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Thursday March 22, 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.


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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.

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.

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