AGRICULTURAL 

PROMOTION 

PROGRAMS

USDA Could Build on 

Existing Efforts to 

Further Strengthen Its 

Oversight

Report to the Honorable Nancy Pelosi,

Minority Leader, House of 

Representatives

November 2017

GAO-18-54

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-54, a report to the 

Honorable Nancy Pelosi, Minority Leader, 

House of Representatives

November 2017

AGRICULTURAL PROMOTION PROGRAMS

USDA Could Build on Existing Efforts to Further 

Strengthen Its Oversight 

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.

View GAO-18-54. For more information, 

contact Steve Morris at (202) 512-3841 or 

morriss@gao.gov.

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 checkoff 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.

What GAO Recommends

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.
Page i GAO-18-54 Agricultural Promotion Programs

Letter 1

Background 4

AMS Has Improved Its Oversight of Check-off Programs, but 

Some Oversight Activities Are Not Consistent across Programs 10

Check-off Evaluations Generally Indicate Positive Returns but 

Vary in How They Are Conducted and Reviewed 19

Conclusions 28

Recommendations for Executive Action 29

Agency Comments 30

Appendix I GAO Contact and Staff Acknowledgments 31

Tables

Table 1: USDA Commodity Check-off Programs 5

Table 2: U.S. Department of Agriculture Commodity Check-off 

Programs Assessment Revenue, 2016 7

Table 3: Results of Independent Economic Evaluations of 

Effectiveness for U.S. Department of Agriculture 

Commodity Check-off Programs 22

Figures

Figure 1: Agricultural Marketing Service Research and 

Promotion/Check-off Program Oversight Structure 9

Contents
Page ii GAO-18-54 Agricultural Promotion Programs

Abbreviations

AMS Agricultural Marketing Service

BCR benefit-cost ratio

FOIA Freedom of Information Act

OIG Office of Inspector General

OIRA Office of Information and Regulatory Affairs

OMB Office of Management and Budget

ROI return on investment

USDA U.S. Department of Agriculture

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-18-54 Agricultural Promotion Programs

441 G St. N.W.

Washington, DC 20548

November 21, 2017

The Honorable Nancy Pelosi

Minority Leader

House of Representatives

“Got milk?” “Pork: The Other White Meat”. “The Incredible, Edible Egg”. 

These are three examples of advertising campaigns for agricultural 

commodities undertaken through research and promotion programs, 

commonly known as commodity check-off programs. At present, there are 

22 commodity check-off programs authorized by the Secretary of 

Agriculture through orders issued after public notice and comment. The 

Secretary issues these orders under the authority provided in legislation 

addressing specific agricultural commodities or under general authority 

provided in the Commodity Promotion, Research and Information Act of 

1996.1 As stated in the general act, these programs were formed to 

strengthen a commodity’s position in the marketplace through the 

development and implementation of promotion, research, and information 

programs. The U.S. Department of Agriculture’s (USDA) Agricultural 

Marketing Service (AMS) has primary oversight responsibility for ensuring 

that check-off boards comply with legislative and regulatory requirements.

The term check-off refers to the way the research and promotion 

programs are funded—an assessment is paid by producers, handlers, 

processors, importers, or others in the marketing chain for each unit of a 

commodity sold, produced, or imported. The programs are principally 

funded by this assessment and do not receive federal appropriations. In 

2016, program assessments totaled over $885 million for these federally 

authorized check-off programs.

Each check-off program is operated by a board, such as the American 

Egg Board or the Cattlemen’s Beef Board, whose members, for the most 

part, are appointed by the Secretary of Agriculture from nominations 

submitted by industry. Check-off board staff are primarily responsible for 

the operations of the board and interacts daily with AMS representatives. 

 1

The following are the 22 commodities for which there are research and promotion 

programs: beef, Christmas trees, cotton, dairy, eggs, fluid milk, Hass avocados, highbush 

blueberries, honey, lamb, mangoes, mushrooms, paper and packaging, peanuts, popcorn, 

pork, potatoes, processed raspberries, softwood lumber, sorghum, soybeans, and 

watermelons.

Letter
Page 2 GAO-18-54 Agricultural Promotion Programs

The check-off boards conduct activities to increase overall demand for the 

commodities; expand markets in the United States and abroad; and 

expand the commodities’ uses through research, promotion, and 

consumer and industry information.

Among other things, check-off boards are explicitly prohibited from (1) 

engaging in any action that could be a conflict of interest; (2) using 

assessed funds to influence any legislation or governmental action or 

policy; and (3) promoting any advertising that may be false, misleading, or 

disparaging to another agricultural commodity. AMS has primary 

oversight responsibility for ensuring that the boards follow these 

prohibitions and abstain from these activities. In 2012, USDA’s Office of 

Inspector General (OIG) found that AMS needed to improve certain areas 

of its oversight of check-off board operations.2

You asked us to review AMS’s oversight of check-off programs. This 

report examines (1) the extent to which AMS has taken steps to address 

previously identified weaknesses in its oversight of check-off programs 

and (2) how, if at all, the effectiveness of the check-off programs has 

been evaluated and what the results of those evaluations have indicated.

To perform this work, we reviewed statutes and regulations related to 

check-off programs. In addition, we reviewed AMS guidance for check-off 

programs, including the programs’ guidelines and standard operating 

procedures.3 We also reviewed OIG reports on check-off program 

oversight.4 For each of the objectives, we selected a nonprobability 

sample of 8 of the 22 check-off programs.5 We selected these programs 

to get a range of information based on the following criteria: (1) AMS 

 2

U.S. Department of Agriculture, Office of Inspector General, Agricultural Marketing 

Service’s Oversight of Federally Authorized Research & Promotion Board Activities, Audit 

Report 01099-0032-Hy (Washington, D.C.: March 2012).

3

U.S. Department of Agriculture, Agricultural Marketing Service. Guidelines for AMS 

Oversight of Commodity Research and Promotion Programs (September. 2015).

4

For example, see U.S. Department of Agriculture, Office of Inspector General, 

Agricultural Marketing Service’s Oversight of Federally Authorized Research & Promotion 

Board Activities, and Agricultural Marketing Service Oversight of the Beef Promotion and 

Research Board’s Activities, Audit Report 01099-0001-21 (January 2014).

