URBANDALE, IA – Pork producers will save some money with a reduced checkoff rate, but it means fewer dollars for the program to utilize. Effective Jan. 1, 2023, USDA’s Agricultural Marketing Service (AMS) is cutting the Pork Checkoff assessment rate by 5 cents per $100 of the market value of all pigs sold in the U.S.
The current rate of 40 cents will be dropped to 35 cents per $100 on Jan. 1, 2023, following recommendations by the delegates from National Pork Producers Council, which overwhelmingly voted to support a resolution calling for a 5-cent reduction in March 2022.
“The decreased assessment rate reflects the Delegate Body’s desire to lessen the assessment burden on producers,” AMS stated in its final rule, published Nov. 4.
According to AMS, the final rule also decreases assessments on imported pork and pork products to bring importer assessments in line with those paid by domestic producers.
AMS addressed the question of the cost and benefit of reducing the assessment, which decreases funds available for research, promotion and consumer information of pork and pork products.
While AMS noted that economic research shows promotion programs “generally yield positive net returns to producers,” it also cited a 47% increase in 2021 for the average prices of live hogs above its 3-year average from 2018-20 in their decision.
“While this finding would initially suggest that a reduction in the assessment would reduce returns to pork producers (and thus fails a cost benefit analysis test), AMS notes the sharp increase in pork prices in the intervening period as a mitigating factor to relying solely on that study,” the final rule stated.
“Even with the rate reduction, AMS has no reason to believe that the Board cannot effectively continue its goal to develop and expand markets for pork and pork products by funding promotion, research, and consumer information initiatives.”
Pork Checkoff payments are collected for all pigs sold with a change of ownership. This includes sales of weaned pigs, breeding age animals and at the final market destination. The Pork Checkoff is mandated by the Pork Promotion, Research, Consumer Information Act.
Payments received by NPB for pigs sold on or after the first of the year will reflect the reduced rate.
The rate change was a recommendation of the Pork Industry Vision Task Force – a group of 19 leaders from NPB, NPPC and various state associations – to ensure the pork industry’s long-term success.
The process is extensive to make a change to the mandatory checkoff. Following a rule-writing process and after approval from AMS, there is a rule-writing process. The proposed rules are then published in the federal register. Following a 90-day comment period, it becomes codified.