The Checkoff Challenge

Producers in several states recently received letters like this asking for a referendum on the pork checkoff.More than 65,000 pork producers around the country recently received a letter, postcard and petition calling for a vote on the national pork checkoff. By mid-May, 4,000 signatures were returned supporting the vote.This challenge to the national, mandatory pork checkoff was instigated by an

Producers in several states recently received letters like this asking for a referendum on the pork checkoff.

More than 65,000 pork producers around the country recently received a letter, postcard and petition calling for a vote on the national pork checkoff. By mid-May, 4,000 signatures were returned supporting the vote.

This challenge to the national, mandatory pork checkoff was instigated by an organization called the Campaign for Family Farms (CFF). CFF is headquartered in the Land Stewardship Project offices in a suburb of Minneapolis, MN.

CFF encompasses a group of rural organizations mostly from around the Midwest. The groups range from Farm Aid and the Missouri Rural Crisis Center to the Catholic Rural Life Office in Sioux City, IA. For a complete list, see Table 1 on page 28.

Organizers of the referendum campaign say the checkoff has not served the interests of independent farmers. They cite the continued decline in hog farmer numbers and low hog markets.

"The farmer's share of the pork dollar has diminished significantly," states Paul Sobocinski, a farmer from Wabasso, MN, who supports CFF and the Land Stewardship Project. He says the farmer's share of the pork dollar went from 46 cents in 1986 to 35 cents in 1997.

"If (pork) promotion programs are going on, who is benefitting here?" he asks. He produces 700 market hogs/year from a farrow-to-finish operation.

The mailing that calls for the referendum sparked a flurry of responses from pork producers and the National Pork Producers Council (NPPC). (See sidebar on page 28.)

21,000 Signatures Needed A national referendum on the mandatory pork checkoff must be held if 15% of the nation's hog producers sign a petition within one year, according to Mark Schultz, who is with the Minnesota campaign and the Land Stewardship Project.

USDA estimates 138,000 hog farmers exist in the U.S. That means the CFF must obtain about 21,000 signatures.

USDA considers a hog producer a person who has sold two or more swine since Jan. 1, 1997. Only one person may sign for each business entity that owns and sells hogs.

Schultz says the 4,000 signatures were obtained within three weeks of the start of the campaign, which was April 29. This means the group has obtained 20% of the needed signatures so far. Letters were sent to producers in many states including Illinois, Iowa, Indiana, Kentucky, Minnesota, Missouri and North Carolina.

CFF's next plan is to go door-to-door with petitions calling for a referendum on the checkoff.

$3-4 Million Cost If the campaign to obtain enough signatures succeeds, a referendum will be held. Producers will be asked if they do or do not support a national, mandatory pork checkoff. A simple majority determines the outcome.

Cost of a national referendum is not cheap. According to Mike Simpson, executive vice president of the National Pork Board, it could run up a tab near $3-4 million. He bases his prediction on referendum cost estimates from the beef industry. This cost includes both expenses from USDA for the referendum and from the industry for educating producers about the vote.

The current checkoff rate is $0.45/$100 hog value. It generates about $60 million a year for promotion, research and consumer information programs. USDA oversees the checkoff and strictly watches use of the funds. Some 20% goes to state producer organizations. The National Pork Board allocates the funds.

Checkoff funds may not be used for political activities such as lobbying.

Return To Past The pork checkoff program used to be voluntary. In fact, voluntary participation among the nation's pork producers never exceeded about 62%. Producers in the National Pork Producers Council (NPPC) were frustrated by participation levels. A common argument was - all producers benefited from the checkoff, yet not all paid their share of the cost.

So NPPC leaders went to Congress and lobbied for a national, mandatory checkoff. The Pork Promotion, Research and Consumer Information Act (commonly referred to as the Pork Act) became law in 1985. Upon initiation in 1986, the new checkoff levied $0.25/$100 market value on all hogs.

For the first two years, the Pork Act's legislative checkoff was considered a trial program. The checkoff was deducted from all hog sales. But producers could request refunds during that time.