5

Our sample included the following check-off programs: Beef, Cotton, Egg, Fluid Milk, 

Highbush Blueberry, Honey, Pork, and Sorghum. Because this was a nonprobability 

sample, its results are not generalizable to all check-off programs but provide illustrative 

examples of such programs.
Page 3 GAO-18-54 Agricultural Promotion Programs

commodity area, (2) amount of total assessments collected, and (3) 

whether each program was created under its own stand-alone legislation 

or the Commodity Promotion, Research and Information Act of 1996. We 

interviewed senior agency officials from each of the four AMS commodity 

areas in which the 8 programs reside as well as the marketing specialists 

who oversee the 8 programs. We also interviewed executives from the 

check-off boards of the 8 programs in our sample. In addition, we 

interviewed representatives from five industry organizations to discuss 

information that they receive related to check-off programs and their 

organizations’ views on any evaluations of check-off program 

effectiveness. We selected organizations with members who pay checkoff program assessments and who have an understanding of the checkoff programs based on information found on the organization websites.

To determine AMS’s oversight activities, we reviewed relevant laws, 

regulations, and agency guidance. Among the statutes we reviewed were 

the Commodity Promotion, Research and Information Act of 1996 and the 

various laws establishing other check-off programs along with the 

regulations pertaining to the sample of 8 check-off programs.6 We 

compiled a list of AMS’s oversight activities, and obtained documentation 

from AMS for the 8 programs in our sample for fiscal years 2014 and 

2015 to demonstrate whether those oversight activities were completed. 

Using this documentation, a first GAO reviewer determined whether the 

oversight activities were completed. A second reviewer then made his or 

her own determination as to whether the activities were completed. The 

first and second reviewers subsequently met to reconcile any differences. 

Once the reviews were complete, we shared our findings with marketing 

specialists from each of the 8 check-off programs in our sample. We held 

meetings with the marketing specialists and the AMS directors in each of 

the four commodity areas in which the 8 programs reside to discuss the 

various oversight activities and how AMS conducts those activities.

To address the effectiveness of check-off program evaluations and their 

results, a GAO economist assessed the most recent independent 

economic evaluations of effectiveness for the 8 check-off programs in our 

 6

Check-off programs not established under the Commodity Promotion, Research and 

Information Act are: beef, cotton, dairy, egg, fluid milk, Hass avocado, mushroom, 

popcorn, pork, potato, soybean, and watermelon programs.
Page 4 GAO-18-54 Agricultural Promotion Programs

sample using GAO’s guidance for assessing economic analyses.7 This 

included an assessment of the (1) objective and scope, (2) alternatives, 

(3) analyses of effects, (4) sensitivity analyses, and (5) documentation. A 

second GAO economist then reviewed this assessment. This assessment 

was used to determine the various methodologies used in the check-off 

program evaluations, the soundness of those methods, and any 

limitations. In addition to reviewing the evaluations, we also spoke with 

the economists who conducted independent evaluations of effectiveness 

for our sample of 8 check-off programs to learn about their methods as 

well as any challenges they may have faced in conducting the 

evaluations. We also interviewed three additional economists who did not 

conduct evaluations of the 8 check-off programs we assessed to get the 

views of external experts. We selected these economists because they 

had previously published journal articles on evaluating check-off 

programs. Finally, we reviewed literature on conducting evaluations of the 

effectiveness of check-off programs.

We conducted this performance audit from August 2016 to October 2017 

in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Check-off programs are designed to expand the market for a given 

agricultural commodity, such as eggs, pork, or highbush blueberries, 

through generic promotion, research, and consumer and industry 

information. A check-off program is meant to expand the demand for a 

commodity rather than for any particular brand or producer.8 Although 

some state, regional, and local check-off programs that have existed for 

 7

The criteria or key elements that GAO bases its assessment of an economic analysis are 

established from the Office of Management and Budget’s (OMB) Circular A-94 and 

Circular A-4 and the Office of Information and Regulatory Affairs’ A-4 Primer. See Office of 

Management and Budget, Regulatory Analysis, OMB Circular A-4 (Sept. 17, 2003); Office 

of Management and Budget, Guidelines and Discount Rates for Benefit-Cost Analysis of 

Federal Programs, OMB Circular A-94 (Oct. 29, 1992); and Office of Information and 

Regulatory Affairs, Regulatory Impact Analysis: A Primer, Circular A-4 (Sept. 17, 2003).

8

Some check-off programs’ respective legislation permits branded promotions subject to 

the Secretary of Agriculture’s approval.

Background
Page 5 GAO-18-54 Agricultural Promotion Programs

over 70 years may be voluntary, federal programs are mandatory. Many 

commodity groups prefer mandatory programs to address the free rider 

problem—that is, producers, handlers, processors, importers, or others in 

the marketing chain who do not pay into a check-off program but benefit 

economically from voluntary programs that others have funded.

After Congress authorized the Cotton Research and Promotion Act of 

1966, the first federally mandated agricultural check-off program and 

board—for cotton—was created. Over the next three decades, Congress 

authorized the creation of an additional 11 commodity programs and their 

respective boards. The 12 programs and boards created under the 

authority of individual stand-alone legislation adhere to the specific 

requirements as set forth in their respective authorizing legislation. The 

passage of the Commodity Promotion, Research and Information Act of 

1996 (generic legislation) gave USDA the authority to establish additional 

commodity check-off programs and boards. Since then, 10 additional 

boards were created based on this generic legislation. Those boards are 

subject to the requirements set forth in the generic legislation. (See table 

1 for the year established and authorizing legislation for all 22 check-off 

programs.)

