Federal Farm Promotion (“Check-Off”) Programs
Congressional research reportOct 20, 2008
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Prepared for Members and Committees of Congress
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The U.S. Supreme Court in 2005 affirmed the constitutionality of the so-called beef check-off
program, one of the 18 generic promotion programs for agricultural products that are now active
nationally. Supporters view check-offs as economically beneficial self-help activities that need
minimal government involvement or taxpayer funding. Producers, handlers, and/or importers are
required to pay an assessment, usually deducted from revenue at time of sale—thus the name
check-off. However, some farmers contend they are being “taxed” for advertising and related
activities they would not underwrite voluntarily. The Supreme Court’s decision to uphold the beef
check-off is considered significant for the future of the other programs, although the Court left
open the possibility of additional challenges.
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Rationale ................................................................................................................................... 1
Legal Challenges....................................................................................................................... 2
Outlook and Issues .................................................................................................................... 4
Are Check-offs Effective? .................................................................................................. 4
What Types of Activities Are Appropriate? ........................................................................ 5
Industry Governance and Representation ........................................................................... 5
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Author Contact Information ............................................................................................................ 6
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heck-off programs, particularly at the state and regional levels, have existed for many
decades. Interest in more federally mandated programs has increased over the past several
decades, as commodity groups have sought new ways to support their products. Such
groups view the programs as economically beneficial farmer self-help activities requiring
minimal federal funding. USDA’s Agricultural Marketing Service (AMS) has some administrative
and oversight responsibilities, but the producer-contributor boards that run the programs must
reimburse AMS for such costs.1
Congressionally authorized programs now collect assessments for 18 commodities (with the year
they began, and collections for the most recent year reported): beef (1986; $79.8 million),
blueberries (2000; $1.9 million), cotton (1966; $66.6 million), dairy products (1984; $281.2
million), eggs (1976; $21 million), fluid milk (1993; $107.8 million), Hass avocados (2002;
$24.2 million), honey (1987; $3.8 million), lamb (2002; $2.3 million), mangos (2005; $3.9
million estimated), mushrooms (1993; $2.6 million), peanuts (1999; $5.7 million), popcorn
(1997; $600,000), pork (1986; $65.4 million), potatoes (1972; $10.7 million), sorghum (2008;
$12-$16 million projected), soybeans (1991; $89.5 million), and watermelons (1990; $1.6
million). Among other check-offs that have been authorized but either not yet implemented, or
terminated by producers in referenda, are canola and rapeseed, wheat, flowers, kiwifruit,
limes, and pecans.2
Title V of the Federal Agricultural Improvement and Reform Act of 1996 (P.L. 104-127) gave
USDA broad-based authority to establish national generic promotion and research programs for
virtually any commodity, either at its own initiative or upon the request of an industry group,
without waiting for specific legislative authority. Prior to the 1996 law, a check-off necessitated
passage of specific authority for an individual commodity—a route that some producer groups
still follow. For example, the Hass Avocado Promotion, Research, and Information Act of 2000,
signed into law on October 23, 2000, explicitly authorized the program that took effect September
9, 2002.
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Many billions of dollars are spent annually on “branded” U.S. food advertising and promotion,
where one producer pits its name brand against the names of others offering a similar or substitute
product. Perdue chicken and Tropicana orange juice commercials are examples of branded
advertising. Generic ads, on the other hand, have no connection to the name of a specific
producer. Because producers of a basic agricultural product cannot easily convince consumers to
choose a particular egg or potato over another, generic advertising can help to expand total
demand for the product, it is argued.
Generic advertising uses television, radio, and other media to reach consumers. The Beef: It’s
What’s for Dinner and Pork: The Other White Meat ads have been examples. The programs also
seek to expand foreign markets and to fund research and education, such as development of new
1
This report focuses on free-standing generic promotion programs; it generally does not cover the similar promotion
activities which are part of the regulations dictated by marketing orders authorized by the Agricultural Marketing
Agreement Act of 1937 as amended. For greater detail on all of these programs, see the USDA-AMS website at
http://www.ams.usda.gov/.
