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Is a National Fund to Promote Organic Produce a Good Idea?

May 19, 2015
Slate recently posted an interesting discussion about the Organic Trade Associations' requested check-off program. "Checkoff” programs are essentially taxes that farmers pay to a national fund, the revenue from which is used to promote ("market") the consumption of commodities like pork, beef, eggs, and milk. Checkoff programs’ activities can take the form of generic advertising campaigns, or they can look more like political lobbying.

According to Slate, this tax may now be extended to the organic industry. The Organic Trade Association (OTA) 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.

Though I wan't familiar with checkoff programs, I was surprised to learn that one did not exist yet for the organic industry. Unfortunately, there is a lot of misinformation around the benefits of organic farming which seems to obviously come from the organics industry. This fund may be an opportunity for the industry to collaborate and be more truthful in its messaging.

The Commodity Promotion, Research, and Information Act of 1996, also called the Generic Act 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.

However, there have been concerns in many farming sectors about how checkoff tax funds are spent and about who decides how to spend them. Slate noted the beef tax. The beef tax 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...

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.

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.

Slate commented that 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.
"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...

"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."

We encourage you to read Got Organic? by Leah Douglas in its entirety. Also, I got a good laugh out of the comment from Bobito which was also the top comment for the piece.