GAO: Ag Checkoffs Need to Be More Consistent in Analysis, Auditing Procedures

The General Accounting Office (GAO) released its review of the 22 agricultural commodity checkoff programs today, finding no major problems but calling for more consistent auditing procedures and oversight by the United States Department of Agriculture.

It also recommends economic analysis done to determine the checkoff programs’ benefit-cost ratios (BCRs) be done consistently across all commodities. These BCRs range widely, from 17.4 for pork programs to 2.14 for fluid milk. But it’s difficult to compare program effectiveness among commodity programs since the methodologies to determine them often differ, depending on the contracted group doing the analysis.

The dairy checkoff is by far the largest program USDA administers, taking in $332.1 million annually from dairy farmers and another $94.8 million through the fluid milk processor program, known as Milk PEP. Soybean growers contribute $89.5 million, cotton growers, $74.1 million, and pork producers, $70.3 million. The beef checkoff, which has generated the most controversy in recent years, takes in $39.1 million.

 The 32-page report includes five recommendations to USDA:

Recommendation 1: “The Administrator of AMS should revise the standard operating procedures for AMS’s check-off programs to state that management reviews include a sample of subcontracts for review.

Recommendation 2: “The Administrator of AMS should establish a mechanism for documenting and tracking follow-up with check-off boards on the implementation of management review recommendations.”

Recommendation 3: “The Administrator of AMS should ensure that annual independent audits include the five statements of assurance as outlined in the standard operating procedures.”

Recommendation 4: “The Administrator of AMS should include in the guidelines and standard operating procedures that key check-off board documents, such as bylaws and policy statements, annual reports, and independent evaluations of economic effectiveness are posted on the check-off programs’ websites.”

Recommendation 5: “The Administrator of AMS should develop criteria by which to assess the methodology and results of independent evaluations and document those reviews to ensure that the standard operating procedures are met.”