Table 1: USDA Commodity Check-off Programs 

Check-off program Year established Authorizing legislation

Cotton 1966 Cotton Research and Promotion Act

Potato 1972 Potato Research and Promotion Act

Egg 1976 Egg Research and Consumer Information Act

Dairy 1984 Dairy Production Stabilization Act

Beef 1986 Beef Promotion and Research Act of 1985

Pork 1986 Pork Promotion, Research, and Consumer Information Act of 1985

Watermelon 1989 Watermelon Research and Promotion Act

Soybean 1991 Soybean Promotion, Research, and Consumer Information Act

Fluid Milk 1993 Fluid Milk Promotion Act of 1990

Mushroom 1993 Mushroom Promotion, Research, and Consumer Information Act of 1990

Popcorn 1997 Popcorn Promotion, Research, and Consumer Information Act

Peanut 1999 Commodity Promotion, Research and Information Act of 1996

Highbush Blueberry 2000 Commodity Promotion, Research and Information Act of 1996

Hass Avocado 2002 Hass Avocado Promotion, Research, and Information Act of 2000

Lamb 2002 Commodity Promotion, Research and Information Act of 1996

Mango 2004 Commodity Promotion, Research and Information Act of 1996
Page 6 GAO-18-54 Agricultural Promotion Programs

Honey 2008 Commodity Promotion, Research and Information Act of 1996

Sorghum 2008 Commodity Promotion, Research and Information Act of 1996

Softwood Lumber 2011 Commodity Promotion, Research and Information Act of 1996

Processed Raspberry 2012 Commodity Promotion, Research and Information Act of 1996

Christmas Tree 2014 Commodity Promotion, Research and Information Act of 1996

Paper and Packaging 2014 Commodity Promotion, Research and Information Act of 1996

Source: U.S. Department of Agriculture. | GAO-18-54

To create a check-off program, industry groups first identify the need for 

such a program and then negotiate among themselves to agree on a 

basic program framework. The framework includes the rate of 

assessment and the various program activities to be undertaken, such as 

promotion, advertising, research, and providing information to consumers 

and industry. Additionally, each industry proposes regulations to USDA 

for the structure of the board that will carry out these activities. Because 

each industry has unique characteristics, a different board structure is 

appropriate for each check-off program. The boards vary in size, 

geographic representation, and types of individuals who are board 

members—that is, producers, processors, handlers, importers, public 

representatives, or others in the marketing chain. USDA, in consultation 

with the industry, then develops regulations to define how the program 

will be operated, how the funds will be collected, and how compliance 

with the authorizing legislation will be maintained, among other things. 

The check-off programs must be approved by a majority of producers—

and in some cases processors, importers, and handler—subject to the 

assessments. To gain approval, a referendum must be held either before 

check-off program operations begin within some specified time after 

assessments are first collected, depending on the authorizing legislation.

To fund a check-off program, producers, handlers, processors, importers, 

or others in the marketing chain are assessed for each unit of the 

commodity sold, produced, or imported. For example, for each 30-dozen 

cases of eggs sold, a producer is assessed $0.10. These funds go to the 

American Egg Board. The boards are to use assessments for the 

research, promotion, and consumer and industry information activities as 

well as for reimbursing AMS for its oversight costs. In 2016, total 

assessments collected for the 22 check-off programs ranged from $0.6 

million for the popcorn check-off program to $332.1 million for the dairy 

check-off program (see table 2).
Page 7 GAO-18-54 Agricultural Promotion Programs

Table 2: U.S. Department of Agriculture Commodity Check-off Programs 

Assessment Revenue, 2016

Dollars in millions

Check-off program Assessment revenue 

Dairy 332.1

Fluid Milk 94.8

Soybean 89.5

Cotton 74.1

Pork 70.3

Hass Avocado 54.7

Beef 39.1

Paper and Packaging 24.3

Egg 23.6

Potato 14.0

Softwood Lumber 13.2

Peanut 9.6

Sorghum 9.4

Highbush Blueberry 7.9

Mango 7.4

Honey 6.7

Mushroom 5.0

Watermelon 3.5

Lamb 2.4

Christmas Tree 1.7

Processed Raspberry 1.6

Popcorn 0.6

Source: U.S. Department of Agriculture. | GAO-18-54

To facilitate oversight, AMS breaks the 22 check-off programs into four of 

the agency’s commodity areas: (1) Cotton and Tobacco—the cotton 

check-off program; (2) Dairy—the dairy and fluid milk check-off programs; 

(3) Livestock, Poultry, and Seed—the beef, egg, lamb, pork, sorghum, 

and soybean check-off programs; and (4) Specialty Crops—the 

Christmas tree, Hass avocado, highbush blueberry, honey, mango, 

mushroom, paper and packaging, peanut, popcorn, potato, processed 

raspberries, softwood lumber, and watermelon programs. AMS has a 

functional committee for the check-off programs, which comprises a chair 

AMS’s Oversight and Past 

Recommendations
Page 8 GAO-18-54 Agricultural Promotion Programs

and the deputy administrators from the four AMS commodity areas and 

meets quarterly. The functional committee reports to the AMS Associate 

Administrator and was established to increase coordination and promote 

best practices and consistency across the 22 check-off programs. 

Additionally, the four commodity area directors and other senior agency 

officials meet weekly to discuss any issues that have arisen and to 

discuss any necessary policy changes.

AMS marketing specialists are responsible for the day-to-day oversight of 

the check-off boards and for ensuring that board decisions and operations 

are carried out in accordance with applicable legislation and regulations. 

Each check-off program has a designated AMS marketing specialist 

serving as the primary overseer of all check-off program activities. (Fig. 1 

shows AMS’s oversight structure for the check-off programs.) As part of 

their oversight duties, marketing specialists review and approve board 

budgets, contracts, promotional activities, board policies, and bylaws, 

among other activities. Every 3 years, marketing specialists also are to 

conduct management reviews that assess each of the 22 check-off 

boards’ internal controls intended to determine whether there is 

reasonable assurance that the boards are in compliance with statutes, 

regulations, and the board’s and AMS’s policies and procedures. AMS 

management reviews are to include reviews of check registers, contract 

and subcontract samples, assessments collected, and travel 

reimbursements, among other items.
Page 9 GAO-18-54 Agricultural Promotion Programs

Figure 1: Agricultural Marketing Service Research and Promotion/Check-off Program Oversight Structure

AMS’s Guidelines for AMS Oversight of Commodity Research and 

Promotion Programs, most recently updated in September 2015, is 

designed to facilitate the application of legislative and regulatory 

provisions of the check-off programs and promote consistency in AMS’s 

oversight of the 22 check-off programs. These guidelines, which pertain 

to AMS as well as board members and board staff, are not intended to 

cover the daily responsibilities of board operations or AMS’s oversight. 

