Food & Power Newsletter: Is an Organic Checkoff Supported By Farmers?

Posted Chris Wager Checkoff Programs, Leah Douglas, Newsletter, Organics

There’s a battle happening in organic farming, and it’s not about labeling or the setting of standards. In May, the Organic Trade Association submitted a revised proposal to the U.S. Department of Agriculture to impose a special tax on organic farming. Called a “checkoff,” this tax would apply to all organic farmers, handlers of organic goods, and food processors with sales over a certain threshold. According to the proposal, money collected through the tax would be used for the promotion of organic products.

But not all organic farmers are happy with the idea. A new coalition of farmer organizations has gathered to oppose the tax. Some farmers are concerned that the new tax will repeat a pattern seen in other commodity checkoff programs, in which funds intended for marketing and research are instead used largely or mainly to support the interest of large corporate producers.

Early in June, the No Organic Checkoff coalition submitted a petition against the checkoff with 755 signatories—representing 6,000 farmers across the country—to the USDA. The coalition includes the Northeast Organic Dairy Producers Alliance, the Northeast Organic Farming Association, Food & Water Watch, the Missouri Rural Crisis Center, and many other organizations.

The organic checkoff has “been universally panned by the farmers that we work with,” says Will Fantle of the Cornucopia Institute, which represents thousands of independent farmers and is part of the No Organic Checkoff coalition. Fantle cited controversy surrounding the mishandling of funds collected through the pork and beef checkoffs. “The [benefits] from a checkoff [don’t] seem to trickle down to the farmers,” he said. “But the costs of the checkoffs do seem to trickle down.”

There are currently more than 20 commodity checkoff programs, including for eggs, cotton, avocados, peanuts, popcorn, and soybeans. Most of them were created after the passage of the 1996 Commodity Promotion, Research, and Information Act, which standardized the process by which checkoffs are implemented and overseen by USDA. Checkoffs are meant to “conduct important research and promotion activities” and grow demand for their commodities, often accomplished with advertising slogans such as “Got Milk?” and “The Incredible Edible Egg.”

The Organic Trade Association first proposed its checkoff program in May 2015. In contrast to other checkoffs, which are limited to a single commodity, the organic checkoff tax would apply to all organic producers, processors, and handlers. This sweeping categorization is unprecedented for a checkoff program.

The checkoff tax proposal sets a mandatory assessment for producers, handlers, and processors who gross over $250,000 annually, at one tenth of one percent of net sales. (Around 90% of all farms fall below this threshold.) The OTA estimates that this assessment rate would bring in about $30 million annually. Smaller farmers could opt into the checkoff.

OTA says that this structure protects small farmers who may struggle to afford the assessment. But opponents of the checkoff argue that the high threshold also means that those small farmers will have no say in how checkoff funds are used or distributed, despite comprising the bulk of producers in the organic industry. The biggest name in organics are huge food processors like White-Wave, the Hain Celestial Group, General Mills, and Post Foods. Farmers fear these corporate giants will end up controlling most of the checkoff tax dollars.

Smaller producers are also exempted from being able to vote in the initial referendum to establish the checkoff. Those who opt into the vote will be obligated to pay the checkoff tax assessment for seven years. “It’s just an undemocratic way to carry on,” says Ed Maltby of the Northeast Organic Dairy Producers Alliance. “And it definitely isn’t in keeping with the spirit of the organic movement.” Maltby advocates that every holder of an organic certification should get to vote on whether to establish the checkoff. OTA did not respond to requests for comment by the time of publication.

Some farmers are also concerned about the proposed composition of the organic checkoff board, which would administer the program. In the revised proposal, farmers will hold only 6 or 7 seats on the 16-seat board, with the rest reserved for handlers and processors. Farmers worry this board makeup will further diminish the voices of small producers.

At one time, organic was the sole domain of back-to-the-landers and craft lettuce growers in California. But today, the concept of organic has reached nearly every corner of the food industry. Demand for organic products has exploded, outpacing production. Organic sales topped $43 billion in 2015, and the organic industry had a 10% growth rate in 2015.

The resubmission of the checkoff proposal comes on the heels of a victory for organic producers who want to stay out of the checkoff tax programs. In January, the USDA finalized rules that exempted organic producers from all existing commodity checkoffs. Prior to the 2014 Farm Bill, only producers whose products were 100% organic could claim an exemption; now, producers who have only some organic products can apply for exemption as well. The No Organic Checkoff coalition applauded the exemption, and used the opportunity to reiterate its disapproval of the checkoff.

What We’re Reading

  • In a referendum on June 14, North Dakota voters overwhelmingly rejected a bill that would have overturned the state’s 80 year old ban on corporate farming. We reported on the fight to uphold the ban in our last newsletter.

  • Philadelphia became the first large city to pass a soda tax, levied at 1.5 cents per ounce. The tax’s advocates say it will curb obesity and contribute funding to parks and education programs. Critics note its regressive nature and disproportionate impact on low-income consumers.

  • The most recent story in Harvest Public Media’s special report on working conditions in the meat industry, Dangerous Jobs, Cheap Meat, investigates the ‘embarrassingly low’ OSHA fines that meatpackers like JBS pay when employees are killed or injured on the job.
  • A coalition of animal and food activist groups, journalists, and academics filed a brief in federal appeals court to protect the Idaho District Court’s August 2015 decision overturning Idaho’s “ag gag” law. The law would have punished employees and external actors for taking pictures or video of animal cruelty, labor violations, or food safety concerns on Idaho farms.

Chris Wager contributed research to this newsletter.

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