As 2003 draws to a close, there are a couple of unresolved issues that will spill into next year's pork industry agenda. Leading the list is the future of the pork checkoff.
In all likelihood, within the next 12 months we will know more about the true fate of the pork checkoff. Pork's not alone in the checkoff battle. Thirty-one other commodity checkoff programs are currently being challenged at various levels. In most cases, the key issue focuses on First Amendment rights/free speech infringement. In other words, some producers feel they should not have to pay for generic advertising or other checkoff-funded programs they disagree with.
Appellate Courts have ruled on several cases, including the pork and beef checkoff programs, declaring them unconstitutional. The Sixth Circuit Court of Appeals upheld a Michigan court judge's decision earlier this year that declared the pork checkoff is unconstitutional.
Pork checkoff advocates now have two options:
Request a rehearing from the full panel of six Sixth Circuit Court judges, or
Request a “stay” allowing the checkoff to continue while an appeal is filed with the U.S. Supreme Court.
The Supreme Court hears only 5-6% of the cases brought before it, so there is no guarantee the checkoff appeal will be placed on the docket. However, with a constitutionality issue at the center of the debate, some feel the High Court justices are more likely to accept an appeal. Some are betting the beef checkoff will be the test case.
With so many checkoff programs literally hanging in limbo — I sure hope the Justices hear a case. The pork industry and many other segments of agriculture need a definitive decision.
In the meantime, it would be foolhardy to assume the checkoff will go on as is. The Justices may agree with the lower court rulings and banish all commodity checkoff programs. Or, they may agree that the laws regulating checkoff programs must be rewritten to exclude generic promotion programs. Of course, they also could rule that checkoff programs may continue as is.
Without question, the challenges facing the pork industry are increasingly legislative or regulatory in nature. At last year's Pork Industry Forum, several states presented resolutions calling for lowering the mandatory checkoff rate. The underlying thought — a reduction of the mandatory rate would result in more producers voluntarily reallocating those monies to an unrestricted fund. A good deal of debate ensued. The 172 Pork Act delegates, responsible for setting the checkoff assessment rate, held fast to the 40¢/$100 rate.
However, with key legislative and regulatory battles being waged at all corners of the country, I suspect the checkoff rate debate will recur at several state association meetings again this year, with resolutions for a rate change back on the Pork Forum table in March.
Regardless of the Supreme Court's decision to address the checkoff conundrum, producer-funded organizations (mandatory or voluntary), are obliged to meet the needs and wants of the membership. The Justices may formally decide the fate of the checkoff, or, producers may chose to realign their funding priorities. Either way, a failure to plan ahead would be the greatest miscue of all.
It's high time that producers on both sides of the U.S.-Canadian border cultivate a greater understanding of the scope and interaction between their respective industries.
For all practical purposes, the U.S. breeding herd has stabilized and it's the smallest it's been in modern times.
The biggest cuts have come in the leading hog state, Iowa, where the sow herd has been cut by one-third in the last 8-9 years. But, Iowa producers imported 14.5 million feeder pigs for finishing in 2002. Where did they come from? Missouri and Canada.
Second-ranked North Carolina's sow herd has stood at about one million for several years, a reflection of the ongoing moratorium on new hog buildings.
Meanwhile, in the five-year stretch from '97 to 2002, Canada boosted the number of pigs farrowed by 45%; number of pigs exported increased 62%. Canada exports 20% of their production.
Considering the impact the Canadian hog and cattle markets have had on U.S. hog prices this year, it shouldn't be too difficult to persuade pork enthusiasts on both sides of the border to pay greater attention to what each other is doing. Failure to do so will leave us all limping along with very tight margins and more tough economic times ahead.
There are opportunities for Midwestern producers to get out from under inefficient breeding and farrowing facilities, yet continue to add value to their abundant corn and soybean crops through finishing Canadian-born feeder pigs. It makes perfect business sense, and, in the end, the total North American sow herd can be better matched to domestic and foreign demands.