SHADES OF FLORIDA.

Pork Checkoff Vote Raises Questions and Concerns

Had the pork checkoff referendum voting results hinged on Florida the same way the presidential election did, the call to end checkoff collections would have failed, chads or no chads. Seventy-seven of Florida's votes favored continuation of the national pork check-off program. Only six of the state's 118 total votes were invalid.

Instead, the narrowly failed national vote rose from a lack of support in key production states. But the National Pork Producers Council (NPPC) says the real losers are pork producers who became victims to U.S. Department of Agriculture (USDA) decisions. Now, pork producers question whether USDA had grounds to conduct the referendum and also charge that the referendum conducted was riddled with irregularities and discrepancies.

Enough flaws, in fact, that shortly after the vote's results were announced, independent pork producers from Michigan asked for and received from a federal judge in that state a temporary restraining order which preserves the mandatory national pork checkoff until the referendum process and results are ironed out in a federal courtroom.

"The decision made by pork producers to file an injunction did not come lightly. We certainly didn't want to create the types of problems we saw in Florida's presidential election," says Craig Jarolimek, a Forest River, N.D., pork producer and NPPC president. The Michigan Pork Producers Association and NPPC have since joined the producer lawsuit. "But there was enough uncertainty surrounding the voting process that we had to challenge it. This is a serious issue with political fallout, not sour grapes over a negative outcome."

The lawsuit contends that USDA acted unlawfully in holding a binding referendum despite having no legal authority to do so. And even if the referendum were legal, Jarolimek says producers have stepped forward with examples of being given wrong voting materials, failing to post lists of producers who requested absentee ballots and failing to post lists of producers who voted in person, which resulted in disqualification of voters without their knowledge. Others allegedly cast both absentee and in-person ballots or ballots in violation of referendum rules.

USDA tossed 1,695 of 32,042 ballots as invalid in the close 15,951 to 14,396-vote race to end the check-off. The vote tabulation shows 21 states voted to continue the check-off, but negative votes in 15 other states -- most of which are in the western Corn Belt -- were enough to swing the pendulum the other way. Tallies in states with few voters were lumped together in a narrow "yes" vote.

VOTER'S WILL?

"The vote outcome signals a higher level of militancy by smaller producers, and is an indication of unhappiness over the structural transformation of agriculture, and more specifically, the pork industry," says Neil Harl, Iowa State University (ISU) economist and lawyer. "Producers are uneasy about where the industry and agriculture are headed because change occurs so rapidly. Termination of the checkoff could send shock waves through agriculture."

In ordering termination of the program, then-Secretary of Agriculture Dan Glickman referred to the pork checkoff as a "mandatory assessment, akin to a tax." Citing industry structure changes, Glickman said, "This outcome demonstrates that the pork checkoff does not have support of the producers it serves and therefore cannot fulfill its stated purpose."

NPPC's Jarolimek offers a different perspective. "USDA let political motivation decide the fate of one of the most successful commodity programs in American agriculture," he says. "USDA unequivocally understands the negative impact that termination of the pork checkoff will have on every pork producer in this country."

Jarolimek points out that only one in every seven pork producers actually voted against the pork program. "USDA is penalizing every producer in this country. The majority of producers have not been heard from, and I will not let a (departed) secretary of agriculture take away the checkoff without a full hearing in a federal court," he says.

Pork Producer "Vote Yes" Task Force Co-chair Karl Johnson, a producer from Mankato, Minn., adds that discontinuation of the pork checkoff would be detrimental to the work the checkoff already has accomplished. "The progress made with the image, acceptance and demand for pork will slip away, the pork industry could experience accelerated consolidation, and coordinated efforts of research, education and information will be lost," Johnson says.

An economic evaluation of the checkoff commissioned by NPPC last year estimated an overall rate of return that is "positive and significant." Texas A&M University ag economists who performed the analysis calculated a net return to producers of a minimum $4.79 per dollar invested. The checkoff collects about $50 million annually.

OTHERS TAKE NOTE

Controversy over the pork referendum has heightened interest in and scrutiny of other commodity checkoff programs, many of which also have been party to signature petition drives to end the programs and criticized by farmers and farm groups that do not support them.

"From here, the impact the pork checkoff has on other national checkoff programs will occur on a case-by-case basis," ISU's Harl says. "It may encourage other commodity producers to examine programs they are involved with and could lead to additional challenges. Commodity checkoff programs in general are not going to fall over the edge, but the pork vote could spark some producers into action."

In fact, the pork vote elicited immediate response from groups with ties to other national checkoff programs. National Cattlemen's Beef Association (NCBA) President George Hall sympathized with pork producers "who lost a major weapon in their fight to maintain consumer demand."

Asserts Hall, "During the past two years, beef checkoff efforts have turned the demand tide and given producers new hope for their operations and the industry."

Likewise, the American Soybean Association (ASA) announced the group was "saddened" by the failed pork vote, given that almost 2 pounds of soybeans are utilized for every pound of pork consumed. Because 424 million bushels of beans are used in hog feed each year, ASA officials noted that eliminating the pork checkoff could negatively affect demand for soybeans as well. (The soybean checkoff that is administered by the United Soybean Board went through a request for referendum process last year. But a referendum was deemed not necessary because less than 3 percent of soybean farmers eligible signed a petition.)

Beef producers also will avoid a referendum in the near term. Coincidentally as the pork checkoff vote was made public, USDA was preparing to announce that not enough valid petitions were received to require a referendum on the beef checkoff. USDA's hand count of petitions filed found no more than 83,464 were valid petitions. A vote required 107,883 valid petitions. The Beef Promotion and Research Act contains a provision that a referendum must be held if requested by 10 percent of all cattle producers.

USDA responded with a note of caution. "Although the number of petitions submitted to USDA is not sufficient to trigger a referendum, thousands of beef producers have clearly signaled their concern over the beef checkoff program," USDA Agricultural Marketing Service (AMS) administrator Kathleen Merrigan said in a statement.

"A USDA task force on research and promotion programs has recommended that all checkoff programs be the subject of continuance referenda every five years to ensure that the programs have industry support," she noted. "This (cattle producer) petition drive should serve as a reminder to all national checkoffs of their responsibility to stay in close touch with the producers who fund these programs, and that the activities be fully reflective of the marketing needs of all those in the industry."

UNCERTAIN FUTURE

Jarolimek remains skeptical. "USDA is sure leaving its legacy on agriculture. A few years ago, after another fatally flawed referendum, USDA determined that the sheep checkoff should be terminated. Barely months later, they were beaten bloody by foreign competition. Because USDA took away their checkoff, they had no way to respond. Now they are doing the same to pork producers," he says.

In preparation that the national checkoff program may still be terminated following court action, several state pork producer associations are making contingency plans. The Iowa Pork Producers Association, for example, has announced it will revert to its previous state program, if necessary. The Iowa state pork checkoff, like the national checkoff, would use checkoff funds for all but policy activities. However, the state checkoff would re-establish a refund provision rather than make mandatory collections.

"State associations are being diligent in case something happens to the national program," Jarolimek says. "For now, we still have a national checkoff in place and will continue our current research and promotion activities as we look for a way to stop the nonsense. Just as with the presidential election, we will have our day in court.

"Losing the checkoff would be a travesty not just for pork producers, but for all of us who work in agriculture," he continues. "In the long run, USDA's management of the pork referendum makes the Florida vote look good."

Barb Baylor Anderson is a freelance writer from Edwardsville, Ill., who covers a wide variety of ag issues.