Agricultural Promotion Programs: USDA Could Build on Existing Efforts to Further Strengthen Its Oversight
Remember "Got Milk?"
Those ads are sponsored by 1 of 22 industry-led research and promotion programs funded by producers of commodities like dairy or pork and such ads are overseen by USDA. These "check-off" programs have restrictions on their activities, such as being prohibited from promoting false advertising.
We reviewed USDA's process for overseeing program activities and financial controls. We made 5 recommendations, including that it consistently review subcontracts to prevent misuse of funds, and ensure documents are on program websites to promote transparency and ensure stakeholders have access to information on program operations.
Examples of commodities covered by research and promotion programs (commonly known as check-off programs)
Photo collage of a cow, honey, pig, blueberries, cotton, cheese, and soybeans.
What GAO Found
The U.S. Department of Agriculture's (USDA) Agricultural Marketing Service (AMS) has improved its oversight of check-off programs since USDA's Office of Inspector General (OIG) made recommendations in a 2012 report. In response to two OIG recommendations, AMS developed and implemented standard operating procedures, which outline specific oversight responsibilities of AMS, and began to conduct internal reviews of its oversight functions. However, GAO found that AMS does not consistently review subcontracts—a legal agreement between a contractor and third party—or ensure that certain documents are shared with stakeholders on program websites.
- Subcontracts. Under AMS's 2015 guidelines for check-off programs, which cover broad oversight activities, staff are to review a sample of subcontracts during agency reviews of program operations. However, AMS did not revise its standard operating procedures to match its guidelines with this responsibility, and GAO found that AMS reviewed subcontracts for only one check-off program in its sample of eight. Without revising the standard operating procedures to include a review of subcontracts, AMS's ability to prevent misuse of funds is impaired.
- Transparency. According to leading business principles, transparency is central to stakeholders' access to regular, reliable, and comparable information. However, GAO found that four of the eight check-off programs reviewed posted all key documents, such as budget summaries and evaluations of effectiveness, to program websites. GAO found that AMS's guidelines state that budget summaries should be posted on program websites, while the other key documents are to be available on the website or otherwise made available to stakeholders. Agency officials said that boards would supply documentation if contacted by a stakeholder. Industry representatives GAO interviewed said that transparency of how funds are used and the effectiveness of programs are important to their members. Without including in its guidelines and standard operating procedures that all key documents should be posted on a check-off program's website, AMS may miss an opportunity to ensure that stakeholders have access to information on program operations and effectiveness.
Independent economic evaluations of the effectiveness of check-off programs, required by law to be conducted every 5 years, have generally shown positive financial benefits. For the eight evaluations GAO reviewed, benefits ranged from an average of $2.14 to $17.40 for every dollar invested in the programs. However, the evaluations varied in the methods used and had certain methodological limitations. For example, some evaluations did not account for the effects of promotion from competing commodities, which could overstate the programs' benefits. AMS's standard operating procedures state that the agency should review the evaluations to ensure that there is a credible methodology, among other things; however, AMS did not consistently document reviews of the evaluations or have criteria by which to review the evaluations. Without developing criteria to assess the methodology and results of evaluations, the agency's assessments of independent economic evaluations may be inconsistent across check-off programs and misleading to stakeholders.
Why GAO Did This Study
“Got milk?” and “Pork: The Other White Meat” are examples of advertising campaigns undertaken by 2 of the 22 federal agricultural research and promotion programs, commonly known as commodity check-off programs. These programs, funded by a fraction of the sale of each unit of a commodity, are led by boards consisting of industry members appointed by the Secretary of Agriculture. The programs conduct research and promotion activities to strengthen a commodity's position in the market. In 2016, check-off funds totaled over $885 million. By law, funds cannot be used for lobbying or disparaging other commodities, among other things. AMS has primary responsibility for overseeing the check-off programs.
GAO was asked to review AMS's oversight of the check-off programs. This report examines (1) the extent to which AMS has addressed previously identified weaknesses in its oversight and (2) how the effectiveness of the programs has been evaluated and what the results have indicated. GAO selected a sample of 8 such programs—selected, in part, based on total funds collected—and reviewed laws, regulations, and agency guidance. GAO interviewed agency officials, check-off board executives, and economists.
GAO is making five recommendations, including that USDA revise its standard operating procedures to include the review of subcontracts, include key documents on check-off program websites, and develop criteria to assess evaluations. USDA generally agreed with GAO's recommendations.
Recommendations for Executive Action
|Agricultural Marketing Service||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 1)||
AMS established criteria in its management review procedures to include a review of check-off program subcontracts. The criteria includes the methods AMS uses to draw a sample of subcontracts for the management review. We believe these actions address this recommendation.
|Agricultural Marketing Service||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 2)||
AMS developed a tracking database system to record management review findings and recommendations. The system will aid AMS' efforts to follow up with check-off program boards to ensure that they implement management review recommendations. We believe these actions address GAO's recommendation.
|Agricultural Marketing Service||The Administrator of AMS should ensure that annual independent audits include the five statements of assurance as outlined in the standard operating procedures. (Recommendation 3)||
AMS updated its standard operating procedures for annual CPA audits and notified check-off program boards of their responsibility to ensure these audits contain all required statements of assurance. AMS verified that the check-off boards included the statements of assurance both in audit engagement letters, which document the agreed-upon terms of the audit, and in annual audit reports. We believe these actions address this recommendation.
|Agricultural Marketing Service||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 4)||
AMS amended the check-off board guidelines and procedures to ensure that all check-off programs display key documents on check-off programs' websites. These key documents include annual budget summaries, annual reports, bylaws, and independent economic evaluations. We believe these actions address this recommendation.
|Agricultural Marketing Service||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. (Recommendation 5)||
AMS formed a working group to develop standard operating procedures for the check-off board independent evaluations. These standard operating procedures include criteria to guide how AMS economists evaluate check-off boards' independent evaluations, including how to assess the methodology and results of independent evaluations. We believe these actions address this recommendation.