2
Source: AMS, unpublished spreadsheet. The beef, dairy, pork, and soybean programs transfer a portion of these total
collections for state-level activities.
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or improved products or surveys of consumer behavior. (Such activities are generally directed by
the producer boards and approved by AMS.)
Producers can and have organized voluntary check-offs, but they account for only a small share
of all funding for generic efforts. Since the prototype Florida Citrus Advertising Tax was
instituted in 1935, hundreds of mandatory farm commodity promotion programs have been
legislated by states or the federal government. Nine out of ten U.S. farmers were contributing to
one or more of these efforts by the mid-1990s.3
Many commodity groups prefer mandatory check-offs as a way to address the so-called “free
rider” problem—nonpaying producers who benefit economically from programs that others have
funded. Requests to Congress or USDA to authorize mandatory check-offs have been prompted
by various factors, including the search for new ways to stimulate product demand, particularly as
farm markets have globalized and U.S. producers face more foreign competition domestically and
overseas.
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Some producers have vigorously challenged mandatory check-off programs. Some have asked
USDA to change or abolish orders it has issued on behalf of the commodity boards, or petitioned
the department to hold a producer referendum on whether a check-off should continue. Some
producers also have filed lawsuits in federal courts. Their key contention has been that the checkoff is a “tax” to fund advertising and other activities they would not pay for voluntarily. Three
cases have reached the U.S. Supreme Court.
In the first, Glickman v. Wileman Brothers and Elliot, Inc., California peach and nectarine
handlers had challenged the USDA marketing order, which is not only a promotion program but
also sets quality standards and other marketing rules for those fruits (see footnote 1). The 9th
Circuit Court of Appeals had held that the order mandating the assessments violated the affected
parties’ First Amendment rights and therefore was unconstitutional. The Circuit Court stated that
such generic advertising had not been proven necessary or more successful than individual
advertising, and also, in effect, violated the free speech of growers who would prefer to use their
money to advertise in other ways. The government appealed the case to the Supreme Court,
which on June 25, 1997, reversed, by a 5-4 vote, the lower court’s ruling. It found that the
program “should enjoy the same strong presumption of validity that we accord to other policy
judgments made by Congress. The mere fact that one or more producers ‘do not wish to foster’
generic advertising of their product is not a sufficient reason for overriding the judgment of the
majority of market participants, bureaucrats, and legislators who have concluded that such
programs are beneficial.”4
In the second case, the Supreme Court on June 25, 2001, ruled 6-3 that mandatory assessments
for the mushroom check-off were a violation of the First Amendment because they force
producers to pay for commercial speech. Upholding a decision by the 6th Circuit Court of
Appeals, the Supreme Court reasoned, in United States v. United Foods, Inc., that the program
authorized by the Mushroom Promotion Act differs fundamentally from that under Glickman. The
3
Armbruster, Walter J., and John P. Nichols. Commodity Promotion Policy. 1995 Farm Bill Policy Options and
Consequences, Texas A&M University, October 1994.
4
Glickman v. Wileman Bros. & Elliot, Inc. 521 U.S. 457, 477 (1997).
