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The Role of Government and the Dairy Check Off

By Jim Chen at al.

Much has been made about "limited" government in this election season, but unfortunately much of that discussion has been more about slogans than about any real analysis.

The New York Times raised a related issue today that takes the role of government discussion in a different direction, highlighting a problem that I have raised for years in my teaching of agricultural law subjects.  The USDA is consistently expected to balance two distinct and often divergent roles -  supporting the U.S. agricultural industry and supporting a healthy and safe food system. 

The New York Times article, While Warning About Fat, US Pushes Cheese Sales provides a concrete example.  The USDA is both involved in promoting cheese consumption and in encouraging us to eat a diet with less saturated fat.  The article quotes Dr. Walter C. Willett, chairman of the Harvard School of Public Health Nutrition Department. "The USDA should not be involved in these programs that are promoting foods that we are consuming too much of already."

The article discusses Dairy Management, an organization funded by the dairy industry through its government-backed "check-off program" as the entity that is actively promoting the increased consumption of cheese.  This, in and of itself, is not unusual.  Almost all food producers actively promote their products.  We are literally bombarded with television advertisements, celebrity endorsements, "happy meals," grocery product placement tricks, etc., all designed to get us to eat foods, many of which are not good for us, at least in the quantity we eat them.  It should be no surprise that the dairy industry wants us to eat more cheese.  As Dairy Management brags on its website:

Between 1983 ? the year the dairy checkoff came into existence ? and the present, sales have increased by nearly 90 pounds per capita, an increase of 17 percent. Today, per capita consumption is growing at a healthy pace, outpacing population growth.

It is the involvement of the government that creates the real controversy.  And, this is a complex issue. One cannot "follow the money" and understand the story.  The dairy check-off program, like other agricultural check-off programs, is funded almost exclusively by dairy producers and processors through a mandatory check-off system.  The only specific allegation of USDA funding is money provided to Dairy Management for the promotion of dairy products for export markets. 

The government connection is more structural.  The check-off system was created by Congress. The dairy check-off is one of a number of similar systems (e.g., pork and beef check offs).  It is mandatory, and in response to a challenge by smaller producers, it was upheld by the U.S. Supreme Court as a constitutional exercise of "government speech."

As the USDA explains with respect to the dairy program:

The Dairy Production Stabilization Act of 1983 (Dairy Act) authorized a national producer program for dairy product promotion, research, and nutrition education to increase human consumption of milk and dairy products and reduce milk surpluses. This self-help program is funded by a mandatory 15-cent-per-hundredweight assessment on all milk produced in the contiguous 48 States and marketed commercially by dairy farmers. It is administered by the National Dairy Promotion and Research Board (Dairy Board).

Consider what Justice Scalia said in the Supreme Court case that upheld the constitutionality of the beef check-off system. This similar system was challenged by smaller producers who did not feel that its message served them well. The court rejected the challenge, holding it was protected "government speech."

The message set out in the beef promotions is from beginning to end the message established by the Federal Government. Congress has directed the implementation of a ?coordinated program? of promotion, ?including paid advertising, to advance the image and desirability of beef and beef products.? 7 U.S.C. §§ 2901(b), 2902(13). Congress and the Secretary have also specified, in general terms, what the promotional campaigns shall contain, see, e.g., § 2904(4)(B)(i) (campaigns ?shall ... take into account? different types of beef products), and what they shall not, see, e.g., 7 CFR § 1260.169(d) (2004) (campaigns shall not, without prior approval, refer ?to a brand or trade name of any beef product?). Thus, Congress and the Secretary have set out the overarching message and some of its elements, and they have left the development of the remaining details to an entity whose members are answerable to the Secretary (and in some cases appointed by him as well).

Moreover, the record demonstrates that the Secretary exercises final approval authority over every word used in every promotional campaign. All proposed promotional messages are reviewed by Department officials both for substance and for wording, and some proposals are rejected or rewritten by the Department. Nor is the Secretary's role limited to final approval or rejection: Officials of the Department also attend and participate in the open meetings at which proposals are developed.

Johanns v. Livestock Marketing Ass'n, 544 U.S. 550, 125 S.Ct. 2055 (2005).

The New York Times article raises a very important issue. Justice Souter actually raised a similar point in his dissent, noting that USDA dietary guidelines were inconsistent with the additional consumption of beef advocated by the ad campaign. What the Times article may miss, however, is that this is not a problem within the USDA. Secretary Vilsack has done more than any USDA Secretary of Agriculture has ever done to promote healthy foods. His department, however, has been given duties that sometimes cannot be reconciled. Congress needs to address the issue and de-couple the government from industry advertising.  And, then, if the ads are false (as in the referenced claim that dairy products will help to reduce weight), the FTC should challenge them.

Full post as published by Agricultural Law on November 07, 2010 (boomark / email).