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Thursday April 26, 2018
Why do farmers tax themselves?

This year marks the 40th anniversary of the founding of the Nebraska Corn Board, the group that collects a portion of the sale price of every bushel of corn in the state and then allocates those funds to research, promotion and product development to expand the use of Nebraska corn. The corn "checkoff," as it's known, the nation's first, is one of hundreds at the state and federal level to be applied in the past 80 years. From beef to pork, soybeans to cotton, honey to pistachios, Christmas trees to oranges, and more, numerous checkoff programs exist to do the same for their respective farm commodities. It's been estimated that nine out of every ten U.S. farmers pay such a tax on their production.

The anniversary raises an interesting question: Here in tax-resistant rural Nebraska, where President Trump's tax-cutting campaign message carried all but two counties, and where the issue of property taxes remains a sore point between farm and town, why have farmers over the years been so enthusiastically willing to impose this type of tax on themselves?

Why do farmers do that?

Nearly every checkoff works the same: The law requires farmers to pay a mandatory assessment on each bushel, pound or other unit of production for the commodities they market. Money pooled from these checkoffs typically go to a producer-controlled board, which then passes it out to subcontractors to pay for generic advertising, and product and production research.The history of those self-imposed taxes goes back to the Great Depression of the 1930s, when farmers were desperate for relief from depressed markets that drove thousands from their farms, according to University of Virginia history professor Sarah Milov, a specialist in the history of U.S. consumerism, who wrote one of the few in-depth histories of checkoff programs for a 2016 issue of the journal Business History Review.

Checkoffs, Milov argues, are a contradictory hybrid of New Deal–era government farm relief and a more recent embrace of free-markets, which U.S. farmers have always praised but not always thrived under. Although New Deal interventions designed to bring relief to Depression-era farm problems changed American agriculture profoundly, leaving a legacy that even today survives in the form of the Farm Bill, farm payments and crop insurance, it couldn't solve the underlying problem that plagued farmers then, and still does today: overproduction.

"New Deal agriculture policy did not thwart overproduction—far from it," she writes. "Farm output outstripped demand for most of the years between 1930 and 1970. Machines, chemicals, and more intensive cultivation practices made American farmers vastly more efficient." With that efficiency came supply gluts and inevitable market depression.

The checkoffs were an ingenious idea to change the problem, Milov says. The problem was not too much supply, but instead, too little demand. As government slowly stepped away from trying to manage supply—that is, paying farmers not to grow crops—self-funded checkoffs stepped in to try to absorb the surplus by increasing demand. And although many checkoffs originated as voluntary assessments, most have now resorted to backing their collection by force of government, as farmers who volunteered to pay the assessment inevitably discovered the perrennial "free rider" problem, in which a small group of farmers banding together to increase demand found themselves frustrated by non-contributing farmers who increased their production to take advantage of higher prices, only to re-glut the market and defeat the purpose.

"Between 1954 and today, dozens of generic promotion programs have been authorized by Congress and hundreds more operate within individual states," Milov notes. "They do more than promote commodity consumption through advertisements like the famous 'Pork: The Other White Meat' or the 'Got Milk?' campaigns. Checkoff dollars also fund scientific research intended to portray industries in a favorable light."

Says Dave Merrell, chairman of the Nebraska Corn Board, “We’ve achieved a lot throughout the corn checkoff’s 40-year history in Nebraska, but we’re not dwelling on past successes. We’re more focused on the next 40. How do we build upon our successes with ag trade? What is the next ethanol? What’s new in research and biotechnology? How do we better engage with consumers who don’t understand where their food comes from? These are the questions we’re actively working to answer.”

And even though you don't pay the mandatory assessments, Milov suggests, grocery stores, large food companies and restaurants all benefit from the resulting advertising that promotes the nutritional qualities of food commodities like beef, pork, eggs and cheese.

“Nebraska’s corn industry is a key economic driver for the state,” says Kelly Brunkhorst, executive director of the Nebraska Corn Board. “Over the last four decades, Nebraska has been a national leader in many sectors in agricultural production, and much of that can be attributed to our state’s farmers and the value-added corn industries that the corn checkoff has supported.”

Interested in more history and accomplishments of the Nebraska Corn Board and its farmer-funded efforts? Check them out here.