Instead, the guidelines provide broad information on AMS’s expectations 

for how boards should operate and how AMS will oversee the programs 

in activities such as budget approval, contracts, financial accountability, 

referendum, and investments, among other items.
Page 10 GAO-18-54 Agricultural Promotion Programs

In March 2012, USDA OIG released a report on AMS’s oversight of 

check-off programs.9 The work was initiated by the OIG after a 2010 

investigative report, conducted at the request of the AMS Administrator, 

identified the possibility of weak oversight controls over the check-off 

boards.10 The 2012 report included two recommendations for AMS to 

develop and implement (1) standard operating procedures that provide 

detailed instructions for performing oversight activities to address all 

areas listed in the agency’s guidelines and (2) guidance for conducting 

periodic internal reviews of program area operations to ensure the 

enforcement of AMS’s guidelines. AMS agreed with the two 

recommendations and planned to implement them with a variety of 

actions, as discussed below.

AMS has responded to recommendations for improving oversight made in 

the OIG’s 2012 report, particularly by developing and implementing 

standard operating procedures and conducting internal reviews of AMS 

check-off program oversight. However, AMS does not provide consistent 

oversight across check-off programs in some areas; specifically, it does 

not routinely review check-off program subcontracts during its 

management reviews,11 conduct follow-up on management review 

recommendations, ensure that financial assurances are included in 

annual audits, or ensure that check-off boards share information with 

assessment payers on program websites. In conducting their oversight of 

the check-off programs, senior agency officials and marketing specialists 

said they face challenges because of increased use of social media, the 

absence of an information system for tracking approvals, and complex 

Freedom of Information Act (FOIA) requests for some programs, which 

may delay the completion of some oversight priorities.

 9

U.S. Department of Agriculture, Office of Inspector General, Agricultural Marketing 

Service’s Oversight of Federally Authorized Research & Promotion Board Activities.

10U.S. Department of Agriculture, Office of Inspector General, correspondence addressed 

to the Honorable Charles E. Grassley, Ranking Member, Committee on Finance, United 

States Senate (July 23, 2010).

11A subcontract is created when a contractor of a board enters into a legal agreement with 

a third party for specific goods or services in order to fulfill the original contract with the 

board.

AMS Has Improved 

Its Oversight of 

Check-off Programs, 

but Some Oversight 

Activities Are Not 

Consistent across 

Programs
Page 11 GAO-18-54 Agricultural Promotion Programs

The OIG’s 2012 report included two recommendations that AMS has 

since implemented: to develop and implement (1) standard operating 

procedures and (2) guidance for conducting periodic internal reviews of 

its oversight activities.12 In August 2013, AMS developed and 

implemented its standard operating procedures, which provide marketing 

specialists with more detailed guidance on the various oversight activities 

that are outlined in the agency’s program guidelines. The standard 

operating procedures cover a range of oversight activities, including 

budget review, contract review, advertising and promotional materials 

review, and financial and internal control oversight. Included in the more 

detailed guidance are various checklists that marketing specialists can 

use to itemize the requirements that boards must meet in a variety of 

areas. For example, the budget review checklist includes a list designed 

to ensure that budgets conform to law and contain, among other items, 

accurate sums and categories, as well as clearly listed administrative 

expenses. According to senior agency officials and marketing specialists, 

the standard operating procedures have assisted AMS in providing 

consistency across the 22 commodity check-off programs, have helped 

ensure that oversight responsibilities are carried out, and have provided 

documentation of specific duties for new marketing specialists.

In response to the OIG’s second recommendation, AMS has developed 

and implemented guidance for conducting internal reviews of its oversight 

of check-off programs. Internal reviews are conducted by AMS’s 

Management and Analysis Program group to evaluate whether the AMS 

commodity areas that oversee check-off programs employ controls that 

provide reasonable assurance that the check-off programs are meeting 

legislative and regulatory requirements. According to an AMS directive, 

internal reviews of each of the four AMS commodity areas are to be 

conducted on a rotating basis.13 An AMS internal review of the Cotton 

commodity area was completed in November 2014, an internal review of 

the Specialty Crops commodity area was completed in September 2015, 

and an internal review of the Dairy commodity area was competed in May 

 12The OIG accepted AMS’s actions in response to the recommendations and closed the 

audit in August 2012.

13U.S. Department of Agriculture, Agricultural Marketing Service, Marketing and 

Regulatory Programs, Internal Reviews—AMS Research and Promotion Programs, AMS 

2150.1 (June 30, 2012).

AMS Has Made 

Improvements in 

Response to 

Recommendations Made 

by USDA’s OIG
Page 12 GAO-18-54 Agricultural Promotion Programs

2017.14 According to officials in the Management and Analysis Program, 

the Livestock, Poultry, and Seed commodity area internal review began in 

May 2017. The Cotton internal review found the program to provide 

reasonable assurance that the boards were complying with legislative 

requirements and that the oversight controls were adequate and 

functioning as intended. The Specialty Crop internal review found that the 

commodity area was fulfilling its oversight responsibilities but also found 

opportunities to strengthen control practices, including ensuring 

consistent and timely application in its use of checklists and tracking 

management reviews to ensure that they are completed and issued in a 

timely manner.15 As a result, the Specialty Crop commodity area 

implemented changes to its use of checklists and agreed to complete 

management reviews in a timely manner. The Dairy internal review found 

opportunities to strengthen oversight, primarily with regard to 

management reviews and recordkeeping. As a result, according to senior 

agency officials, the Dairy commodity area has implemented changes to 

its management review and recordkeeping processes.

We identified four areas in which AMS does not provide consistency in its 

oversight across its check-off programs: (1) review of subcontracts, (2) 

follow-up on recommendations made to check-off boards, (3) ensuring 

that independent financial audits contain statements of assurance, and 

(4) ensuring that information is available on program websites for 

assessment payers (i.e., transparency).

Subcontracts. The 2012 OIG report found that AMS did not recognize in 

its guidelines for check-off programs that its oversight role extended to 

monitoring subcontracts. Following the release of the OIG report, AMS 

updated the guidelines to respond to the OIG finding. Under the 2015 

AMS guidelines, marketing specialists are to review a sample of 

subcontractor expenses during their management reviews. However, we 

found that AMS did not similarly update its standard operating procedures 

 14The internal review of the Specialty Crops Check-off Programs included this sample of 

programs: the National Peanut Board, Hass Avocado Board, Mexican Hass Avocado 

Importers Association, Softwood Lumber Board, and the United States Potato Board.

