USDA Considers Making Dairy Imports Pay for Promotion

Steve Taylor
Correspondent

WASHINGTON — On its face it looks like a slam-dunk: imports of dairy products should be paying for promotion just the way milk produced in the United States is subject to a mandatory assessment to build markets.

A rule under consideration by USDA would compel importers to pay seven and a half cents per hundredweight of milk equivalent on all dairy products entering the country, with the money collected turned over to the entities that run marketing programs funded with the 15 cents per hundredweight levied against farmers on all domestic milk production.

The rule, predictably, is being pushed by the organizations that already are the recipients of the 15-cent checkoff, including the United Dairy Industry Association and Dairy Marketing Inc., many of whose officials have filed pleas to USDA’s Agricultural Marketing Service to quickly impose the assessment on imported dairy products.

Not so fast, say a mix of foreign governments, cheese importers, U.S. food manufacturers, global agribusinesses, anti-government waste groups and individual dairy farmers, some of whom have long opposed all mandatory promotion checkoff schemes.

USDA wrapped up a comment period on the proposal on June 18, and it has a towering stack of documents and letters from more than 150 parties arguing for and against. The proposed rule first surfaced when the 2002 Farm Bill mandated action to pull imported dairy products into supporting promotion, and when nothing materialized the 2008 Farm Bill again called for action.

And as with virtually anything to do with federal dairy policy a host of conflicting interests was ready for battle when USDA published a draft rule in the Federal register earlier this year.

Proponents of the rule contend that U.S. dairy farmers are having to contend with growing competition from foreign producers who don’t have to pay a promotion assessment, yet the foreign producers benefit from the advertising, market research and promotional work the mandatory checkoff funds support in the U.S. food market.

This free ride needs to end, and an import assessment that’s only half what U.S. farmers are paying is a small burden compared to the benefits of expanding dairy product sales to American consumers, advocates argue.

But opponents respond with attacks along several fronts. Led by the powerful Washington law firm Covington & Burling, they raise constitutional issues over the lack of a referendum for importers such as was provided for domestic producers, among many other concerns.

They contend that if the rule is implemented it will mean that promotional activities will have to become neutral as to product origin, meaning that the well-known “Real Seal” program that denotes products made with domestically produced milk will have to end or be retooled to boost dairy products from around the world. Any kind of promotion that singles out one class of domestic product over any other, domestic or foreign, will have to cease.

It is this aspect that most alarms Pat Boettcher, a Wisconsin dairy producer, who notes that her state’s long and successful history of promoting Wisconsin cheese would come to an end. The USDA rule would prevent any U.S.-specific promotional element that would seem to discriminate against any import. The state’s cheesemakers would have to accept that their products were no better than generic cheeses from anywhere, she says. But she also wonders how such an outcome would square with the push for Country of Origin Labeling (COOL) requirements currently undergoing widespread adoption.

And many of the country’s nearly 1,800 cheese importers say they don’t want any part of the generic marketing activities currently conducted by the farmer-funded U.S. dairy promotional organizations.