’s proponents. “And if they were to go out and talk to rank and file cattle producers, they would find a different story.”
Bill Bullard, the CEO of R-Calf, told Agri-Pulse he believes the beef checkoff has “run amok” and will be improved by the bill.
“We have been trying to impart accountability and transparency into the program and have continued to meet with resistance for years,” Bullard said. “The OFF Act is the remedy for that.”
The bill is intended to be included in the upcoming farm bill, though it may have to be offered as a floor amendment again if it can’t get approval in the House or Senate Ag Committee. Booker is a Senate Ag member.
House Agriculture Committee Chairman Glenn "GT" Thompson called the OFF Act a “bad piece of legislation.” Thompson said he may try to include language in the farm bill “just affirming our checkoff programs that work really well.”
Stabenow, who opposed the Booker-Lee amendment in 2018, didn’t take a position when asked about the proposal Tuesday. She told Agri-Pulse she still needed to review it.
Meanwhile, other lawmakers have their own plans to push back against the OFF Act.
Rep. Barry Moore, R-Ala., plans to sponsor a resolution “expressing the sense of the House of Representatives that research and promotion boards support efforts to develop new markets and strengthen existing markets for specific commodities while conducting important research and promotional activities via pooled resources and stakeholder investments,” according to a copy of the resolution obtained by Agri-Pulse.
The resolution is intended to put the House on record in support of checkoffs, Watkinson said.
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