15The Specialty Crops internal review included a third recommendation that the 

commodity area ensure the boards’ investment policies strictly conform to AMS 

guidelines. During its follow-up with the commodity area, Management and Analysis 

Program officials reviewed additional documentation and determined that the investment 

policies did conform to AMS guidelines.

AMS Does Not Provide 

Consistent Oversight 

across Check-off 

Programs in Some Areas
Page 13 GAO-18-54 Agricultural Promotion Programs

for the check-off programs and that these reviews are not being done 

consistently across programs.

We found that the marketing specialist for one of the eight programs we 

reviewed chose a sample of subcontracts for the management review and 

documented this selection in the management review report. Marketing 

specialists for three of the programs said they reviewed subcontracts only 

if the sample of primary contracts that were part of the management 

review included subcontracts. Marketing specialists for the other four 

programs said they did not review subcontracts. Two marketing 

specialists we interviewed said they do not select a sample of 

subcontracts because check-off boards are responsible for overseeing 

and monitoring subcontracts. Senior agency officials and marketing 

specialists also noted that they review and approve all promotional 

materials regardless of whether any material is from a contract or 

subcontract. Senior agency officials also said that the contracting process 

differs among the various check-off boards and may cause confusion 

about what is considered a subcontract for purposes of a management 

review. For example, the cotton board contracts with Cotton Inc. to carry 

out the program’s research and promotion activities; Cotton Inc. may, in 

turn, contract with entities to carry out those research and promotion 

activities—considered a cotton board subcontract. This is in contrast to 

processes of other boards, such as the honey board, which can directly 

contract with entities to carry out research and promotion activities; those 

contractors may, in turn, subcontract duties. In addition, the potential 

exists for subcontract costs to total hundreds of thousands of dollars. A

2010 OIG investigative review found that a subcontractor of one check-off 

board used subcontracts to pay employees unauthorized bonuses of 

about $302,000.16 Without revising its standard operating procedures for 

check-off programs to recognize that each management review is to 

include a sample of subcontracts for review, AMS’s ability to prevent 

misuse of subcontract funds is impaired.

Recommendation follow-up. Under AMS’s guidelines and standard 

operating procedures, marketing specialists are to ensure that corrective 

actions are taken by the boards in a timely manner if a matter is 

recommended in the management review, conducted every 3 years. For 

example, the standard operating procedures state that the board has 30 

 16U.S. Department of Agriculture, Office of Inspector General, correspondence addressed 

to the Honorable Charles E. Grassley, Ranking Member, Committee on Finance, United 

States Senate. 
Page 14 GAO-18-54 Agricultural Promotion Programs

calendar days from the receipt of the management review report to 

respond to the findings by formal letter and that follow-up should include 

appropriate documentation of the corrective actions taken. The 2012 OIG 

report found that there was little consistency among AMS commodity 

areas regarding the reporting of management review results and followup procedures. Four of the check-off programs we reviewed obtained 

written confirmation from boards about how they intended to address 

issues identified during management reviews consistent with the standard 

operating procedures; three others did not obtain written confirmation, but 

said they obtain any check-off board plans for remediation via less formal 

means, such as via e-mails or during board meetings. The management 

review for the eighth program did not contain any recommendations.

According to marketing specialists we interviewed, the follow-up process 

to ensure that boards have taken corrective actions is also informal—a 

specialist learns how management review recommendations have been 

implemented by attending board and committee meetings.17 Senior 

agency officials verified that AMS has no mechanism for tracking followup with check-off boards to ensure that they have taken corrective 

actions. Under federal internal control standards, management should 

remediate identified internal control deficiencies on a timely basis and, 

with oversight from the oversight body, monitor the status of remediation 

efforts so that they are completed on a timely basis.18 Without 

establishing a mechanism for documenting and tracking follow-up with 

check-off boards on the implementation of management review 

recommendations, AMS has no assurance that it is consistently 

monitoring the status of corrective actions. Senior agency officials said 

that having a formal method to track and follow up on management 

review recommendations would allow them to identify trends, best 

practices, and similar emerging issues among the check-off programs.

Independent financial audits. Each year, each check-off board is 

required by law to hire an independent audit firm to conduct an audit of 

the board’s financial statements in accordance with generally accepted 

government auditing standards. This audit helps to ensure compliance 

with legislative, regulatory, and policy directives. AMS guidelines direct 

 17Officials from AMS’s Management and Analysis Program, which conducts internal 

reviews of AMS’s oversight, said that they verify that boards have addressed management 

review findings and recommendations during their internal reviews.

18GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: September 2014).
Page 15 GAO-18-54 Agricultural Promotion Programs

marketing specialists to review the annual financial audits to determine 

whether the auditor identified any misuse of board funds and if the audit

adequately addressed whether (1) funds were discovered to be used for 

influencing government policy or action, (2) the board adhered to the 

AMS investment policy, (3) internal controls over funds met auditing 

standards, (4) funds were used only for projects and other expenses 

authorized in a budget approved by USDA, and (5) funds were used in 

accordance with AMS guidelines. The standard operating procedures 

state that AMS is to ensure that audits contain these five statements of 

assurance, and they state that the audit firm is to express an opinion on 

the financial statements of the board and include a report on internal 

controls and compliance with applicable laws and regulations.

The 2012 OIG report found that none of the independent audit reports 

included the five statements of assurance for the 18 check-off boards 

reviewed.19 In our sample, audit reports for four of the eight programs 

included the five statements of assurance. For two of the programs in our 

sample, the engagement letters, which document the agreed-upon terms 

of the audit, contained all five assurances, but the audit reports did not 

contain the five assurances. For the remaining two programs in our 

sample, neither the engagement letters nor the audit reports contained all 

five assurances, but senior agency officials said that the AMS marketing 

specialists for those two programs ensured that these assurances were 

adequately addressed during pre- and post-audit meetings. According to 

marketing specialists we interviewed for those two programs, audits 

following government auditing standards incorporate the requirements 

and are fulfilled by a general statement that boards were in compliance 

with laws and regulations. However, the 2012 OIG report found that an 

independent auditor did not include the specific assurances because the 

auditor was not asked to perform such work and only minimal 

adjustments would be needed to provide for those assurances. Without 

ensuring that its annual independent financial audits include the five 

statements of assurance as outlined in the standard operating 

procedures, AMS will have less certainty that check-off funds are not 

subject to waste, fraud, or mismanagement.

