Once the smoked cleared from USDA’s bomb announcing the end of the national pork checkoff last week, some facts have come into focus.
First, it’s not over yet. While the referendum vote shook out with 15,951 votes to end the checkoff and 14,396 to continue it, a group of independent pork producers, state pork producer associations and the National Pork Producers Council headed to the Federal Courts to file an injunction to look into the referendum. As of this writing, details surrounding the injunction – and whether a judge will even agree to look into the issue – are unknown.
The basis for asking a Federal Court to review referendum procedures has to do with voting irregularities. Federal Service Agency county offices conducted the voting, and interpretation of the rules varied greatly. Some of the alleged flaws include handing out the wrong voting materials, failing to post lists of producers who voted in person and those who voted via absentee ballot, disqualifying voters without their knowledge. “We know of a couple of producers who voted in two counties,” says Karl Johnson, a Minnesota pork producer and co-chairman of the industry’s “Vote Yes” campaign.
USDA Secretary Dan Glickman will need to file the checkoff termination order before week’s end, when his term concludes. According to the Pork Act, which outlines details of the checkoff program, the mandatory checkoff must end within six months of the announcement of a negative vote. However, the referendum rules stipulate the checkoff should end within 30 days of such announcement. According to Mike Simpson, executive director of the National Pork Board, Glickman can identify a specific date within his final rule for the checkoff to end.
The question then is if a Federal Court accepts NPPC’s injunction, and the checkoff termination date falls during the review process, would the national checkoff program continue or cease? The answer remains allusive at this time.
The new nominee for the top ag spot, Ann Veneman, is more accepting of producer-directed programs like a national checkoff. If she’s confirmed as USDA secretary, she would have the authority to look into the referendum process and the termination rule. The question is, would she have the will to do so? “It seems unlikely that she would change the current results,” says one pork industry source.
Currently 10 states have checkoff programs on the books. The states are: Iowa, North Carolina, Virgina, South Carolina, Alabama, Louisiana, Montana, Texas, Oklahoma and Maryland. “I don’t know the status of activity of these state programs,” says Simpson, “meaning, I don’t know if they are dormant, expired or whether they will kick in should the national checkoff end.”
In Iowa’s case, a mandatory state checkoff would begin. The rate is set at 0.25 percent of gross market value of market hogs, seedstock and feeder pigs. There is a refund provision and the funds would be used for consumer education, research and promotion, but not for public policy activities.
Other states, including Nebraska and Illinois are looking into passing similar state checkoff programs. A review of producer chat-room comments found on the Internet would suggest solid support for state checkoff programs– with refund options. Whether a voluntary national checkoff program could be successfully reinstated is less sure.
A quick look at the voting breakout shows that 21 states voted to keep the national checkoff program; 15 states voted to terminate it; Mississippi and West Virginia had a tie vote; and 12 states had so few votes that USDA announce their results as a group. The Western Corn Belt led the defeat. Every state in the region, except Minnesota, voted to end the checkoff.
Ron Plain, University of Missouri agricultural economist, provides other insights into the “No” vote. Voter turnout was key. The number of potential voters is unknown, but USDA cites 77,260 operations own hogs in the United States. “If you figure two voters per operation, there was a potential 154,500 votes,” he notes. “That means one in five potential voters bothered to cast a vote.” States with higher “No” votes also had a higher than average voter turnout.
The 19 states that have seen the greatest percent decline in pork operations over the past five years voted 58 percent against the checkoff. The 19 states with the smallest decline, voted 56 percent to continue the checkoff.
As for dollars saved by ending the national pork checkoff (based on $50 million annual collections), Plain says the nation’s 77,000 smallest pork operations will average a $305-annual savings; the nations largest operations will average $106,000 in savings. The nation’s No. 1 pork producer, Smithfield Foods, will save $7 million per year.
“They (checkoff opponents) are going to find out that without the checkoff, they’re going to miss an awful lot of things,” says Johnson, “and that the consolidation of this industry will just happen faster.”
Whether the national checkoff program lives or dies, there will likely be a national pork association in some form. The road to determining what’s its role will be and how it will be funded remains rocky.