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Check out check-off
June 17, 2004

Bean check-offs: A complete history

Who started them and why;how they compare

By Dr. Howard F. Schwartz,
Colorado State University

The United States bean industry and growers have promoted a progressive and dynamic working relationship with teams of research scientists, extension educators and other technical personnel from various land grant universities, the U. S. Department of Agriculture, and private organizations including seed, agrichemical and equipment companies since the early 1900s.

This interactive relationship has elevated the value of diverse bean market classes in terms of nutrition, crop alternatives, economic return and overall sustainability for growers and the U. S. bean industry.

For many years, the USDA and various state governments supported these needs and priorities by directly financing positions (salaries for scientists, educators, technicians) and operating budgets required to conduct basic and applied research, extension and educational programs of benefit to dry bean growers, the industry, and consumers.

However, beginning in the 1970s, commodity groups began to see a decline in direct support from the government as more and more national and international agencies, projects and needs competed for limited tax dollars and funding sources. In addition, many research programs lacked sufficient funding to keep up with inflation and exploding costs associated with the evolution of newer technologies.

Growers and dealers and their respective commodity associations were encouraged to get more involved in the handling, financing and future of their industry. Hence, bean growers in various states and regions of the United States joined together to form or strengthen groups, identify common areas of interest and concern, and take political action to replace lost funding and/or enhance limited funding sources for research, extension and education at the state and federal levels.

Progressive leaders developed campaigns to educate the growers and dealers of the value of investment in research and extension projects at grower meetings and field days, newsletter articles and individual contacts.

States with general Marketing Order legislation then required that a majority vote be expressed by commodity group members (growers, dealers) for creation of their check-off program and its specific components - i.e., marketing, quality control, promotion, research, and/or education.

Bean Grower Associations/Check-off Boards
The following associations were developed in specific states and regions of the U. S. by progressive growers, dealers, research scientists and extension educators at the university level, state agency personnel (i.e., state Commissioners of Agriculture), and others throughout the last 30 years.

The Michigan Commission has been in existence since 1967, the Northarvest association since 1977, and the Colorado committee since 1988. Each state has established its own set of criteria regarding its structure and mode of operation. The bean production region in each state is usually divided into geographical districts (e.g, 1 to 8 in Idaho and Michigan), or bean varietal councils (e.g., 7 market classes in California).

Once the association has established a system for assessing and collecting check-off dollars from the growers and dealers, the state then creates a special board, commission or council to represent the bean industry and be accountable for proper handling of the check-off dollars according to the wishes of its members and legal procedures of the state and federal governments.

Check-off Operating Procedures
U.S. bean check-off organizations consist of 9 to 22 members elected by their peers or appointed by that state's governor or commissioner of agriculture for a 3 to 4 year period to represent growers and dealers from the state at-large or from a specific district/council within that state.
These boards generally have representation or oversight provided by a member of that state's government (i.e., commissioner of agriculture) to insure that fiscal and legal policies are followed by the board and to serve as a liaison with other state agencies and programs. In addition, each board usually hires an executive secretary or manager to help with the day-to- day operations of the board, and general conduct of its business.

Some boards may request ad hoc representation from individuals from their state university and other segments of the industry and receive input and advice from other bean advisory groups that operate in their state (e.g., the Nebraska Dry Bean Growers Association provides this type of input to the Nebraska Dry Bean Commission). The California board also has a public member that contributes to the process.

Each state or regional board establishes operating policies and guidelines, creates projected budgets for upcoming crop cycle check-off dollars, and solicits and selects priority projects (research, extension, education, promotion, industry representation). Each board represents their constituents at the state, regional, national and international levels by participating in trade and industry policy reviews, trade shows and as voting members in other bean industry organizations that focus on promotion, marketing and political issues (i.e., Rocky Mountain Bean Dealers Association, National Dry Bean Council, American Dry Bean Board).

Each check-off board is responsible for managing the bean contributions that are assessed to growers and dealers as beans are delivered to the dealer (first handler). The dealer maintains accurate records of the amount of beans delivered to their elevator and then is responsible for forwarding these records plus payment to the designated state agency (commissioner of agriculture's office) on a periodic basis (for example, monthly to quarterly).

Most states maintain annual records for each crop cycle, and check-off dollars usually represent the year of production, with payment assessed at the time of delivery to the elevator. Therefore, a grower may deliver a load of beans saved on-farm from the 1998 crop, followed by a load of beans from the 1999 crop; and the check-off payment will reflect each separate assessment by crop year by grower. Most states also keep separate records as to the market class that is assessed, i.e., pinto, black, great northern.

