On July 20, USDA’s Agricultural Marketing Service (AMS) formally proposed reducing the Pork Checkoff rate from 40 cents to 35 cents per $100 value for live animals, in line with a vote by National Pork Producers Delegate Body.
From 2018 to 2020, total checkoff revenue ranged from $72.3 million to $77.6 million, USDA said in the Federal Register. During that period, 95.6% of all revenue was from domestic sales and 4.4% was derived from assessments on imported hogs and pork products. Of domestic revenue, 98.6% was derived from market hogs and 1.4% was derived from feeder hogs. In 2021, total checkoff revenue increased approximately 41% to $103.6 million, an increase primarily reflecting the 47% increase in live hog prices.
Despite the price increase, both the share of all revenue derived from imports and the share of domestic revenue share derived from live hogs was mostly unchanged in 2021 relative to previous years, AMS noted.
The assessment decrease would reduce annual funding of the promotion, research and consumer information program by an estimated $13.5 million under the assumption that 2021 market conditions persist. This decrease reflects both a $12.3 million reduction in domestic assessments stemming from the 12.5% decrease in the rate of assessment for live hogs (i.e., the change from 0.40 to 0.35% assessment for live weight hogs), which totaled $98.4 million in 2021 and a $1.2 million reduction in importer assessments.
These reductions in assessment rates are made in response to the increase in the average prices of live hogs and reflect the National Pork Producers Delegate Body’s desire to lessen the assessment burden on producers and make such funds available to pork producers and the industry.
The adjustment in importer assessments also would bring the equivalent market value of live animals from which imported pork and pork products are derived in line with the market value of domestic porcine animals. A Harmonized Tariff Schedule number for prepared or preserved pork also would be updated in the regulation.
The AMS Administrator determined that the order would not have significant economic impact on a substantial number of small entities; therefore, a regulatory impact analysis was not required. The Census of Agriculture reports that 64,871 U.S. farms produce hogs and pigs in 2017.
Many of those farms are likely to be classified as small business by having total sales less than the $3.5 million threshold set by the Small Business Administration. AMS does not believe that this rule change will have a significant or differential economic impact on small producers because total assessments paid are proportionate to the value of hogs sold by a producer.
This is not the first reduction in assessment rate for this program. The program was funded by an initial assessment rate of 0.25% . The rate was increased to 0.35% effective December 1, 1991, and then to 0.45% effective September 3, 1995. Further, the rate was decreased to 0.40 percent effective September 30, 2002. The import assessments were decreased by five-hundredths to seven-hundredths of a cent per pound effective April 2, 2004, to reflect a decrease in the 2002 average price for domestic barrows and gilts, the Federal Register explained.
“Even with the proposed rate reduction, AMS has no reason to believe that the Board could not effectively continue its goal to develop and expand markets for pork and pork products by funding promotion, research, and consumer information initiatives,” the Federal Register announcement said.
See the announcement in the Federal Register. Comments must be received by August 19.
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