Commodity Promotions

VFBF Policy

Cotton

We support a referendum of Virginia cotton producers on the question of allowing the Virginia Cotton Board to increase the state assessment on cotton by a maximum of fifteen cents a bale to meet increased financial demands.

Apples

We believe emphasis should be placed on assisting the apple industry in remaining economically viable.

Equine

We support the establishment of an equine feed check-off not to exceed $3 per ton with distribution of funds for research, promotion, and education being distributed by the Virginia Horse Industry Board.

Background

Virginia's agricultural commodity boards were created to enhance the sale of Virginia's farm commodities by conducting market development, promotional, educational, and research programs. The individual boards, comprised of producer and agribusiness representatives, administer the self-help funds in the various program areas. Periodically, updates need to be made to these existing boards to reflect current needs. Three of these boards need additional authority to ask specific commodity farmers to vote whether they would like to increase their self-imposed assessments for the purpose of being able to fund additional marketing, promotional, educational, or research sponsored activities.

Cotton

The Virginia Cotton Board was established through legislation by the Virginia General Assembly in 1997. After a referendum of eligible cotton producers that same year, in which the majority of those voting voted in favor of a state assessment on cotton, the state began collecting an annual “check off” of 85 cents per bale of cotton ginned in the Commonwealth. These monies are dispersed by the Cotton Board for programs related to research, education, and promotion of cotton. As with other checkoff boards, the Virginia Cotton Board can enter into contractual relations with other entities whose mission is consistent with that of the Board. Since its inception, the Board has had such a relationship with the National Cotton Council (NCC). For the first time in almost 20 years, the NCC is raising its member state dues by 15 cents. In order to continue our arrangement with NCC and at the same time maintain a level funding stream for state specific projects, the cotton industry would like to have a referendum of producers asking them whether or not they favor an increase on the current assessment by a maximum of 15 cents to meet these increased financial obligations.

Apples

The excise tax on apples, as well as the Virginia State Apple Board, was created by legislation in 1946. The purpose of the Board was to plan and conduct education, advertising, publicity, sales promotion, and research projects relating to the Virginia apple industry to increase consumer awareness, demand, and usage of Virginia apples and apple products. In 1999, the law was updated to change the way members of the Virginia State Apple Board were elected, as well as to combine excise taxes paid by apple producers and apple packers so that the tax was only paid by apple producers. In 2001, the law was updated once again to provide apple producers with the opportunity to hold a referendum on the continuation of the levy of an excise tax on apples. The referendum was held in 2003 and apple producers voted against the continuation of the excise tax. In 2004, the law was changed to reflect the results of this referendum. However, over the course of the remainder of 2003 and 2004, a number of the large apple producers were impacted by the reduction of funding collective marketing efforts. In addition, they experienced a decline in the research information available that had once been funded by this tax. These larger producers recognized the potential burdensome nature of the fiscal impact of the excise tax on smaller producers. So, they would like the opportunity to hold another referendum of apple producers who produce at least 5,000 bushels a year to re-impose an excise tax of 2.5 cents per bushel only on these larger producers. This new excise tax is considerably smaller than the original tax. There is no opposition to this proposal among these producers.

Equine

The Virginia Horse Industry Board was created in 1993. A referendum was conducted among horse owners who had paid for the equine infectious anemia test during the preceding year. The referendum overwhelmingly passed. Currently, horse owners pay $1.50 assessment of each equine infectious anemia test conducted.

The Virginia Horse Industry Board provides grants for research, educational, and promotional support for expansion of the Virginia equine industry. However, the industry recognizes that this funding source can not generate the revenues needed to keep up with an expanding industry in Virginia. A comprehensive equine survey, conducted by the Virginia Agricultural Statistics Service in 2001, indicated an inventory of 170,000 equine in the state with an overall value of $1.46 billion. The equine industry has wide support in requesting the authority to conduct a referendum of all equine owners regarding the establishment of a Virginia Equine Feed “check off.” The assessment would be $3 per ton, or 7.5 cents per bag, of commercial feed labeled for equine use. On average, a horse eats approximately one ton of feed per year.

All feed manufacturers who produce equine feed that is sold or imported for sale in Virginia would be responsible for collecting the assessment from equine owners and remitting to the Virginia Department of Agriculture and Consumer Services on an annual basis. The assessment would apply only to feeds labeled specifically for equine. The assessment would be added to the cost of equine feeds manufactured and sold in the state, as well as those imported into Virginia for the sale. Currently, feed manufacturers already pay a licensing fee of which 7 cents is dedicated to the Virginia Agriculture Council. Therefore, there would be only a minimal amount of additional paperwork for the administration of the assessment on equine feed.

This is not a new concept. Maryland and North Carolina also have developed a similar type of equine feed assessment.

Reasons for Position

These proposals are simply authorizing the respective industries to conduct referendums for determining whether the industry supports imposing a self assessment on itself.

There is no change to the basic policy issue. There are 14 different commodity assessments. These programs have been in place since 1946.

There is wide industry support for each of these proposals.