Capital Press: Groups press USDA on dairy checkoff oversight

Mandatory annual reports accounting for money received and spent in connection with the federal dairy checkoff have not been filed with Congress.

by Carol Ryan Dumas | October 2, 2017

Nearly $427 million was collected for the dairy checkoff program in 2016. Dairy farmers are assessed 15 cents per hundredweight of milk they produce and importers are assessed 7.5 cents per hundredweight of milk (or the equivalent) they import.

The Organization for Competitive Markets and the National Dairy Producers Organization are calling on USDA to immediately prepare and publish mandated reports to Congress on the dairy checkoff program — after a five-year lapse under former Secretary Tom Vilsack.

USDA’s failure to produce and submit the annual reports came to light through a blog by an economics professor at Tufts University Friedman School of Nutrition Science and Policy.

That professor, Parke Wilde, told Capital Press he reads the reports for interest and uses them as source materials in teaching his students about the effectiveness of different strategies in food advertising.

But the absence of the reports struck a broader chord with groups concerned with a lack of accountability and transparency in how checkoff dollars are spent.

Dairy checkoff assessments collected in 2016 totaled $426.9 million. Assessments for all 22 research and promotion commodity programs totaled $885.5 million, according to a spokesman for USDA’s Agricultural Marketing Service, which administers the checkoff programs.

USDA’s recent response to Wilde’s freedom of information request was that “the annual (dairy checkoff) reports to Congress for fiscal years 2013 to 2017 have not yet been published so AMS currently has no records responsive to your request.”

Under federal law, the secretary of agriculture is responsible for submitting annual reports to Congress accounting for dairy checkoff activities and spending — including an independent analysis of the effectiveness of the program.

That requirement only exists for the dairy checkoff program and not the other commodity checkoff programs, an AMS spokesman said.

Vilsack, who now serves as the president and CEO of the U.S. Dairy Export Council, was responsible for the missing reports.

OCM is asking USDA Secretary Sonny Perdue to correct the previous administration’s lack of oversight, make sure the reports get done and assure going forward they get done in a timely manner, said Angela Huffman, OCM director of communications.

National Dairy Producers Organization is also calling on Perdue to fulfill his statutory obligation immediately “to correct Vilsack’s failings.”

Those reports describe the activities of an accounting for the receipt and disbursement of all dairy checkoff funds, said Bob Krucker, an Idaho dairy farmer and NDPO board member. Vilsack didn’t do that, so “there’s been absolutely no oversight on the spending of money,” he said.

Many dairy farmers question whether the money taken from them, “and it’s a lot of money,” is being spent properly under the checkoff rules and regulations. And they don’t know because those reports haven’t been submitted, he said.

OCM contends the checkoff issue is broader than the dairy reports and includes alleged improper spending and illegal activities with the beef, pork and egg checkoffs.

The missing reports follow a history of documented abuses of checkoff dollars in commodity programs and cover-up of those abuses by USDA, OCM stated.

OCM is asking Perdue to “start fresh and not let these issues continue to fester under his watch,” Huffman said.

Krucker said checkoff dollars are large sums of money coming from farmers, and there’s no supervision if they’re being spent for the benefit of the farmers.

“All this money is not spent according to what it’s supposed to be used for. It’s being used for the benefit of processors and retailers but not for the actual benefit of the farmers from where it came … that’s the rub,” he said.

Checkoff promotions absolutely increase consumption and sell more product — providing more profits for processors and retailers — but it doesn’t trickle down to the farmer, he said.

“Processors and retailers are making money off the backs of the farmers,” he said.

As for the dairy checkoff reports, a USDA-AMS spokesman told Capital Press the reports are “expected soon.”

A spokesman for Dairy Management Inc. — which manages dairy checkoff money with state and regional promotion groups — said DMI annually provides USDA with the necessary information to file the reports.

Former Secretary Vilsack has not replied to Capital Press’ requests for comment as to why the reports weren’t produced or submitted to Congress.

Capital Press has also not received a reply to requests for comment from National Milk Producers Federation as to how news of the missing reports is being receive by producers or to whether the organization was aware of the lapse in reporting.