Organic Checkoff: What Is It, What Will It Do, And Is It Good for Carolina Farmers?

THE DEADLINE TO SUBMIT YOUR COMMENT WAS APRIL 19, 2017

Read CFSA’s Checkoff Comments:

Comments on rules about voting 

Comments on rules about the program

Background

What is checkoff?

Back in the 1930s, the federal government started passing laws that provide a government-regulated way for farmers of a particular crop or livestock to join together, pooling their funds to help pay for research and marketing of their product. In the modern era, these research and promotion programs are often referred to as “checkoff” because farmers vote (or check off a box) on whether to establish a program. Checkoff programs impose mandatory fees on producers and processors. The money collected is then used to fund programs that increase consumer demand and research that helps farmers of that product do their job more efficiently.

There are more than a few checkoff programs already out there than can help us understand how these programs do and don’t work. Examples include checkoff programs for beef, pork and blueberries. Some of you may remember marketing campaigns like, “Beef, It’s What’s For Dinner” and, “Got Milk?” Data show that there is economic benefit that stems from checkoff marketing; checkoff marketing campaigns return between $2 and $4 for each dollar spent on advertising. However, there is also evidence that marketing gains are not distributed evenly; commodities with checkoff programs experience rapid market consolidation.

Less well known are the results of the research that checkoff programs fund. From sequencing the soybean genome to identifying the gene that results in tender pork, checkoff funded research does help address problems of disease, pests, quality, and more. And organic farmers in the southeast know that there are not enough research dollars available to them to fund the research needs of the industry.

There is a darker side to checkoff programs. Several programs have been embroiled in legal battles about their use of the funds collected from farmers; particularly for assessing fees on all producers and then using the collected funds in ways harmful to the interests of some of those producers. Check out articles about the beef checkoff program (and here’s another one), and this article and another one about the pork checkoff’s legal troubles.

Organic Checkoff? How did that happen?

The 2014 Farm Bill included a change in the law that allowed the organic industry to submit a proposal to USDA for an organic research and promotion program for the first time. The push to change the law started late in the Farm Bill process and was incorporated into the Farm Bill without giving farmers the chance to weigh in, so the proposal for organic checkoff has been fraught from its beginning.

The need for both research and promotion of organic food is generally well accepted. On the research side, funding for organic research is hard to come by at the federal and state levels. Public research dollars for organic research is a fraction of the funding dedicated conventional crops, and there is little interest in the private business realm in developing open pollinated varieties when GMO varieties are patent protected and designed to make vast sums of money for agrichemical companies. On the marketing side, research demonstrates that consumers don’t have a good handle on what differentiates organic food from conventional, let alone from “natural” or “non-GMO.” Marketing could help consumers understand the differences and drive more consumers to buy USDA certified organic products.

Though there are good reasons to consider organic checkoff—the need for research dollars and a campaign to clear up consumer confusion—there are also good reasons to hesitate. We’ll get into the nuts and bolts of the proposal below. If you want to get way into the weeds, read USDA’s entire proposal here.

 

Current Situation

Currently, the proposal is pending at USDA and that there is still time to submit comments. The proposal is long and will have a huge impact of certified organic farmers across the Carolinas. CFSA has a blog post with in depth information about the proposal and how it will function here.

 

Take Action

We encourage you to submit your comments on the proposal by April 19, 2017. You can comment online by clicking here. A new page will open; click on the “Comment Now!” button at the top right of the webpage.

You may also submit your comments via fax or mail. Comments must be RECEIVED by April 19 (not postmarked), so make sure to send your comment with enough time to get there. Submit by fax to (202) 205-2800 or by mail to Promotion and Economics Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Room 0632-S, Stop 0244, Washington, DC 20250-0244.

You may wish to consider including some of the following information in your comment. CFSA has concerns with the checkoff proposal and we encourage you to press USDA to take these concerns into account as it considers whether to move ahead with an organic checkoff program.

