Release Date: October 2007
Time to Pick up the Check
Jerry Kozak,
President/CEO
All of us have dined occasionally with acquaintances who, at the end of the dinner when the check comes due, suddenly have a hard time forking over their fair share of the tab. These are the type of people whose definition of what is fair makes you wonder sometimes.
We have a similar situation in the U.S. dairy business, where importers of foreign dairy products enjoy the fruits of the largest, richest consumer market in the world, yet don’t contribute their share to help build and develop the market.
As U.S. dairy farmers are well aware, they have paid a 15 cent per hundredweight checkoff on their milk production since 1984, to be used for generic promotion and research of milk, dairy ingredients and cheese. Additionally, fluid milk processors pay a 20 cent per cwt. checkoff for similar purposes. In fact, ten U.S. agricultural commodities have comparable mandatory promotional programs, including big ones like beef, pork and cotton, that apply their assessment to imports. Dairy – the biggest checkoff program of them all – is the lone exception.
We thought we had that oversight corrected in 2002, when the Farm Bill contained a provision extending the equivalent of the 15 cent checkoff on dairy imports (i.e., 1.5 cents per pound for cheese). All imported dairy-derived products would be assessed, but basically the items most affected would be cheese, and dry protein-based ingredients that end up in cheese products.
Unfortunately, the USDA has never implemented the checkoff on imports, out of an overabundance of caution that such a checkoff could violate world trade regulations. So now, five years later, NMPF is again pushing – in the Farm Bill now under development in Congress – a technical correction to the law that was passed in 2002. This fix applies the domestic checkoff to farmers in all 50 states, not just in the continental 48 (which was the scope of the original dairy checkoff law). By covering the entire U.S. producer community, we can then make sure that importers will also pay their share. NMPF estimates that more than $10 million annually in import assessments will be collected as a result.
Dairy importers claim there is something unfair about this proposal, even though the rate of dairy imports has grown significantly faster in the past decade than the overall rate of U.S. consumption. Clearly, they benefit from an expanding U.S. market, and should help pay to develop that market. The fact that we have long-standing checkoff assessments on many imported commodities – and those programs haven’t spawned litigation and trade challenges – is the best evidence that once their moment of dramatic hand-wringing and teeth-nashing is over, this is hardly a big deal for foreign exporters.
The U.S. dairy checkoff has been vital to creating a favorable climate for the continued consumption of all dairy products through more than just advertising. Foreign dairy interests know only too well how dairy producers around the world face a variety of threats from fears about BSE and foot and mouth disease, vegan animal rights activists, diet and nutrition issues, and more. These challenges to the marketing environment are just part of what the domestic dairy checkoff works to counteract. And importers benefit from these efforts just as much as domestic producers.
Ultimately, importers are engaged in a literal case of penny-ante economics: they don’t want to pay into the checkoff program, period, even if the effective cost is just a measly penny they wouldn’t bother picking up off the sidewalk.
For America’s farmers, this is an issue of fairness, and unfortunately, the situation has gone on for much longer than it should. Dairy farmers are paying $270 million each year to help build the record growth in U.S. cheese consumption, now more than 30 pounds per capita annually. Importers of foreign dairy products benefit from that growth, but pay for none of it. Congress needs to make certain that the dine ‘n’ dash mentality of foreign interests ends with this farm bill. It’s time everyone who eats at the table pays this tab.