Transparency. According to the Business Roundtable and the 

Organisation for Economic Cooperation and Development’s principles of 

 19At the time of the OIG audit, only 18 check-off boards had been established and were 

collecting assessments.
Page 16 GAO-18-54 Agricultural Promotion Programs

corporate governance, a strong disclosure regime that promotes 

transparency is central to stakeholders being able to access regular, 

reliable, and comparable information.20 As check-off programs use 

assessment money collected from stakeholders of the commodity being 

promoted, AMS’s guidelines state that both transparency and oversight of 

the check-off funds are critical. Moreover, AMS’s guidelines state that 

annual budget summaries should be posted on the check-off board’s 

website and that three additional documents are either to be on the 

website or otherwise made available: (1) the bylaws and policy 

statements, (2) annual reports, and (3) the independent economic 

evaluation of effectiveness.21 Four of the eight check-off programs in our 

sample posted all four documents on the programs’ websites. All eight 

check-off programs posted their annual reports online. Four of the checkoff programs, however, did not post to their websites at least one of the 

remaining documents—the budget summary, bylaws, or independent 

economic evaluation. Marketing specialists we interviewed said that 

boards would supply information not included on the websites if an 

assessment payer requested such information, which is consistent with 

AMS guidelines. Board executives we interviewed from those programs 

that do not post all four documents on their websites also said that they 

would supply the information to assessment payers if contacted. Senior 

AMS officials also said that there are stakeholders who may not have 

computers or access to the Internet and may therefore request 

information via postal mail.

Industry organization representatives we interviewed said that 

transparency of how funds are used and the effectiveness of the 

programs are important to their members. One industry organization 

representative we interviewed said that, although some stakeholders may 

 20According to its website, Business Roundtable is an association of chief executive 

officers of America’s leading companies working to promote a thriving U.S. economy and 

expanded opportunity for all Americans through sound public policy. Business 

Roundtable, Principles of Corporate Governance, (2012). According to its website, the 

mission of the Organisation for Economic Co-operation and Development is to promote 

policies that will improve the economic and social well-being of people around the world. 

Organisation for Economic Cooperation and Development, G20/OECD Principles of 

Corporate Governance, (2015).

21AMS’s guidelines state the following about annual reports: “In order to be transparent, 

boards will prepare an annual report containing detailed information on all board 

expenditures, projects (including costs and outcomes), administrative expenses and 

results of any audits/reviews that will be published on board Web sites and/or otherwise 

made available to those paying assessments.”
Page 17 GAO-18-54 Agricultural Promotion Programs

not use the Internet, posting information on how assessments are being 

used, such as the information provided in annual reports, is useful for 

stakeholders and builds trust among check-off boards and stakeholders. 

Posting information on the boards’ websites could convey information to 

stakeholders who have access to the Internet at a low cost. Without 

including in the guidelines and standard operating procedures that all four 

key check-off board documents (i.e., bylaws and policy statements, 

annual reports, and independent evaluations of economic effectiveness) 

should be posted on a check-off program’s website, AMS may be missing 

an opportunity to ensure that some assessment payers have access to 

information on program operations and effectiveness.

AMS officials identified ongoing challenges in check-off program 

oversight. In particular, AMS marketing specialists and senior agency 

officials identified three challenges: (1) the increase in some check-off 

boards’ use of social media, (2) the absence of an information system to 

track approvals, and (3) complex and time-consuming FOIA requests for 

some programs. Because of competing priorities, some oversight duties 

may be delayed as a result.

Increase in boards’ social media efforts. According to marketing 

specialists, four of the eight check-off programs have seen a significant 

increase in the boards’ use of social media, which has been a challenge 

in terms of both workload and the need for additional AMS guidance 

because the specialists must approve the social media content. Marketing 

specialists for the other four programs said that the check-off programs 

they oversee have not yet increased their social media presence enough 

to make it a challenge for workload. Senior agency officials and marketing 

specialists agreed that oversight of the check-off programs requires a 

significant amount of time and effort that has been made more 

complicated since some check-off programs began using social media. 

For example, a marketing specialist for one check-off program approved 

over 3,000 items, including social media for promotional and research 

materials, in a 6-month period. According to this marketing specialist, 

depending on the complexity of the item needing approval, there could 

have been dozens of communications between the specialist and the 

check-off board staff. In addition, marketing specialists and senior agency 

officials said that because social media is constantly evolving, AMS has 

needed to reevaluate its guidance to boards for social media. The senior 

agency officials acknowledged that the duties of marketing specialists are

demanding and that they are working to find ways to provide support to 

marketing specialists. Senior agency officials said that this is challenging 

AMS Officials Identified 

Challenges in Their Efforts 

to Oversee Check-off 

Programs
Page 18 GAO-18-54 Agricultural Promotion Programs

because the boards must reimburse AMS for oversight costs, so any 

additional personnel would be paid for through check-off assessments. 

Also, AMS established a social media committee made up of marketing 

specialists who have drafted social media guidance for the boards to 

follow.

Technology. Tracking the numerous promotional and research approvals 

can be a challenge for some AMS marketing specialists because of the 

absence of an information system to track approvals. According to two 

marketing specialists, during busy times, they may be handling more than 

20 requests for approvals a day. While marketing specialists for two of the 

check-off programs we reviewed said that the use of approval tracking 

software, paid for by the respective check-off boards, has made their 

oversight function more efficient, other marketing specialists said that 

they must rely on e-mail messages to organize the status of approvals. 

Marketing specialists who have tracking software said that they can 

quickly see the status of any approval at any given time; further, check-off 

board staff can also use the software to prioritize approvals. One 

marketing specialist said that, although she had developed a system for 

organizing e-mails, a tracking system used by both AMS and the board 

would ensure that oversight activities would not be delayed and could 

expedite the approval process. Senior agency officials said that it would 

be helpful if each marketing specialist had this software but that the 

check-off boards would need to pay for this expense.