Some talking points for you may want to use in your comment:

  • Certified organic farmers are currently exempt from participation in conventional checkoff programs. If implemented as written, that exemption would end, regardless of a farmers’ gross income. USDA has made clear that farmers with gross income under $250,000 may not opt into the organic checkoff in order to opt out of paying into the organic checkoff program. This means that, farmers grossing under $250,000 will have to pay into either the conventional commodity checkoff program OR the organic checkoff. This is unfair. Certified organic farmers have been opting out of conventional checkoff because these programs’ spending on marketing and research don’t tend to benefit organic farmers. Forcing farmers who grow or raise a product covered by a conventional checkoff program to pay into the organic checkoff even as other farms of similar size aren’t required to participate isn’t right, and could push small scale and beginning farmers out of crops and livestock covered by conventional checkoff programs, for example eggs, beef, dairy, watermelon, mushrooms, Christmas trees, and blueberries. Farms grossing under $250,000 should either have a choice to participate or not–whether these farms have a choice should not depend on what they raise or grow.
  • Roughly 75% of all USDA Certified Organic farms have gross income of under $250,000 per year, meaning that the vast majority of US organic farms will not be represented in this checkoff program. This will give an outsized voice to a small number of industrial scale farms, organic food importers and large scale organic processors. As a result, the research and promotion conducted with these funds is unlikely to benefit the majority of certified organic farms.
  • The amount of paperwork is overly burdensome. Exempt farmers will need to document annually that they are financially eligible for the exemption. Farmers who are either required or volunteer to participate in checkoff will need to calculate not only their gross income, but also their net—which will require keeping up with which expenses will reduce their assessment and the amount spent on those specific inputs. It gets even more complicated and onerous for farmers whose products are covered by a conventional checkoff program, requiring them to seek an exemption from the conventional checkoff program, or, for certain commodities, apply for a refund of automatically collected conventional checkoff fees.
  • Many organic farms in the southeast run split operations where some production is conventional and some organic. The added layer of paperwork that the checkoff program will impose in terms of keeping track of which expenses are for their organic vs. their conventional products, and determining their net income separately, adds a burden for those farms that are already keeping track of different production practices to the satisfaction of their certifier.
  • Many farmers have gross income that fluctuates from year to year. For farmers with gross income around the $250,000 participation threshold, there will be years when they have to pay in, and years when they may opt not to. It is not clear from the proposed rule whether these farmers can vote in future referenda. It appears that if these farms elect not to pay into the program in years when their income falls under the $250,000 threshold, they cannot vote in the referendum. This seems draconian, given that they may have paid in up to six of the seven years, while those who opted in could vote after paying in only four of the seven years.
  • Successful farms scale up over time. This could mean that a farm that had gross income under $250,000 takes steps that eventually push it over the threshold. The rule makes no provision for how growing farms might participate in future referenda. The rule seems to require that any farm grossing over $250,000 in any year voluntarily pay in for all other years in the period between referenda in order to earn the right to vote. This may discourage farms from scaling up since by scaling up they will be assessed without their input for as many as 13 years.
  • The Board makes decisions about how to spend assessments on research and promotion. North and South Carolina are represented by someone from the following list of states: Alabama, Arkansas, Delaware, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Missouri, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, and West Virginia. The research needs of southeastern states are specific and very much bound to our soils, our weather, and the pest and disease pressure that are unique to our region of the country. Based in the Carolinas, research into crops that thrive in New Jersey or Illinois isn’t likely to improve my experience farming. One of seven “regional” seats on the Board, this seat represents nearly ¼ of all states. Assuming there is interest in finding a fair way to distribute funding for research, one seat representing farmers in the South, the Mid-West, and the Mid-Atlantic, isn’t it.
  • At a minimum, this program will allocate $2.65 million to organic agricultural research. At most, it will allocate $10.6 million, assuming that all discretionary funds are used for agricultural research and that only agricultural research is funded. Organic farmers in the Southeast desperately need research to improve the quality of their products and develop varieties that are resistant to the pests and diseases that exist in our region.The possible range of funding for research, combined with the dilution of the southeastern farmer voice on the Board (since our Board representative will also represent farmers in the Mid-West and Mid-Atlantic) makes this proposal fairly unattractive to farmers in the Carolinas.
  •  The manner in which net income is calculated is at odds with the basic premise of organic agriculture. By allowing farmers to reduce their gross income by the cost of off-farm purchased feed and amendments when calculating how much they will be assessed, this checkoff proposal fails to take into account the value that many organic farmers place on creating their own soil amendments by composting on site, and on pasture-based livestock operations that reduce a farmer’s feed costs, or farmers who raise their own feed. In addition, organic farmers have to engage in integrated pest management, which involves practices that reduce the need for herbicides or pesticides. This proposal doesn’t allow farmers to reduce their gross income based on the time they spend making compost or to take advantage of years of building soil fertility. The calculation of net income should provide a deduction from gross income to organic farmers who have worked to build soil fertility and reduce the amount they spend on off-farm inputs. Many farmers have invested for decades to reach a point where their input purchases are low.

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