Livestock Marketing Association 7509 Tiffany Springs Parkway, Kansas City, MO 64153 800-821-2048 816-891-0502 Fax: 816-891-7926 Email: lmainfo@lmaweb.com

Lamb Checkoff Q&A

The new lamb checkoff, which was implemented July 1, has started out on a very sour note for livestock markets that handle sheep. One of the biggest problems encountered by the markets was the lack of official notice of the implementation date by USDA until nearly two weeks after collection of assessments were to have begun. As a result, markets were given no time to adjust their bookkeeping systems or resolve a number of administrative issues before collection of the assessment had started.

From all the calls that LMA has been getting from their member markets, it would appear that the lamb checkoff and how checkoff assessments were to be collected and remitted was not well thought out prior to its implementation. The following are a few of the most common questions that have been raised by our member markets in the past couple of weeks. The answers are based on discussions with USDA’s Agriculture Marketing Service (AMS) and the Grain Inspection, Packers & Stockyards Administration (GIPSA) and sheep industry leaders.

Q:  Does the checkoff cover all classes of sheep?
A:  Yes, it is called the “lamb” checkoff but the assessment is collected on sheep of all ages.

Q:  Why did they use a pass through system for assessment collections, where the markets collect the assessment and pass it on to the buyer?
A:  This is a good question but presumably to make it easier on the markets so they didn’t have to remit as well as collect the assessment. Instead it has created a costly administrative nightmare for the markets requiring them to revamp their bookkeeping software or put on additional office help to manage checkoff assessments.

Q:  Do I have to write out a check to the buyers for the assessment collected from the seller, which is some cases may just be for a couple of dollars or a few cents, or can I credit the buyer for that amount?
A:  AMS says you can show it as a credit. GIPSA has not given the official okay to do it this way but we anticipate they will in order to make it easier on the markets.

Q:  The assessment is based on weight but my market sells sheep by the head, how do we deal with this?
A:  AMS has given the okay to estimate the weight of sheep that are sold by the head however many markets are not comfortable with doing it this way. For now, the markets will either have to estimate the weight or weigh the sheep in determining the amount of the assessment to be collected from the seller.

Q:  Is GIPSA on board with allowing the markets to credit the buyers for the collected assessment and estimating the weight for assessment purposes?
A:  GIPSA is working on policy directives on these issues now. We should hear something official from them soon. Early signs indicate that GIPSA will allow some of these exceptions in order to help the markets avoid further cost or delays in collecting the assessments.

Q:  I didn’t know about the new lamb checkoff until well after its implementation date and did not collect the assessment during that time, will I be considered in violation of the Order?
A:  Not likely, AMS tells us that compliance is likely to be very lax for the first couple of months while all the wrinkles in the program are ironed out.

Q:  I have a buyer who says he is not going to pay the full amount owed for the sheep he purchased at my market because I did not collect the assessment from the seller and credit his account for the assessment. Am I now stuck with the producer’s checkoff bill for these sheep?
A:  No, not for a while anyway. AMS has agreed to work with the parties in these circumstances until some of the problems encountered with the program are worked out.

Q:  I sell sheep to a lot of individuals who are unlikely to pass on the assessment or remit it to the Lamb Board. What is my responsibility in this case?
A:  Your responsibility for compliance with the lamb checkoff ends at the market when you collect and pass on the assessment. As long as your records are in order, you won't have a compliance problem.

Q:  I never heard of a referendum being held on the lamb checkoff, did I miss something?
A:  No, a referendum prior to implementing the program was not held on this particular checkoff. The law that established this checkoff permits a referendum to be held any time up to three years after implementation of the program.

Q:  Is this a voluntary program?
A:  Yes, in the sense that producers can file to get their assessments back after a referendum is held, regardless of its outcome. So, while sheep producers must pay the assessment for now, they can get it back later.

Q:  Is there any chance the markets will be reimbursed for their startup and ongoing administrative costs in collecting lamb checkoff assessments?
A:  The Lamb Promotion Order does not provide for reimbursement of expenses connected with collecting and remitting checkoff funds however LMA intends to address this and other issues with the Lamb Board when it is in place in a couple of months.

Q:  Did LMA support the establishment of a lamb checkoff?
A:  No, in our comments to USDA we opposed the establishment of any new similar checkoffs until the issue of the constitutionality of other standing checkoffs (pork, beef and dairy) had been resolved.

Q:  Who can I contact at USDA to let them know of the problems my market is having in implementing the lamb checkoff and to get answers to my questions?
A:  We suggest you call Randall Jones, AMS Associate Deputy Administrator, or his boss, Deputy Administrator Barry Carpenter, at 202-720-5705