Summary of check-off dollars
Table 2 provides an estimate of the amount of check-off dollars that can be generated annually in various states that have implemented such programs during the last 30 years.

These dollars are then allocated by the check-off board for specific programs that they have prioritized after input from their grower and dealer members, advisory groups, research scientists and extension educators, and others.

Most states have a voluntary assessment, and a grower can request a refund of the fee that was automatically assessed; generally, refund requests are less than 5%.

Most boards allocate 40-50% of their budgets for research and extension projects, 10-15% for administrative costs, 5 - 10% for education (including newsletters and other correspondence with their constituents), a portion as carryover for the next year's budget and the remaining income is used for promotion at the state and regional levels and/or membership in national organizations such as the American Dry Bean Board and National Dry Bean Council.

If one assumes that 50% of these check-off dollars are committed to bean research and extension projects conducted by personnel at state universities in the United States, nearly $1.5 million are available from bean commodity groups. Most of these dollars are allocated on an annual basis, and often range from $2,500 to $5,000 per grant or project.

Some core projects such as genetic improvement, variety testing and IPM may each receive $ 5,000 to $10,000 annually, with project review and renewal on a 3 to 5 year basis.

These check-off dollars are vital for research and extension programs to cover operating expenses incurred on behalf of the grower and dealer organizations that they collaborate with in their state and region.

There has been a 24% decline overall (range of 1 - 46% by state) in assessments from the 1997-99 to 2001-03 periods, due to lower production in individual states and nationally.

This decline in revenue for priority research, promotion and education programs is having a dramatic impact upon the ability of state organizations to invest in the future of the bean industry and to meet the needs of their grower/dealer members.

Many states are reviewing their assessment rates and exploring ways such as increased assessment rates for the lower production to regain some of these lost resources.

In conclusion, this framework of state, regional and national programs and collaboration has enabled bean growers and the industry, as well as the scientific community and private sector of the USA to progress and deal successfully with the challenges and opportunities in the 21st Century.

The dramatic downturn in production and financial resources will require that these state organizations critically evaluate the value of programs that they invest in and identify ways to fund priority efforts. Colorado has experienced a particularly alarming downturn of acreage (more than 50%) during the last few years, and the current assessment rate ($0.04 + 0.02/cwt) cannot generate sufficient revenue to invest adequately in priority research and promotion programs on behalf of the growers and dealers.

How check-offs compare

California Dry Bean
Advisory Board:
7 Market Class Boards with 14 growers, 7 dealers, 1 public member
Check-off Contribution: general check-off of $ 0.155/cwt - grower + $ 0.01/cwt - dealer + a specific market class check-off determined by each Market Class Board; varies from $ 0.03 - 0.07/cwt - grower only; no refund provision

Northarvest Bean Growers Association:
North Dakota Bean Council
5 Districts with 5 growers
Check-off Contribution: $ 0.10/cwt - grower + $ 0.00 dealer; refund provision

Minnesota Dry Bean Research and Promotion Council
5 Districts with 5 growers
Check-off Contribution: $ 0.10/cwt - grower + $ 0.00 -dealer; refund provision

Michigan Bean Commission (Production Research Advisory Board):
8 Districts with 8 growers, 1 dealer
Check-off Contribution: $ 0.01/cwt - grower + $0.01/cwt - dealer; no refund provision
An additional $ 0.09/cwt - grower is assessed for promotion

Michigan Bean Commission (Production Research Advisory Board):
8 Districts with 8 growers, 1 dealer
Check-off Contribution: $ 0.01/cwt - grower + $0.01/cwt - dealer; no refund provision
An additional $ 0.09/cwt - grower is assessed for promotion

Idaho Bean Commission:
Commercial, Seed and Snap Bean Industries with 4 growers, 4 dealers,
and 1 seed industry member
Check-off Contribution: $ 0.0667/cwt - grower + $0.0333/cwt - dealer; no refund provision

Nebraska Dry Bean Commission
(Nebraska Dry Bean Growers Association - advisory board):
4 Districts with 6 growers, 3 dealers
Check-off Contribution: $ 0.0667/cwt - grower + $0.0333/cwt - dealer; refund provision

 


 

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Northarvest Bean Growers Association | 50072 East Lake Seven Road | Frazee, MN 56544
Ph: 218-334-6351 | Fax: 218-334-6360 | Email: nhbean@loretel.net