A proposed checkoff program for organic

RE: Docket #AMS-SC-16-0112, Organic Research, Promotion and Information Order

PCC Natural Markets is the nation’s largest consumer-owned and operated grocer with 56,000+ member-owners and a 12th store in development. All our stores are certified for organic handling and processing. We’re pleased for the opportunity to comment.

We certainly need more organic research and education, and more organic farmers in America. We support funding organic research, education and promotion but are concerned about high administrative costs, a failure to produce tangible benefits for family farmers, failures in oversight and transparency, and restrictions in the promotional scope. We have not been able to find convincing evidence that checkoff programs have increased demand, market share or acreage, or independent family farm viability. We cannot support the proposal without revisions.

Small pork producers went out of business under the pork checkoff, while the biggest producers flourished. Dairy prices fell. Smaller family cattle ranchers say they’re forced to fund a system that doesn’t help them, but is a cash cow for the largest ranchers and multinational meatpackers. The Northeast Organic Farming Association (NOFA) reports check-off programs that are successful see a decline of family farmers in business.

While failing to improve family farmer viability or profitability, checkoffs have high administrative costs, creating new careers and revenue streams for administrators. Of the $30 million the Organic Trade Association expects to raise, 15 percent off the top ($4.5M) would be spent on administration. The remaining $25.5 million would be divided this way:

25% for Discretionary Funds ($6.37 million) for whatever the Board decides
25% to Marketing & Promotion ($6.37 million)
12.5% to Agricultural Research ($3.2 million)
12.5% to Marketing Research ($3.2 million)
12.5% to Farmer Education and Information ($3.2 million)
12.5% to Industry Information ($3.2 million)

It means 65 percent of the total would not go to research but for administrative costs, marketing and “discretionary funds.” Since checkoff programs are specific to specific foods, such as blueberries, apples or milk, by the time funds are divided, many (if not most) are paying for a program that doesn’t benefit them.

We understand organic checkoff messaging legally could not disparage — or even imply — anything negative about non-organic food. It could not say something even as simple and true as “Organic is the Gold Standard” or “Grown without toxic pesticides” or “No added hormones.” It’s hard to imagine what message could be effective without drawing comparisons.

Transparency and oversight are weak. There’s a history of using funds inappropriately. A federal investigation into alleged embezzlement of $2.6 million by an employee of the Oklahoma Beef Council is the latest example. The Council’s former accounting and compliance manager allegedly started forging checks in the group’s name beginning in 2009 and the Beef Council has had to sue to recover ranchers’ money that vanished each year for seven years. The American Egg Board is charged with anticompetitive activities, which Sen. Mike Lee (R-UT) and Sen. Corey Booker (D-NJ) have called “a classic case of Big Government and Big Business working together to squeeze out smaller rivals and squelch innovation.”

We are concerned that the governing board for administration of the checkoff program would be dominated by political appointees selected by USDA. While farmers hold nearly two-thirds of all organic certificates, they’d have fewer than half the seats on the checkoff board. Individuals with political and corporate connections likely would be appointed by the USDA Secretary, who is beholden to the White House. The board is all but certain to be weighted in favor of the largest corporate interests over smaller and mid-size family farmers and producers.

We are concerned that promoting organic sales under federal rules would not necessarily increase organic acreage in the United States but would increase demand for lower-priced imported organics that have caused some domestic organic farm prices to plunge. It appears checkoff dollars could not even promote U.S. organics, since that could be seen as disparaging imported crops. American farmers would be paying to promote their competition.

For these reasons, we believe any checkoff proposal would have to be refashioned so 75 percent of the funds are dedicated to organic research and direct U.S. farmer support, with 25 percent of the funds reserved for administrative costs and promotion. We would insist on transparency in promotional board activities, including attendance at meetings, and for transcripts to be posted on the internet.

We also call for a democratic process to decide this debate. Currently, all organic certificate holders will not be given a vote unless they request a ballot. If someone requests a ballot, they must agree to pay the checkoff tax if the proposal passes. Certificate holders should not have to pay to vote. All certificate holders should get a ballot without “paying to play.”

The high administrative expenses, the failure to produce tangible benefits for family farmers, the failures in oversight and transparency, and restrictions in the promotional scope are longstanding concerns and outweigh the hypothetical promise of different results by adding the word “organic” to a checkoff program title.

Without substantial revisions, we regret that we do not see sufficient evidence to support the proposal.

Sincerely,

Trudy Bialic

Director, Public Affairs & Quality Standards