Shoppers are often confused; we know that. As Farmer Goes to Market has reported in the past, consumers may tell surveyors they want foods labeled according to how they're raised or processed. But does that expressed desire signify shoppers are in search of something better, or does it signify that they don't really understand what the terms mean? Recent Nebraska work, for instance, makes the point. Surveyed meat and egg consumers expressed two opposing demands simultaneously: They said they didn't care whether food was certified organic, but they strongly cared whether it was "hormone-free," "non-GMO," and "humanely-raised" (which is essentially organic). That kind of contradiction "suggests some skepticism about consumers’ knowledge," as the scientists delicately phrased it.

Now, here come some more newly published studies that cast doubt on exactly how well your shoppers really understand what they're getting with these types of label claims:

'All-natural' is misleading? Tennessee ag economist Karen Lewis DeLong used a choice experiment to estimate consumer willingness to pay for ribeye steaks that were labeled as:

  • Natural
  • Grass fed
  • Corn fed
  • Fed without genetically modified feed
  • Grown without growth hormones and antibiotics.
  • She chose those particular characteristics because surveys have shown consumers associate many of them with the vague term "natural," which itself has no clear legal definition.

    DeLong then tested whether shoppers changed their willingness to pay a higher price for natural based on whether they were informed about USDA's legal definition, which is simply that it contains no artificial flavors, colors or chemical preservatives and is only minimally processed.

    DeLong theorized that if consumers are not willing to pay a premium once they find out USDA's definition has nothing to do with GMOs, hormones, antibiotics or feed, that has to mean the "natural" claim is misleading. She found:

    • Consumers who came into the study with no knowledge of the "natural" definition showed willingness to pay a premium for the grass-fed, no GM feed, no growth hormones, no antibiotics, and natural labels.
    • Consumers who were then informed of the USDA meaning only maintained a willingness to pay more for grass-fed and no growth hormones labels.
    • She concludes that only consumers unfamiliar with the definition of natural had a significant willingness to pay a premium for natural labeled steak, while consumers familiar with the definition of natural did not.

    Several companies and consumer groups have voiced concerns that the natural label on food products is misleading and should be banned, or at the very least, be redefined. DeLong's findings suggest that concern is a fact, and that calling food "natural" is inflating their costs with no clear benefit.

    "Given these results, it seems plausible that the natural label is misleading to consumers who are uninformed and unfamiliar with its meaning...," she writes.

    Functional label illiteracy? In the second study, U.S. Food and Drug Administration's Alexander Persoskie analyzed data from the Health Information National Trends Survey, a nationally representative survey of health information seeking among 3,185 U.S. adults in the winter of 2013. Persoskie asked participants to read an ice cream nutrition label and answer four questions that tested their ability to apply basic arithmetic and understanding of percentages to interpret the label. He also asked participants their intake of sugar-sweetened soda, fruits and vegetables to guage whether any connection existed between ability to understand labels and eating habits. His results:

    • Nearly one in four could not determine the calorie content of the full ice-cream container.
    • Just over one in five couldn't estimate how many servings they'd have to eat to consume 60 g of carbohydrates.
    • He found 42 percent were unable to guess how many calories they'd save by giving up one serving a day.
    • Similarly, 41 percent couldn't calculate the percentage daily value of calories in a single serving.
    • People who had not graduated from high school had the poorest performance on the four nutrition label questions: More than a third of this group could not correctly answer any nutrition label questions, and fewer than 9 percent could correctly answer all four questions. However, even a college education didn't guarantee understanding. Only 54 percent of people who had earned a 4-year college degree could correctly answer all four nutrition label questions.

    The good news, if there's any, is he found higher scores for label understanding were associated with consuming more vegetables and less sugar-sweetened soda, although only the association with soda consumption remained significant after adjusting for demographic factors.

    So much for science. As part of its month surveying of just over 1,000 U.S. consumers, Oklahoma State's ag economics department set out to test whether 7 percent of U.S. citizens really believe chocolate milk comes only from brown cows, as was reported in a previous study. So they asked.

    Again, there's good news and bad in the results. The good? Only 1.6 percent of respondents in the Oklahoma State study attributed chocolate milk to brown cows and white milk to white cows. And the bad?

