Organic checkoff faces a rising headwind

WASHINGTON, Sept. 23, 2015 - A national organic research and promotion program, or “checkoff,” has been a dream of the Organic Trade Association and others for years. But opposition among organic producers is swelling, and the idea may unravel even before it comes to a vote by the nation’s certified organic farmers, processors and other stakeholders. A poll is supposed to take place within a year or so.

The plan’s proponents fought successfully for a provision in the 2014 farm bill allowing for USDA to consider an organic checkoff. After three years of negotiations prior to farm bill passage among its members, OTA and an affiliated task force submitted their proposal, called GRO Organic, to USDA. It would raise as much as $30 million annually and is intended to help the organic sector catch up with retail demand that has roughly doubled since 2007 to nearly $40 billion – at least 5 percent of U.S. retail food sales.

“We are very aware of the need to reinvest in our movement,” said Melissa Hughes, OTA board president and counsel to Organic Valley, an 1,800-member dairy cooperative that also supports the plan. “A top purpose,” she says, “is research and on-farm research, which is severely lacking right now . . . for example, helping where a farmer faces a persistent pest.”

But the very nature of this checkoff, along with several parts of its proposed structure, may prove its undoing. For one, GRO Organic would be the first in the growing family of checkoffs devoted to a countless spectrum of crops and livestock products, rather than, as all others do, a single farm commodity.

John Bobbe is executive director of OFARM, a network of six organic cooperatives of organic row-crop, grain and cattle producers in the Midwest and Plains, and he says, “every one of our co-ops oppose this checkoff.” His groups do want more research that helps at the farm level, he says, but support for organic farming research is already on the rise at USDA, state land grant universities, and the Organic Center. “There are also some very successful voluntary checkoff programs that support organic research,” he says. Besides that, he doesn’t believe they could count on the organic checkoff to make sure farmers receive the majority of resources. “We’ve seen too much abuse and misuse of funds in the existing checkoff programs to support a national one for organic,” Bobbe says.

Checkoff programs have long had a multitude of detractors, especially among owners of small and midsize farms who feel checkoffs end up enriching big farms and processors at their own expense. But now a coalition formed against the proposal is swelling. No Organic Checkoff (NOC) is packed with high-profile organic entities: the seven-state Northeast Organic Farming Association, the Organic Seed Growers & Trade Association, the Organic Crop Improvement Association International, the Family Farm Defenders, plus OFARM, some regional organic dairy co-ops in the West and Midwest, and others.

Breeding further opposition is the inherent complexity of a checkoff program that would promote multiple products. Drafters of the OTA plan tried to design a fair system of assessments, by first letting any producer with less than $250,000 in annual receipts either opt into the program permanently and pay the assessments, or opt out entirely. Then, it would try to raise funds equitably by levying a 0.1 percent assessment on the net profit at each step in the organic pipeline. Bobbe says collecting assessments equitably on such an array of products and types of production and processing operations may not even be doable. “It would be a total accounting nightmare,” he says.

Complicating matters further, the law allows USDA to put the checkoff to a vote of producers if “substantial industry support” is apparent. But OTA’s proposed opt-out at $250,000 means that organic farmers beneath that volume, especially those already opposed to it, will simply opt out, avoiding assessments in a program they oppose anyway. That would boost chances the checkoff would be approved. “That is the reason that the $250,000 opt-out was requested,” Bobbe says. “It means a much smaller [voting] pool.”

So the NOC groups insist that USDA, which decides what will be voted on, open the vote to all certified organic operators. Roger Johnson, National Farmers Union president, agrees. Never a big fan of checkoffs, he says NFU has many misgivings about the organic checkoff, “and we weighed in very strongly (with USDA) that everyone needs to vote on this proposal,” he said. The notion that most small organic farmers would opt out of the plan as drafted by OTA means “the proposal should be modified to appeal to more organic producers, which is what we have been advocating all along,” he said.

USDA has published its steps to advance this checkoff. At OTA, Hughes says proponents hope USDA will come up with a favorable checkoff plan early in 2016, and set a vote for later next year after a public comment period and a final drafting.

Meanwhile, Kate Mendenhall, NOC coordinator, says she isn’t certain USDA will judge the  OTA proposal as having adequate support to put it forward for a vote. “We really don’t know what USDA is going to put into the proposal,” she says, and “we don’t think there really is support for an organic checkoff.” Other problems opponents see in the OTA plan include:

• While OTA says half of checkoff board members must be producers, opponents think what’s proposed now would allow for big processors and others who happen to also have farms to be appointed.
• Though OTA’s plan would mandate at least 25 percent of checkoff funds to be spent for research, and 50-75 percent overall “for research or for activities that work hand-in-hand with research, such as technical assistance,” Mendenhall says, “the way the thing is proposed, there is not a significant percentage dedicated to production agriculture research.”
• Many small operators fear that a majority of organic producers wouldn’t be able to eventually dissolve the organic checkoff in the future even though the organic checkoff plan now calls for a referendum after its first seven years. The doubters include hog farmers who must still pay into the national pork checkoff, even though in 2000 a majority of pork producers voted in a referendum to terminate that program.