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Have you seen the latest spin-off of the "Got Milk?" campaign? Apparently, America's dairy producers don't believe we have received the message that milk—in all its glorious forms—is good for us.
In their latest TV spot, a teenager peruses the wares of an elite chocolatier who is standing behind her sales counter. After several thoughtful moments, the customer points and says, "And ... uh ... I'll take one of those things." In a European accent the vendor responds, "Parisian mocha flake," placing one in a gold foil bag along with the customer's other selections. Taking the ribbon-sealed bag from the vendor, the teenager pummels the bag on the counter, pulverizing its contents. Opening the bag, he pours the powder into a bottle of milk and shakes the bottle vigorously. The commercial's tag line: "Got Chocolate Milk?"
These ads, and others like them—"Beef. It's what's for dinner" or "Pork, the Other White Meat"—are funded through federally mandated "checkoff" programs, so named because farmers "check off" a specified amount per production unit to pay for them. Coordinated by the U.S. Department of Agriculture (USDA), these programs pay the government to stimulate demand for U.S. farm products that benefit from federal price supports. Checkoffs are an outgrowth of those supports. The hope is that if the checkoff succeeds at stimulating consumer purchases of supported commodities, the government can reduce tax-funded payments to the farmers producing them.
Who pays the bills for these programs? Farmers do. For example, in the beef industry, the Beef Board requires cattlemen to "check off" one dollar per head for the federally mandated checkoff program. In 2000, state beef councils contributed a total of nearly $40 million to the Beef Board's national campaign.
Large ranches produce more cost-effectively than smaller, family-owned ranches do. Because per-head production costs fall as herd size increases, the dollar-per-head checkoff assessment imposes a greater burden on small farms and ranches than on larger agribusinesses.
Michigan beef producers are not behemoth agribusinesses as they are in places like Texas. Obviously, then, Michigan beef producers find themselves on the short end of the beef checkoff. Of the $40 million in assessments paid in 2000, Michigan farmers contributed less than 1 percent. While that might sound trivial, the reality is that small ranchers in Michigan paid nearly a quarter-million dollars into the beef checkoff program because the USDA requires it. Michigan ranchers contribute a greater fraction of their net incomes to the checkoff than do their Great Plains counterparts.
In beef and other industries, small farmers are angry. They view the mandated checkoff assessments as unfair—and rightly so. Consequently, small farmers have begun to challenge their assessments in the courts, and with some early success. Last year, mushroom growers took their case to the U.S. Supreme Court and won, arguing that such federally mandated contributions violate free speech. Dairy, beef and pork producers are now mounting similar challenges.
A new farm bill passed this spring by Congress will raise federal spending on farming by nearly 80 percent over current levels, adding up to $180 billion over the next 10 years. In addition to expanding aid to currently supported industries, the bill extends price supports to previously uncovered commodities like lentils and wool.
This election year pork-barrel bill is a bad idea. It flies in the face of Congress' 1996 pledge to wean farmers from federal dependency and jeopardizes U.S. credibility in ongoing World Trade Organization talks. The bill will spawn more mandated checkoff programs that are unfair to small farmers in Michigan.
The best solution to the unfair assessments faced by small farmers is to end agricultural price supports, freeing precious land and human resources for other more valuable uses. That's what Congress set out to do six years ago, with its massive reform of agriculture policy. It shouldn't let election year politics derail that effort.
(Victor Claar and Robin Klay are economists at Hope College in Holland, Mich., and adjunct scholars with the Mackinac Center for Public Policy. Permission to reprint in whole or in part is hereby granted, provided the authors and their affiliations are cited.)
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