    Almost one in every five of the same respondents answered the question, "True or false: the sun revolves around the earth" as true.

When it comes to labeling foods as to what farmers do—and don't do—the contradictions abound:

  • Consumers say they want "welfare-friendly," but "raised without antibiotics" is more likely, not less likely, to make animals suffer needlessly.
  • Consumers say they want "sustainable," but by decreasing the efficiency of the food chain, "GMO-free" actually reduces environmental sustainability.
  • Consumers say they want "cage-free" so hens don't suffer, but research shows more birds die and are wounded, on average, in barns that don't put them in cages.

It's a food-labeling jungle out there, and new research shows it's getting more confusing. Do consumers know what they really want?

University of Nebraska ag economists Kate Brooks and Taro Mieno, working with a fellow economist from Illinois, try to answer that thorny question—at least about livestock-raising—in an upcoming issue of the journal Agriculture and Human Values. They point out that although the research is "extensive" showing that consumers say they want products labeled as organic or with animal-welfare claims, the trouble is most of the science only asks consumers to consider one production claim on a label at a time. Although that makes the experimentation easier to carry out, it bears little resemblence to the stew of differing labels shoppers now face in the store.

So the Nebraska researchers instead subjected sampled consumers to a scale that forced them to rank as "best" or "worst" differing side-by-side production claims, including:

  • Certified organic
  • Humanely raised
  • Grass-fed (for cattle) or vegetarian diet (for chickens)
  • No growth hormones
  • No antibiotics
  • Free-range (cattle) or cage-free (chickens)

After weeding out practicing vegans, respondents who didn't reply completely and people who don't regularly shop for meat, milk and eggs, the researchers ended up with 1,039 responses. Their best/worst question structure allowed them to place each production claim on a relative scale, compared to one another, of importance to consumers. They found:

The most important production claims were "no growth hormones," "no genetically-modified organism" and "humanely raised." Together, these three claims captured three out of four shares of preference claims for beef, milk, chicken and eggs. The "no antibiotics" claim ranked in the middle importance for all products, while the "free-range/cagefree," "grass-fed/vegetarian diet" and "certified organic" claims were ranked as the least important. Women were more likely to prefer the no hormones claim compared to men, who were more likely to prefer the free-range/cage-free and grassfed/vegetarian diet production claims.

Which label claims count?

The study offers little to point to the logic of consumer interest in such "absence labeling" product claims:

  • The ag economists found it particularly interesting that low- and medium-income shoppers tended to rank the humanely raised claim as more important than high-income ones did, in contrast to previous research and conventional wisdom that the opposite is true. In their study, high-income families tended to prefer the no antibiotics and organic production claims more than the low-income families did. Another surprising finding: While they expected consumers with a farming background to have different preferences for production claims than shoppers with no farm background, no differences were observed between the two groups.
  • Even though the "no growth hormones" claim was one of the most important traits across all product types, no growth hormones are used in chicken or egg production in this country and haven't been for almost a half-century—a fact USDA requires processors to remind consumers of on every package of chicken labeled as grown without antibiotics. Milk marketed as produced without use of recombinant growth hormone is likewise required to be labeled stating no science exists to prove it's any different from regular milk.
  • As Farmer Goes to Market has reported before, the seemingly simple term "animal welfare" covers some complex nuances that are often unsubstantiated and even contradictory. Yet "humanely raised" ranked relatively high in all product categories.
  • This latest study purposely excluded an entire category of common label the researchers considered too vague, including "agriculturally sustainable," "environmentally friendly" and "natural." While they may describe how some farmers raise animals, their precise definitions were deemed too unclear to the researchers to test, and likely less clear to consumers. How they would have affected the rankings is unknown.
  • Although shoppers across the board ranked "certified organic" as the least important trait to look for when shopping, the irony is that obtaining an organic certification from USDA means the farmer must to some degree incorporate all of the other tested traits those shoppers rated as more important. Whether shoppers' devaluing of the certified organic claim comes out of ignorance about what it means or out of some desire for something else wasn't clear. However, with the scientist's typical flair for the understatement, the Nebraska researchers did note that shoppers' expressed desire for multiple claims on the same package instead of the umbrella organic claim does "suggest some skepticism about consumers’ knowledge."