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Court said that the mushroom check-off is a stand-alone program that is not part of a broader
regulatory scheme, as was the peach/nectarine marketing order, and “... for all practical purposes,
the advertising itself, far from being ancillary, is the principal object of the regulatory scheme....”5
The Supreme Court issued its third decision on May 23, 2005. The case, Johanns v. Livestock
Marketing Association, stems from a ruling on June 21, 2002, by a U.S. district court in South
Dakota that the national beef check-off violates the First Amendment by forcing producers “to
pay, in part, for speech to which the plaintiffs object.” The district court further ruled in the case
that the generic advertising conducted under the Beef Promotion and Research Act and the
ensuing Beef Order is not government speech. The 8th Circuit Court of Appeals announced that it
would not reconsider the district court’s ruling. Appealing to the Supreme Court, the federal
government argued a point that the Justices had not considered in the mushroom case: that checkoff messages constitute government speech, and so are not susceptible to a First Amendment
challenge. The Supreme Court, in a 6-3 decision, ruled in favor of the government, upholding the
program. The Court stated, in part:
The message set out in the beef promotions is from beginning to end the message established
by the Federal Government. Congress had directed the implementation of a “coordinated
program” of promotion, “including paid advertising, to advance the image and desirability of
beef and beef products.” Congress and the Secretary have also specified, in general terms,
what the promotional campaigns shall contain. ... Thus, Congress and the Secretary have set
out the overarching message and some of its elements, and they have left the development of
the remaining details to an entity whose members are answerable to the Secretary (and in
some cases appointed by him as well).6
The Supreme Court majority also rejected check-off opponents’ argument that the program does
not qualify as government speech because it is funded by a targeted assessment rather than by
general revenues (e.g., taxes). “Citizens may challenge compelled support of private speech, but
have no First Amendment right not to fund government speech. And that is no less true when the
funding is achieved through targeted assessments devoted exclusively to the program to which
the assessed citizens object,” the Court concluded.
In a May 23, 2005, press release, then Secretary of Agriculture Johanns said that he was pleased
with the decision. The House Agriculture Committee Chairman, the National Cattlemen’s Beef
Association, the National Pork Producers Council, the American Farm Bureau Federation, and the
National Milk Producers Federation were among the groups that also reacted favorably to the
Supreme Court’s decision. The National Farmers Union joined the Livestock Marketing
Association in expressing disappointment with the decision. (A subsequent settlement, filed by
defendants and plaintiffs, included a check-off funded survey of producers’ views toward the
program.)
5
United States v. United Foods, Inc. 533 U.S. 405, 412 (2001). After the Court’s decision, the Mushroom Council, the
producer board that administers the program, in 2001 reduced the mandatory assessments and diverted their revenue to
non-promotional activities such as research into mushrooms’ health and nutritional attributes.
6
Johanns v. Livestock Marketing Assn. and Nebraska Cattlemen v. Livestock Marketing Assn. (Nos. 03-1164 and 031165).
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Since the Johanns decision, several other closely watched legal challenges of the programs have
been stalled or even ended, including others on beef, and on dairy, pork, watermelons, and cotton.
Johanns also is widely expected to be used to defend future First Amendment challenges.7
However, it is possible that check-off opponents could continue to challenge other legal aspects
of the programs in the courts. For example, the Supreme Court did not address the question of
whether or not a check-off might be unconstitutional if it were found that the advertisements are
attributable to individuals who disagree with a funded message.
As the Supreme Court noted, Congress retains final oversight and statutory authority. It remains
to be seen whether check-off advocates—or opponents—will continue to examine the need for,
and seek, any statutory changes. Nonetheless, the Johanns decision could inform any new
legislation creating or amending check-off programs. Among the other issues are the following.
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All of the federal check-off programs and many state ones are required by law to periodically
evaluate their effectiveness. The ultimate measure has been whether those who contribute to the
programs gain economically. More to the point, do the economic benefits outweigh the costs of
assessments? Researchers examine a variety of indicators such as changes in product sales,
producer prices, market share, industry profits, and consumer awareness of the products or
product attributes. Examining past and projected market and related industry data is one method
for making such determinations; another method is industry and consumer surveys. However,
these approaches encounter difficulties in trying to isolate the impacts of program promotion
dollars from other variables, such as the relative prices and availability of competing products
(e.g., poultry vs. beef and/or pork; milk vs. juice or soft drinks), changes in consumer income,
demographics, shopping preferences, and so forth.
Economists try to account for these variables through the use of increasingly sophisticated
economic models. Most of the studies, including those based on the models, typically have found
positive ratios of benefits compared with costs—ranging from 2-1 benefits over costs to as high at
10-1. However, even these analyses can be widely interpreted and may not answer such questions
as whether a higher ratio necessarily signals a more “effective” program; whether all types of
contributors share equally in the benefits; whether others, such as consumers and processors who
do not directly contribute, gain (or lose) economically; or whether investing the funds in some
other way—like buying stocks—might yield higher returns.8
7
This section, including sources and arguments presented, is based in part on archived CRS Report RL32957, Farm
Product “Check-off” Programs: A Constitutional Analysis, by (name redacted). That report contains an extensive
discussion of these cases and their potential implications.
