Organic checkoff proposal: Why farmers oppose the Organic Trade Association’s marketing fund plan.

Is a National Fund to Promote Organic Produce a Good Idea? Organic Farmers Don’t Think So.

Is a National Fund to Promote Organic Produce a Good Idea? Organic Farmers Don’t Think So.

What to eat. What not to eat.
May 14 2015 10:46 AM

Got Organic?

Is a national fund to promote organic produce a good idea? Organic farmers don’t think so.

A farmer's market located in the parking lot at Al Lang Stadium, St. Petersburg, March 7, 2015.
A farmers market located in St. Petersburg, Florida, on March 7, 2015.

Photo courtesy of City of St. Pete/Flickr

“Got Milk?” “Pork: The Other White Meat.” “The Incredible Edible Egg.” “Beef: It’s What’s for Dinner.”

For years, these familiar slogans have highlighted the importance of American kitchen staples. What better represents the American way of eating than a glass of milk with your cookies or a hamburger on the grill? On billboards and television, these ubiquitous marketing campaigns have long shaped public perception of which foods constitute a wholesome diet. But consumers are often unaware of who, exactly, writes, produces, and pays for these ads.

Such marketing campaigns are funded by what is known in the food business as “checkoff” programs. These are in essence taxes that farmers pay to a national fund, the revenue from which is used to promote the consumption of commodities like pork, beef, eggs, and milk. The current beef checkoff, for instance, requires ranchers to pay $1 per head of cattle into the national fund. Checkoff programs’ activities can take the form of generic advertising campaigns, or they can look more like political lobbying.

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Soon, this tax may extend to the organic industry. The Organic Trade Association, the largest trade group for organic agriculture, petitioned the U.S. Department of Agriculture on Tuesday to begin the process of establishing an organic checkoff. While the OTA believes that a checkoff program could help grow organic’s share of the grocery market, many producers and advocates are concerned that the tax will further entrench the interests and control of large-scale organic producers and retailers and will make it harder for smaller farmers and organic producers to compete.

As organic products have moved from niche to mainstream, the politics surrounding organic farming have also changed. Some farmers believe the organic label doesn’t go far enough to ensure that organic producers actually uphold environmentally sustainable growing practices. These concerns have intensified as larger-scale, corporate growers have begun to dominate the organic industry, outpacing small, independent growers in market power. Companies like General Mills, Dean Foods, Kellogg, and Kraft have become leading voices in the organic industry. Now, organic farmers are facing questions that have long caused rifts in the wider agricultural community—among them, whether to implement a checkoff tax program.

The first checkoff program, for cotton, was established in 1966, and in the following decades several more emerged. The process of establishing such assessments was formalized in the Commodity Promotion, Research, and Information Act of 1996, also called the Generic Act. This law allowed for “generic promotion, research, and information activities for agricultural commodities, paid [for] by the producers and others in the industry who reap the benefits of such activities.” The act also established guidelines for the boards that would oversee the use and allocation of checkoff revenue.

There have long been concerns in many farming sectors about how checkoff tax funds are spent and about who decides how to spend them. The beef tax in particular has raised the ire of many independent cattle producers who assert that the National Cattlemen’s Beef Association, the overseer of checkoff funds, uses those funds to promote the interests of large-scale producers. Among other efforts, the NCBA has used checkoff money to lobby against an antitrust review of big meatpackers, to train farmers to use social media to attack sustainable food advocates, and to scold USDA staffers for encouraging their co-workers to participate in Meatless Monday. But ranchers’ attempts to overturn the beef checkoff have failed. In a 2004 challenge to the constitutionality of the beef assessment, the Supreme Court ruled that checkoff campaigns amount to “government speech” and that farmers must pay the checkoff tax regardless of their opposition to how checkoff funds are allocated.

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An organic checkoff became possible with the passage of the 2014 farm bill, which allowed for the creation of a research and promotion program that extended beyond a specific commodity. Under that bill, the organic checkoff tax would apply to all certified organic producers and retailers. However, OTA’s checkoff tax proposal would require producers and “handlers” (retailers and distributors) with gross revenue greater than $250,000 to pay one-tenth of 1 percent of net organic sales into the checkoff fund. The OTA estimates that the program would bring in about $30 million to $40 million in revenue annually for organic promotion, research, and education.

