After nine years of arguing, dairy importers will now pay a 7.5¢/cwt. research and promotion assessment fee effective today. The notice was published in the Federal Register this morning.
The nine-year hold up has been the requirement that all U.S. dairy producers, including those in Alaska and Hawaii, contribute to the checkoff program. Failure to have every dairy producer in the country subject to the checkoff while charging importers the fee would not have met World Trade Organization rules.
So today’s announcement expands the checkoff to Alaska and Hawaii as well. Importers will now also have two seats on the National Dairy Research and Promotion Board, expanding the Board to 38 total directors. Alaska’s five producers will be included with Oregon and Washington, and Hawaii’s two producers with California.
“It’s been a long time in coming, but we’ve finally achieved a degree of fairness in the area of dairy promotion between domestic milk production and imports,” says Jerry Kozak, National Milk Producer Federation president and CEO. “Dairy importers, who benefit from the world’s largest dairy market, need to help pay to expand that market, the same way that our farmers do.”
The inclusion of importers in the assessment was first passed in the 2002 Farm Bill. But because dairy producers in Alaska and Hawaii were not paying the assessment, it could not be expanded to importers under WTO rules. That was changed in the 2008 Farm Bill, but it took until today for the United States Department of Agriculture’s Agricultural Marketing Service to promulgate rules.
Since the effective date of the assessment is today, it is too early to say exactly how many more dollars will be generated from the import assessment, says David Pelzer, senior V.P of strategic communications for Dairy Management, Inc.
In 2010, imports represented were about 3% on a total solids basis. So back of the envelope math suggests the 7.5¢/cwt. assessment on dairy imports might range from $4 to $5 million annually.
Kozak notes that 10 other farm commodities have promotion programs that apply checkoff to their imports. “Dairy has been the exception to this common practice,” he says.
But not everyone is happy with the new assessments. “This international tax does not help expand our U.S. dairy export markets and has been widely opposed by our trading partners,” says Connie Tipton, IDFA president and CEO. “It’s unclear to us why dairy producers are willing to promote dairy imports at a time when U.S. dairy imports are declining and our U.S. exports are growing.”