In 1988, a national referendum was held to determine if producers wanted to keep the legislative checkoff. Some 78% of the producers voted in favor of the mandatory checkoff. Refunds were discontinued after the referendum.

In the past decade, pork producer delegates elected from 44 states have voted to increase the checkoff rate to its current level ($0.45/$100). The rate cannot be set higher than $0.50/$100 hog value. Any further rate increase must be approved by a majority of pork producers across the country.

The pork industry is not alone in a mandatory checkoff program. Dozens of agricultural commodities have similar checkoffs, including the beef, dairy, soybean, egg and potato industries.

Ironically, the beef industry may be facing a referendum soon, also. Petitions calling for a beef checkoff referendum are expected to circulate this summer.

The constitutionality of legislative, mandatory checkoff programs have been challenged in court. To date, the courts, including the U.S. Supreme Court, have ruled in favor of the mandatory checkoffs, stating they are indeed constitutional.

Table 1. Who's Who of Campaign for Family Farms

* Catholic Rural Life Office (Diocese of Sioux City, IA) * Catholic Rural Life Office (Archdiocese of Dubuque, IA) * Churches: Center for Land and People * Community Farm Alliance (Kentucky) * Dakota Rural Action (South Dakota) * Diocesan Coalition to Preserve Family Farms (Diocese of Sioux City, IA) * Family Farm Defenders * Farm Aid * Federation of Southern Cooperatives * Illinois Stewardship Alliance * Indiana Campaign for Family Farms * Iowa Chapter of the National Farmers Organization (NFO) * Iowa Citizens for Community Improvement * Land Loss Prevention Project * Land Stewardship Project (Minnesota) * Minnesota Project * Missouri Rural Crisis Center * National Catholic Rural Life Conference * National Family Farm Coalition * Wisconsin Rural Development Center

A call for a referendum on the pork checkoff has generated a number of comments from supportive pork producers as well as the National Pork Producers Council (NPPC). Following are some of these comments:

Small Producer Hit Hardest * Producer Randy Spronk, Edgerton, MN, writes: "I can't think of a more democratic way than the present system of funding these programs (genetic research, nutritional studies, Pork Quality Assurance and promotional efforts)," he states.

"Each and every producer participates - from the biggest to the smallest. Each and every producer of pork will benefit from these research, promotion and educational efforts.

"Minnesota is currently funding a three-year project on food safety. The recall of one shipment of pork will have damaging effects on you as a producer, even if it wasn't pork from your farm."

Spronk went on to say that the largest producers may well be the ones who want the checkoff eliminated. They could use the money for their own research, research the small producers would not be able to access.

"The elimination of the mandatory checkoff will hit the small, independent producer that Land Stewardship wants to protect the hardest," he concludes.

Gallup Poll - 88% Support * A Gallup poll this past winter showed support among pork producers of the mandatory checkoff program was quite high. Some 88% of the producers answering the survey said the checkoff had benefited the industry through enhanced consumer awareness and increased sales of pork. And 83% reported they were in favor of continuing the checkoff.

Nearly 72% of the producers believed the checkoff benefited them personally. They cited increased pork demand and enhanced export development as ways the checkoff helps them.

The poll involved 506 producers who marketed 1,000 hogs or more in 1997. The Gallup Organization was hired by NPPC for the National Pork Board to survey producers. The poll is conducted annually.

Pork Most Profitable * In a letter responding to the checkoff challenge, the NPPC Board of Directors pointed out that the pork industry is considered the most profitable sector in American agriculture in the last decade. They cited the University of Missouri for this statement.

"We believe the checkoff had a great deal to do with this success," the board stated. "The question that must be asked is this: If pork producers don't work collectively - for the benefit of all - to promote their product and to develop the tools and information needed to be competitive, who will? "

The board also said, "No one, and clearly not NPPC, accepts the current price situation facing pork producers. It is unsustainable and must change. However, we have launched an aggressive retail and foodservice blitz, combined with our ongoing efforts on international market access, government purchases and credit guarantees. Once again, if we do not undertake these efforts on behalf of all pork producers, who will?"