Rarely do fees for goods and services go down. Yet that's the big news coming out of Pork Industry Forum held last month in Denver, Colo. Producer delegates to the National Pork Board (also known as Pork Act delegates) voted to recommend a reduction in the national pork checkoff rate. The proposal would drop the checkoff from $0.45/ $100 value per market hog sold to $0.40/$100 value.
North Carolina, Indiana and Missouri all offered resolutions designed to reduce the national checkoff. Through the course of the two-day meeting, 143 delegates from all states debated the matter, mulling over rate cuts as low as $0.25/ $100 in value.
"The unity of pork producers was clear, as was the recognition of a need to have checkoff-funded efforts," says Hugh Dorminy, NPB president. "It was incredible the intensity of debate, but at the same time it was professional."
At issue was the need to satisfy producers back home, following a controversial checkoff referendum vote in late 2000. "In response to the referendum that we had, it's our responsibility to tighten our belts and reduce the checkoff rate," said Duane Bakke, a Minnesota delegate. "This would send a positive signal back home, it shows that we're listening."
The delegates' action also centered on the need to find a way to encourage non-checkoff funding for the National Pork Producers Council and the public policy efforts it oversees on the industry's behalf.
"The policy side is just killing us (as an industry)," said Brent Sandidge, a Missouri delegate. "We have a lot more branded product today, we're not promoting a commodity, so we can shift some of those funds. We have to address the activists and legislative issues."
Ultimately it was an amendment from the Minnesota delegation that settled on the compromise rate that would cut producers' contribution by a nickel for every $100 in market-hog sales.
Since the authority to reduce the national pork checkoff lies with the U.S. Agriculture Secretary, the delegates can only recommend the rate reduction.
Dorminy said it would take at least six to eight months before the checkoff-rate adjustment could occur. First, USDA has to write the proposed rules; a 60-day public comment period would follow. USDA would then prepare the final rules, and if necessary, allow for additional comments. Dorminy believes USDA Secretary Ann Veneman would honor the pork producers' request. "We have a 15-year history of USDA supporting the will of producers regarding the checkoff rate," he said.
If approved, the lower rate would mean $5 million to $6 million less in checkoff funding at today's market prices. Of course NPB funding in any given year fluctuates with hog prices. The 2002 Program Budget presented at Pork Forum totaled $45.8 million.
The prospect of less money going to education, promotion and research concerned many delegates – especially those representing Iowa. NPB officials did not indicate how or where the budget cuts might occur.
"There's a producer-led process that drives budgeting decisions," said Dorminy. "Our job is to manage so that we can sustain programs long term."
The resolution did not specifically address checkoff contributions from seedstock, feeder-pig or weaned-pig sales, or the assessment imposed on pork importers. How those checkoff contributions will be affected is yet to be determined.