8
This paragraph is based on Gary W. Williams and Oral Capps Jr., “Measuring the Effectiveness of Checkoff
Programs,” Choices magazine, 2nd quarter 2006. Accessed online at http://www.choicesmagazine.org.
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Funds collected can be used by the boards, which meet regularly and submit their plans to
USDA-AMS for review, for a wide variety of activities, with the common objective of enhancing
product demand. Virtually all check-off laws include language prohibiting the use of funds for
any type of activity to influence government policies or actions. However, some critics have
regarded the line between advertising and advocacy as a blurry one: for example, at least one
group once periodically used its funds for advertisements in Washington, D.C.-based publications
that promoted the image of the industry as a whole. This question is further complicated if a
check-off program staff is housed in, or near, the same offices as that commodity’s trade
association or if the association contracts to carry out some “permitted” activities.
In another disputed use of funds, the U.S. Environmental Protection Agency (EPA) agreed to a
limited and conditional release of liability for past and ongoing violations of air pollution laws by
animal feeding operations (AFOs) that participate in a national study of air emissions and that,
among other things, pay $2,500 per farm to help fund it. The National Pork Board agreed to
commit $6 million in check-off funds to cover the $2,500 fees from the more than 1,800 hog
farms with approved agreements. A coalition of groups called the Campaign for Family Farms
challenged this commitment. In October 2006, a USDA administrative law judge ruled that the
Pork Board spending was “contrary to public policy and not in accordance with law” (AMA
PPRCIA Docket No. 05-0001). However, in December 2006 the judge denied the petitioners’
motion for an injunction against the board’s spending, pending resolution of an appeal. That
appeal was still pending in October 2008, and the board spent the check-off funds as planned.9
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When Congress approves a check-off, it generally does not begin until an industry group
proposes and AMS issues an order, following federal rulemaking procedures. Often, but not
always, a referendum among affected parties is required before it takes effect. Once an order is
underway, periodic referenda may be held to assess support for its continuation. Most check-off
laws provide guidance, often specific, on the make-up and establishment of the industry
governing boards that oversee program staff and set policy and priorities (which are subject to
USDA review and approval). One concern is how to ensure that all contributors are chosen and
represented fairly (with regard to geography, operation size, importer or domestic, and so forth).
Such questions have become more prominent among those groups, which allege that major
structural changes in their industry have enabled what they believe to be more powerful economic
interests to dominate check-off efforts.
Some believe that the Johanns decision might spur Congress, for instance, to consider exempting
certain categories of producers who disagree with generic advertising from paying mandatory
assessments under a commodity promotion law similar to the exemption that Congress
established in the 2002 farm bill (P.L. 107-171) for persons that produce and market solely 100%
organic products. Congress might also seek to further define or expand current provisions in
commodity promotion laws that already require councils and projects to “take into account
similarities and differences” between certain products and producers.
9
Source for status of the challenge: AMS legislative affairs office (personal communication), October 20, 2008.
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Congress may also be asked to reexamine its position on requiring the advertisements to show
that they are, in fact, speech by the government, since this was a major criticism in the dissent and
all circuit courts found insufficient governmental control. As mentioned by Justice Ginsburg in
her concurring opinion in Johanns and by some experts, a clear indication of who the speaker is
may be important to reconcile the message in check-off programs with other speech that is
overtly sponsored by the government, particularly the nutritional and dietary guidelines (e.g.,
“Food Pyramid”). The most recent federal Dietary Guidelines, for example, encourage greater
consumption of fruits, vegetables, whole grains, and low-fat dairy, within a balanced, lowercalorie intake diet, while some check-off programs generally encourage more consumption of
both low-fat and high-fat beef, pork, and dairy products.
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(name redacted)
Specialist in Agricultural Policy
/redacted/@crs.loc.gov, 7-....
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