Laura Batcha, the CEO and executive director of OTA, emphasizes that a key aspect of the checkoff program is “[dispelling] confusion amongst consumers about organic versus unregulated claims like ‘natural’ or ‘non-GMO.’ ” OTA believes that educational promotions funded by the checkoff tax would help consumers understand what the organic designation means and what kinds of products are sold under the organic label. Regardless of size, farmers “would benefit from an educated public that understands the value of an organic product,” Batcha says.

The question of who will pay into, and be represented by, the organic checkoff fund has become especially contentious. OTA’s current proposed cutoff of $250,000 excludes many producers. In 2010, around 90 percent of all farms—including conventional and organic—grossed less than $250,000 annually. Assessment exemptions would save farmers money but would also exclude them from the process of deciding whether the checkoff program should be implemented and how the tax revenue should be allocated. “Do you put everyone in the pool so they can all vote?” Patty Lovera, assistant director of Food & Water Watch, an environmental nonprofit, asks. “Or do you carve more people out, who don’t have to pay in, but don’t get to vote?” According to the OTA proposal, growers with less than $250,000 in revenue could choose to pay into the checkoff fund and thereby have a say in how funds are allocated. But by virtue of its current income cutoff, the proposal “[allows] voting rights to the large farms,” Ed Maltby, the executive director of the Northeast Organic Dairy Producers Alliance and a retired dairy farmer, says. “So, it’ll be the large conglomerates that dominate discussion.”

Even if they opt into the fund, small-scale growers control a disproportionately small portion of the organic market, and that lack of market power could translate to less of a voice in the checkoff tax program. As with many agricultural sectors, the organic industry is run by a few corporate players at the top: In 2012, the top 10 percent of organic producers controlled about 75 percent of the market. And there’s also the question of whether this checkoff tax program would be more accountable than others that have historically caused friction in the farming community. Maltby worries that the organic checkoff would follow the same blueprint as existing checkoff taxes. “The beef checkoff really shows how there’s no transparency” in those programs, Maltby says. “[Checkoff] money goes to corporate interests in the end and supports corporate policy.”

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The OTA already has a negative reputation with some producers and advocates because of its connection to agribusiness. Notable members of OTA include Dean Foods, General Mills, Smuckers, and Whole Foods. These heavyweights would necessarily have a higher stake in the checkoff fund, given the progressive nature of the checkoff assessment. Similarly, these companies are already highly invested in OTA’s activities. Based on the trade group’s tiered membership dues structure, Whole Foods alone likely pays more than $50,000 annually for its OTA membership.

There’s also the question of whether an organic checkoff would actually help American organic farmers—even the big ones. Consumer demand for organic products has grown over the past few years, but domestic production of organic foods hasn’t matched that growth. The amount of farmland used for organic crops has hovered around 1 percent, while organic products now comprise about 4 percent of food consumed in the U.S. “How you’re meeting that demand for organics is a very important structural question,” Lovera says, and the checkoff “is a marketing approach to a structural problem.” We already import about half of our organic soybeans from abroad, primarily from China and India, and a checkoff marketing program could inadvertently end up spurring the sales of foreign products, not domestic ones.

Given all the potential downsides, it’s not surprising that many organic farmers would rather skip the checkoff. In addition to Food & Water Watch and the Northeast Organic Dairy Producers Alliance, several other farmer advocacy groups have come out against the checkoff, including the Cornucopia Institute, Missouri Rural Crisis Center, and Family Farm Defenders. Once the USDA reviews OTA’s petition, an official proposal will be available for public comment. Then a majority of “eligible voters,” defined as producers or handlers who would eventually be required to pay into the checkoff fund, would need to approve it.

While the heightened popularity of organic foods could be positive for small-scale organic growers, an organic checkoff tax would likely carry disproportionate benefit for industrial, corporate growers. Paying into a national tax fund is a far cry from the type of regional economic development that will best serve small farmers as they struggle to maintain a hold in an increasingly monopolized, corporate-controlled industry. Lovera puts it bluntly: “There’s bigger problems in organic,” she concludes. “And glossy photoshoots with celebrities won’t solve them.”