Issue in Focus
Apr 07 2017
Two years ago, a small California company called Hampton Creek, who had been selling a vegan mayonnaise called “Just Mayo” in stores nationwide, was attacked by a US Department of Agriculture (USDA) program called the “American Egg Board.”
You may be asking why on earth the federal government was involved in a pressure campaign to thwart a startup vegan brand of mayonnaise.
Simply put, it’s because the American Egg Board did not appreciate the small Hampton Creek vegan mayo company competing with the large, egg producing companies that it represented, so they took affirmative action to cut out their competition. While this behavior may be common in the private sector, the American Egg Board is a federally sanctioned commodity checkoff program, and that behavior has no place in a federal program.
Commodity checkoff programs were originally intended to support research and promote certain agricultural products. Industry representatives asked Congress for the USDA to pool funds by imposing a tax on producers of certain commodities and then put those taxes into a program, known as a checkoff program, that would financially support research and promotion.
In spite of this original intent and limited purpose, the USDA has been lax in its oversight of checkoff boards. As a result, many checkoff programs have acted beyond the scope of their statutory mandate, even including illegal lobbying and anti-competitive behavior, placing their government-sanctioned thumb on the scale of the free market.
Such was the case with the American Egg Board and Hampton Creek.
Now you may be asking: Is this really something the federal government should be doing in the first place?
Of course not. But until we eliminate checkoff programs or make them truly voluntary, we can, at the very least, ensure that they are not harming competition or stifling innovation in the agriculture industry.
If farmers and ranchers want to get together and pool their resources to better promote their products, then that is the free market at its best. But as soon as the power of the federal government is used to force people into a program they do not want to participate in, then that is crony capitalism at its worst.
Checkoff programs were intended to promote certain commodities, not disparage others. They are certainly not intended to prevent any new products from having a fair chance in the marketplace.
These programs are in need of reform and oversight. Senator Booker (D-NJ) and I believe our legislation, the “Opportunities for Fairness in Farming Act of 2017,” or the “OFF” Act (S. 741), can help provide that.
Not only would this bill clarify and fortify the prohibition of checkoff programs from contracting with organizations that lobby specifically on agriculture policy, but it also establishes program standards that prohibit anti-competitive behavior and other activities that may pose a conflict of interest.
To help enforce those rules, it requires transparency regarding a checkoff program’s budget and expenditures, ensuring money collected by the government isn’t used in illegal lobbying or in anti-competitive ways.
Should this pass into law, it will be a win for the free market and for small ranchers, farmers, and startups. And hopefully, it will ensure the USDA is not left standing with egg on its face again.