Exploring a U.S. Hemp Checkoff Program

The Hemp Industries Association (HIA) recently announced a partnership with the National Industrial Hemp Council (NIHC) to explore the creation of a checkoff program for the hemp industry. If, together, we conclude that the industry sees value in a checkoff and wants to proceed, we will then engage in a long-term collaborative effort to develop a formal application to be submitted to the United States Department of Agriculture (USDA) on behalf of the hemp industry.

 

Frequently Asked Questions

What is a checkoff program?

Officially called Research and Promotional Programs, checkoffs have been established by the U.S. Congress for more than fifty years. The USDA was given authority to regulate the creation of new checkoffs for agricultural commodities in 1996. A checkoff program is a mechanism to collect funds, or checkoff dollars, for funding the research, education, and promotional needs of a specific commodity. The promotion of the commodity must be done in a general way that benefits the industry as a whole and does not favor any specific producer. Activities are intended to expand both domestic and export demand; examples include advertising, nutrition education, research to improve product quality and appeal, market research studies, and technical assistance. The term “checkoff” is derived from historical programs that were not mandatory; producers marked a checkoff box if they wished to contribute to the program. Mandatory programs do not have such forms, but the name has remained. Producers and handlers usually finance these programs from assessments charged on a per unit basis of the marketed commodity. Currently, there are more than twenty checkoff programs active in the United States including beef, pork, dairy, soybeans, cotton, eggs, blueberry, honey, and Christmas trees.


Who runs a checkoff program?

Checkoff programs are run by independent boards made up of producers of the commodity. The board is governed with strict oversight from the USDA’s Agricultural Marketing Service (AMS). Board members are appointed by the Secretary of Agriculture. The board can only engage in activities that include research, education, and promotion of their commodity. HIA and its partners are gathering input from a broad cross section of industry stakeholders to inform our understanding of what a checkoff program for hemp may look like. We want to make sure that we have transparency and that the contributors to that understanding are representative of the hemp industries as a whole, accounting for diversity in geographic considerations, industry segments, and reflect the input of businesses large and small. 

 

How many farmers will participate?

Should the consensus be to move forward with a proposal for a hemp checkoff, all farmers will have the ability to vote on whether they want to implement a checkoff program. The vote can happen before assessments occur or it can occur after the first year of assessments. Once a checkoff is approved, all producers contribute. Congress has made one exception; certified organic producers can opt out of the checkoff. Our work group will want to make sure that there is a broad level of support from hemp producers and will seek to produce letters from industry associations to demonstrate to the USDA and producers around the country that there is a strong level of support to move forward.

 

What is the track record of past checkoff programs?

Checkoffs have been very successful historically for the agricultural sectors that have adopted them. Checkoff programs have been responsible for such familiar American advertising campaigns, including "Milk Does a Body Good," the Got Milk? milk moustache series, "Pork. The Other White Meat", "The Incredible, Edible Egg", and "Beef: It's What's for Dinner." By law, a checkoff program must undergo an economic return on investment analysis every five years. These  studies have consistently confirmed the positive return on investment for producers. Some examples include: 

  • In its most recent analysis, the National Pork Board checkoff program demonstrated an average return on investment of $25.50 per dollar invested.1

  • The cotton checkoff program returned an average of $5.70 of benefit to cotton producers from 1986 to 2005.2

  • U.S. soybean farmers received $12.34 in added value for every dollar they invested in the soy checkoff program.3

 

How are the commodities assessed?

Commodities can be assessed by either a percent of value or per unit of production. Because of the variety of uses for hemp, NIHC and HIA are proposing considering a percentage of value. This will provide funding for much needed research on new uses for the crop, new production practices, as well as for promotion and market development activities.  The final determination will be decided by the work group after discussion and economic analysis.  

 

Will there be segments like for fiber and CBD?

We are in the beginning stages, so those determinations have yet to be made. Once the Working Group is created and more stakeholder support is solicited, we will discuss the specific form the checkoff might take. The industry’s consensus objectives and costs involved will inform the Working Groups recommendations. It is reasonable to assume that a hemp checkoff would invest in activities that support every segment of the industry.

 

What about state checkoff programs?

The state checkoffs are not precluded from the national checkoff program that was established by Congress. Those state checkoffs could continue their work. We would propose a method of coordination between the state checkoffs and a proposed national checkoff program.

 

Can checkoff dollars be used for lobbying?

No. Checkoff dollars can only be used for research, education, and promotion. No checkoff dollars can be used for lobbying or influencing the government.

 

How will the checkoff program be run with transparency and integrity? 

Those assessed make up the board of directors and direct program spending. It is in the industry’s best interest to remember we are collecting farmers’ dollars and that we must invest those dollars for the benefit of the very farmers that are being assessed. Further, checkoff budgets must be approved annually by USDA and are subjected to an annual audit and a three-year management review.



Citations:

1) Kaiser, Harry M., 2017. “An Economic Analysis of the National Pork Board Checkoff Program”, Cornell University,

2) Capps, Oral, Jr. & Williams, Gary W., 2011. "Is the Cotton Checkoff Program Working?", Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center

3) Kaiser, Harry M., 2019. “An Economic Analysis of the United Soybean Board’s Demand- and Supply-Enhancing Programs (2014-2018)”, Cornell University



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