FOIA requests.22 Responding to complex FOIA requests about check-off 

programs has been a challenge, according to senior agency officials, 

marketing specialists, and board executives of four of the eight programs 

we reviewed. Some requests do not take many resources to fulfill, but 

others take significant time and money. For example, to respond to a 

FOIA request, board staff and marketing specialists must identify 

pertinent documents; review them to ensure that there is no proprietary or 

sensitive information; and, as needed, involve the board’s legal counsel 

 22FOIA requires federal agencies to provide the public with access to government 

information on the basis of the principles of openness and accountability in government.

Each year, federal agencies release information to FOIA requesters that is intended, 

among other things, to contribute to the understanding of government actions, including 

the disclosure of waste, fraud, and abuse. AMS is one of the many agencies at USDA that 

responds to these requests. 5 U.S.C. § 552. In October 2017, we issued a report on the 

status of FOIA requests related to check-off programs. GAO, Check-off Programs: Status 

of Freedom of Information Act Requests, GAO-18-55R (Washington, D.C.: Oct. 24, 2017).
Page 19 GAO-18-54 Agricultural Promotion Programs

or third-party businesses.23 According to senior agency officials, in one 

case, a FOIA request resulted in the check-off board and AMS providing 

approximately 10,000 documents to the requester. AMS estimates that in 

fiscal year 2016, for the Livestock, Poultry, and Seed commodity area 

programs, it cost the agency about $182,000 and more than 2,700 hours 

to fulfill FOIA requests.24 For the same period for the Dairy commodity 

area programs, AMS estimates that it cost over $365,000 and about 

6,600 hours to fulfill FOIA requests. Because AMS is reimbursed for its 

oversight costs, the funds to cover FOIA-related costs come directly from 

check-off assessments. These cost estimates do not include check-off 

board staff resources utilized to fulfill FOIA requests. Senior agency 

officials said that there are legal constraints on the types of individuals 

and organizations that they can request cover fees associated with 

document retrieval under FOIA.25

Independent economic evaluations of the effectiveness of check-off 

programs, conducted at least every 5 years, have generally shown a 

positive benefit to those who pay assessments. The evaluations we 

reviewed varied both in the methods used to conduct the analysis and 

how information was reported and revealed certain methodological 

limitations. According to senior agency officials as well as the economists 

who conducted the evaluations, the variations are in part due to the 

differences in check-off board resources. We found that AMS does not 

consistently document its review of independent economic evaluations 

 23USDA regulations state that each USDA agency is responsible for determining whether 

to disclose information in agency records that has been submitted by a business. If a 

request for information that has been submitted by a business is received, the agency 

shall (1) provide prompt notification to the business and afford the business reasonable 

time in which to object to disclosure, (2) notify the requester of the need to inform the 

business, (3) determine whether the records are exempt from disclosure or must be 

released, (4) provide the business with notice of any determination on disclosure prior to 

the date of disclosure, and (5) notify businesses promptly in instances in which FOIA 

requesters bring suit seeking to compel disclosure.

24Because AMS is not permitted by statute to charge requesters for processing FOIA 

requests in all cases, the costs are estimated.

25Under FOIA, agencies may charge fees for search and copying, but the act provides 

exceptions. For example, news media pay reduced or no fees. For all requesters, fees 

may be waived if disclosure of the information is in the public interest because it is likely to 

contribute significantly to public understanding of the operations or activities of the 

government and is not primarily in the commercial interest of the requester.

Check-off Evaluations 

Generally Indicate 

Positive Returns but 

Vary in How They Are 

Conducted and 

Reviewed
Page 20 GAO-18-54 Agricultural Promotion Programs

and has no criteria established for determining what makes for a credible 

methodology and results.

The Federal Agriculture Improvement and Reform Act of 1996 requires 

check-off boards to (1) fund independent economic evaluations of the 

effectiveness of their promotion activities every 5 years,26 (2) submit the 

evaluation to USDA, and (3) make the results available to the public.27

Check-off boards, through a request for proposals process, contract for 

independent economic evaluation to determine the effectiveness of 

promotion activities. The law does not specify how an independent 

economic evaluation should be completed, and AMS does not offer any 

guidance on the methodologies to use, the types of information to include, 

or how the results of such an evaluation are to be presented. AMS

guidelines, which are available to the check-off boards, state that 

evaluations: (1) have a credible methodology, (2) articulate shareholder 

returns, and (3) present the results in a non-technical manner.

The eight independent economic evaluations of check-off programs we 

reviewed focused on benefit-cost ratios (BCR) and returns on investment 

(ROI). While BCRs and ROIs are slightly different, they both measure the 

financial gain or loss generated from the costs of implementing a 

program. In both cases, economists use economic, industry-specific 

models to determine the benefits or economic gains from the check-off 

programs by isolating the impacts of program promotion dollars from 

other variables, such as competing products or changes in consumer 

income. For example, some models include the effects of changes in the 

prices of substitute food products, which may affect the demand for 

commodities. The model used in the evaluation for the beef check-off 

program, for instance, includes prices for both chicken and pork, as an 

increase in the price of chicken or pork could lead to an increase in the 

consumer demand for beef, regardless of check-off program activities. 

Other variables that may affect demand include changes in (1) consumer 

buying habits, (2) consumer income, and (3) government policy. These 

variables can either increase or decrease the demand for commodities 

 26The dairy and fluid milk check-off programs are required to submit annual reports to 

Congress that include an independent economic evaluation of effectiveness. The 2013, 

2014, and 2015 annual reports to Congress were submitted to Congress in October 2017. 

The delays in submitting the required reports were due to concerns about the methods 

used in the economic evaluation of effectiveness. 

27Pub. L. No.104-127 § 501(c) (codified as amended at 7 U.S.C. § 7401).

Evaluations of Check-off 

Programs Were 

Conducted Every 5 Years 

and Show a Range of 

Positive Benefits for 

Assessment Payers
Page 21 GAO-18-54 Agricultural Promotion Programs

despite the activities of check-off programs. Evaluation models may also 

include variables that affect the supply of a commodity, such as increased 

prices that send signals to farmers to increase production. Although it is 

difficult to capture, some commodity evaluation models also model 

increases in yields and acreage to determine how much the agricultural 

research portion of a check-off program affects the supply of the 

commodity. Increased supply as a result of agricultural research 

expenditures can also increase producer benefits and economic gains, 

but according to the sorghum and cotton evaluations, many of these 

gains cannot be immediately or directly measured.

