Checkoff oversight virtually nil

More and more, the federally-mandated, non-refundable commodity checkoffs resemble something out of a Charles Dickens novel. Most feature huge casts, complicated plots and, to read their press releases, are completely responsible for the best of times enjoyed by their farm- and ranch-payers.

Truth

But when federal auditors examine almost any aspect of the 18 checkoffs created by Congress, they usually find the worst of times: funds misspent on illegal travel, subcontracts used to funnel money for unauthorized bonuses, no procedures to track money and audit rules so porous that a checkoff-bought Sherman tank could clank through most checkoffs without a question or an eyebrow getting raised.

That was the case again March 30 when the Office of Inspector General at the USDA released an unusually brief — but highly critical — audit of the “possibility of weak oversight controls” of federally-chartered checkoffs. (A link to the OIG report is posted at www.farmandfoodfile.com.)

The audit, explains the report, had been initiated by an “AMS’ (USDA’s Agricultural Marketing Service) former administrator” in 2009 when “stakeholders,” mostly farmers and ranchers, “paid approximately $528 million” to the checkoffs. And while $528 million ain’t chickenfeed, OIG found that the federal checkoff watchdog, AMS, was pretty chicken … well, lax in its oversight and, often, just blind.

Bottom line

“Specifically,” notes the report, “AMS’ oversight policies were unclear regarding the agency’s role and responsibilities,” and, as such, the “staff did not always enforce the agency’s guidelines” which “increases the risk that funds could be misused.” Could be? No, were. “A recent OIG investigation … reported that a subcontractor of the USB” — the United Soybean Board, the soybean’s checkoff’s governing body — named “the United States Soybean Export Council, used subcontracts as a mechanism for paying employees unauthorized bonuses totaling approximately $302,000.”

“Misuse” like this is common, according to the report, because “guidelines (for) periodic management reviews” of the checkoffs vary from “every three years” for those in the fruit and vegetable program to those in the livestock and seed area that “had a policy to conduct a management review when a complaint or concern arose.”

That’s right; someone first had to complain that money in the multi-million dollar livestock and grain checkoffs was misused before anyone at AMS even sharpened a pencil.

Huh. Your local elevator coop, school district and church perform annual audits as a matter of policy but AMS needs “a complaint or concern” to put on its green eyeshades.

It gets worse

This hear-no-evil, see-no-evil approach meant that “the Livestock and Seed program” — the AMS umbrella over the beef, pork, lamb, soybean and sorghum checkoffs — “had not conducted a management review of any its boards in at least five years.”

Hard to believe. Wow. Not one person looked into the tens of millions of farmer and rancher dollars spent annually in any of these five major checkoffs for anything because “officials said they had not received a complaint or had any concerns during that time period.”

Little wonder then that the beef checkoff’s contractor, the National Cattlemen’s Beef Association, used checkoff dollars to pay for the spouse of a “senior staff member” to accompany him to New Zealand for a “meeting” or that $300k in unauthorized bonuses were slipped to a soybean checkoff subcontractor.

Not only was no one looking, you could take it to the bank that no one would look — for years, if ever.

And little wonder that, despite laws banning the use of checkoff money for lobbying, three top beef checkoff officials attended the National Farmers Union convention in Omaha in early March to pressure NFU delegates to alter, drop or vote against a South Dakota resolution that endorsed a USDA plan “to expand the contracting authority” of the beef checkoff.

Why would beef checkoff officials fight against opening up contracting to more than just the NCBA, an organization that grabs nearly 90 percent of all beef checkoff dollars but sports fewer than 3 percent of all cattle owners as members?

Hey, file a complaint. Maybe we’ll both find out.

About the Author

Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children. farmandfoodfile.com More Stories by Alan Guebert

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