As urbanites from the U.S. coasts and from other countries fly into and over Nebraska, a perpetual question arises from spring through fall: Why do High Plains farmers plant their fields in the form of giant crop circles?

As you can see from this satelite image of the Platte River valley, Nebraska's farmscape has today become a patchwork of nearly uniform circles, varying in color and shade, dotting the landscape. Those circles represent a significant change in how the common crops, particularly corn, wheat, and sorghum, are grown.

Why do farmers do that? Nebraska is the nation's No. 1 state for the use of irrigation to grow crops, according to 2013 census data from USDA, the most recent data. Nearly 40 percent of all Nebraska acreage now employs some form of irrigation—or nearly 16,000 farms. Those crop circles illustrate the most common method for applying that irrigation, a method that some say was itself invented in Nebraska: The center pivot.

A center pivot irrigation system uses a long chain of pipe that typically stretches from a water well or pumping station in the middle of a field to the outermost edges. The pipe carries water from the pump system housed in the field's center out to those borders. Irrigation water pumped through the piping delivers a continuous spray out of nozzles spaced along the pipe.

That pipe is carried above the crop on a series of wheel chassis that hold it above the ground. Those wheels are then driven so that the entire pipe system walks slowly around the center pump like the hands of a clock. It typically takes a day or more for the entire pipe to make a complete circle, watering all areas of the field reached evenly.

Because the circular arrangement of the center pivot can't reach into the corners of the fields, and because crops won't grow or aren't planted in the areas that aren't reached by the irrigation, the system results in fields that appear as circles from high above. In addition, some fields are also divided into only portions of a circle, depending on how and when crops are planted and the irrigation frequency, sometimes giving fields the appearance of pie wedges.

Like large parts of the Midwest, Nebraska's irrigation wells are fed in part by the Ogallala Aquifer, a vast reservoir of underground water that covers parts of eight states. Lying from 100 to 350 feet beneath the surface of the soil, the aquifer was formed by the giant rivers and streams that formed the landscape during the last ice age ending thousands of years ago. Because the aquifer must be "recharged" by surface water that slowly seeps down through soil, some have expressed concern that practices like irrigation are withdrawing water faster than it can be replenished.

Center-pivot irrigation is a water-conservation tool designed during the 1950s by Colorado farmer Frank Zybach, who along with friend and Columbus, Neb., car dealer A. E. Trowbridge and Robert Daugherty, the young owner of a fledgling Nebraska farm equipment company called Valley Manufacturing, developed and marketed what would come to be called "the most significant mechanical innovation in agriculture since the replacement of draft animals by the tractor." Because, unlike traditional water sprinklers that shoot water into the air, center pivots drop water directly onto crops, less of it is lost to evaporation and more goes to water growing plants.

Today's center pivot systems are often computer-controlled, high-tech engineering solutions that distibute water evenly across 1-mile diameter fields of rolling hills, and have even begun to solve the problem of empty field corners by adding robotic arms capable of swinging out to reach into those corners.

As the long days, sleepless nights and feverish work to get crops out of the fields and the year's beef cattle out of pastures and into feedlots get into full swing across Nebraska over the next six weeks, chances are unfortunately good that farmers will get hurt or die in the process.

Statistics show farming remains America's most dangerous occupation, both here and across the nation, with Nebraska farm workers suffering an accident rate of more than six injuries for every hundred workers, about 50 percent higher than the accident rate for grocery stores.

Our popular "Why Do Farmers Do That?" series takes on the question: Why do farmers injure themselves so regularly? The question's not as simple as it may seem, and surprisingly unsettled among the experts. Here are a few known—and suspected—contributors:

The nature of the occupation. Farmers work outside (and suffer heatstroke). They work with often large and sometimes aggressive animals (and get stepped on, crushed, gored and suffocated or drowned by exposure to fumes from their stored manure). They handle pesticides and other lethal chemicals (and suffer exposure-related illness). They drive tractors and work around other heavy equipment (and get crushed, buried and maimed by open machinery). They work on tall structures (and fall or get electrocuted by coming into contact with overhead power lines).

Images of the traditional pastoral farm aside, today's full-time farms more closely resemble industrial workplaces than they do Old McDonald's farm, says John Shutske, longtime farm-safety expert and professor of safety engineering and agricultural health at University of Wisconsin.

"Today's farm has its big share of dangerous machines, potentially toxic environments and animals that are easily five to six times bigger and twice as fast as the NFLs biggest lineman," Shutske says. "But, I don't know that people living and working on farms view their farm that way. It's their home and their life. That's not a bad thing at all, but if we could convince every farmer and member of their family that—at least from a safety perspective—their workplace is a potentially deadly industrial workplace," he says, we could make a significant impact in farm-related injuries.

Economic pressure. Not unlike many of the grocers they supply, farmers exist in what some economists deem "commodity hell." Constant competition and relatively undifferentiated commodity products leaves farmers competing on a low-margin, cost-based basis. Cost-based competition requires continually increasing productivity, which leads to even lower prices, which requires even more productivity to survive. Such continual bleeding-edge cost-control leaves little margin to make improvements in equipment, so safety investments often fall to the bottom of list.

Take roll-bars and seat belts on tractors, for instance, which the National Institute of Occupational Safety and Health estimates would prevent more than nine in 10 cases of the No. 1 cause of death on farms—overturned tractors that crush the driver. NIOSH estimates only 60 percent of the nation's 4.6 million tractors are so equipped.

Those economic contributors likely reach beyond equipment investment, as well. The seasonal nature of farming and vulnerability to weather delays condenses a year's worth of work into a few hectic and often sleep-deprived weeks, inviting accidents caused by distraction, fatigue and willingness to accept shortcuts in the name of time efficiency. Even the mental stress associated with economic booms and busts may contribute, Shutske believes. His work over the past year has drawn a connection between constant, chronic stressors and the deleterious impacts that occur on memory, attention and other higher brain function.

"Being highly distracted, forgetful, slow to act or economically unable to make needed improvements, repairs and corrections is not easily forgivable when you're talking about a 300-horsepower machine or a 1,500-pound animal," he says.

Lack of regulation and safety training. Small and mid-sized farms are not subject to most federal occupational safety regulations. Some might argue regulation doesn't make much difference in safety in the longrun, but that lack of regulation also contributes to a lack of safety training on most farms, which is hard to argue doesn't contribute to high accident rates. Farmers, who tend to work alone, seldom if ever have any safety supervision other than their own to rely on.

Cultural factors. Although it appears to be falling out of favor in modern times, the culture created by America's "agrarian myth"—the underlying belief that farmers must accept a life of deprivation and hardship, away from the comforts (and safety protections) of the city life, in order to permit urban society to prosper—has been suggested as a cause of high farm accident rates. Fewer safety experts, Shutske included, fully buy that explanation; however, the explanation remains tempting.

When Obama-Administration OSHA announced it planned to start regulating grain bins in 2013 to protect, in part, children who were being suffocated after being buried in and around them, reaction against the plan from the farm community was loud and angry. Opponents argued OSHA was intruding into farmers' traditional independence, and that farmers know better than bureaucrats how to keep their employees and families safe.

That sense of indendence and the sense of fatalism that accompanies it, an ethic not restricted to America alone, has been cited as a possible cause of farmer's willingness to take risks that can lead to accidents. And anecdotal evidence of farmers who actually display amputated fingers as badges of determination and long-suffering can't be dismissed as evidence farmers, at least in the past, have accepted injury as just part of the job.

"But I think we turned that corner a long time ago," Wisconsin's Shutske argues, "I don't think farmers just "accept" injury as part of life anymore. I truly don't think the cultural beliefs and the norms of a modern farm operator are all that different than a business person in any other industry."


In patnership with the Nebraska Grocery Industry Association

The Nebraska Grocery Industry Association was formed in 1903 by a group of Omaha grocery store owners, wholesalers and vendors to allow them to promote independent food merchants and members of the food industry, and to promote education and cooperation among its membership. NGIA continues to represent grocery store owners and operators, along with wholesalers and vendors located throughout Nebraska, by promoting their success through proactive government relations, innovative solutions and quality services. NGIA offers efficient and economical programs. NGIA also lobbies on both a state and national level, ensuring that the voice of the food industry in Nebraska is heard by our representatives.

Supported by the Nebraska Farm Bureau

The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.

Supported by the Nebraska Corn Board

The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.

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