For the eight check-off programs we reviewed, the BCRs and ROIs 

ranged from 2.14 to 17.40. In other words, for every dollar invested in the 

check-off programs, the programs returned from $2.14 to $17.40 in 

revenue to assessment payers (see table 3). However, it is important to 

note that the results of the independent economic evaluations should not 

be compared across check-off programs because of differing 

methodologies, differing data, and differing demands for the products, 

according to economists we interviewed. Economists we interviewed and 

literature we reviewed suggested that although the results of an 

independent economic evaluation may appear large, the amount invested 

in promotion activities is small compared to the total value of industry 

sales.28 Therefore, the overall impact of promotion activities on the market 

may be small.

 28G.W. Williams, G. Davis, and J.P. Nichols, Check-off Program Evaluation: Why, What, 

How, When, and Who? Commodity Market Research Report No. CM-2-00 (College 

Station, Tex.: Texas Agricultural Market Research Center, Texas A&M University, 

September 2000).
Page 22 GAO-18-54 Agricultural Promotion Programs

Table 3: Results of Independent Economic Evaluations of Effectiveness for U.S. Department of Agriculture Commodity Checkoff Programs

Economists GAO interviewed said that the results of independent economic evaluations of check-off program effectiveness cannot be 

compared across programs because of the variety of methods used to compute the benefit-cost ratio and return on investment (e.g., 

some evaluations include different types of data, time periods, and methodologies and some focus only on the domestic market).

Check-off program Date of evaluation Benefit-cost ratio/ 

return on investment

Period of analysis

Beef June 2014 11.20 2006-2013

Cotton July 2016 2.2a 1986-2015

Egg January 2012 5.43-8.11 2007-2010

Fluid Milk 2013 2.14 1995-2012

Highbush Blueberry July 2015 9.07 2006-2014

Honey March 2014 14.12 1986-2012

Pork April 2012 17.40 2006-2010

Sorghum August 2013 8.48b 2008-2012

Source: GAO’s analysis of check-off program independent economic evaluations of effectiveness. | GAO-18-54

Note: Benefit-cost ratios and returns on investment measure the financial gain or loss generated from 

the costs of implementing a program. In other words, the results indicate the amount returned for 

every dollar invested in the check-off programs.

a

The cotton evaluation showed a discounted benefit-cost ratio of 2.2. The non-discounted benefit-cost 

ratio was 3.6. Discounting a program’s benefits and costs transforms gains and losses occurring in 

different time periods to a common unit of measurement.

b

The sorghum evaluation benefit-cost ratio of 8.48 is for renewables, including biofuels, and highvalue markets, including food and nutrition activities.

Program referenda largely show that most assessment payers approve of 

check-off programs, but not all types of assessment payers may feel that 

they share equally in the benefits that are found through the independent 

economic evaluations, according to economists we interviewed. The 

studies we reviewed report either average or marginal measures of 

effectiveness, such as a BCR.29 Some economists we interviewed, both 

those who have conducted the evaluations we reviewed and those who 

did not, said that these types of studies do not address the level of ROIs 

across the distribution of check-off program payers or how much more 

larger-sized assessment payers receive in returns from their investment 

in the check-off program as compared to smaller-sized ones. This view 

was confirmed by representatives we interviewed from some of the 

 29A marginal BCR is the increase in returns generated by an increase of 1 dollar spent or 

a percentage increase spent on the promotion. Average BCR is the average return from 

the program for every dollar spent.
Page 23 GAO-18-54 Agricultural Promotion Programs

industry organizations, who indicated that their members would prefer to 

better understand what they receive for their investment at the farm level. 

In addition, one economist we interviewed said that assessment payers 

may be skeptical of the results of independent economic evaluations of 

program effectiveness because while the costs are tangible, the benefits 

of the programs are not. That is, the producers cannot see what portion of 

their revenues is directly attributable to check-off program activities.

The independent economic evaluations we reviewed were conducted 

using different methodologies and reported different information. 

According to senior agency officials, evaluations likely vary because 

legislation does not include any details on how evaluations should be 

completed and the amount of resources that each check-off board has 

available to devote to evaluations varies. Nearly all of the economists we 

interviewed said that it would be useful to have minimum standards for 

information that should be included in the evaluations. Some independent 

economic evaluations used different types of models and data to estimate 

the benefits and costs to assessment payers. For example, for the egg 

and honey check-off commodity models, the evaluation used two 

separate types of methodologies to estimate increases in demand 

because of the programs’ promotional activities.30 Some other 

independent economic evaluations in our sample, such as for cotton and 

fluid milk, used multi-market models that incorporated components for 

substitute products, the foreign sector, and the government sector. Some 

independent economic evaluations, such as the beef evaluation, 

measured a marginal BCR and others measured an average benefit-cost 

ratio. The cotton and sorghum evaluations performed an analysis of how 

increases in yields, acreage, and production because of the research 

portion of the check-off programs affected the supply of the commodities. 

The independent economic evaluations also examined different time 

periods in their analyses, depending on the available data (see table 3). 

For example, the egg evaluation covered the period of 2007 through 

2010, and the fluid milk evaluation covered 1995 through 2012.

In addition to having different methodologies to calculate benefits and 

costs, information and analyses included in the independent economic 

evaluation reports also varied among the eight programs we reviewed. 

 30The egg evaluation used two models: (1) a household demand model using per capita 

egg survey data and (2) a demand model estimated with USDA quarterly egg data 

expressed in millions of eggs per quarter.

Evaluations Vary in How 

They Are Conducted and 

Reveal Certain 

Methodological Limitations
Page 24 GAO-18-54 Agricultural Promotion Programs

For example, the beef check-off evaluation includes a section on the 

optimal allocation of funds to domestic activities of the program, which is 

not included in any other report. Seven of the eight evaluation reports had 

a conclusions section. One of the evaluation reports included a 

recommendations section, while others did not. Although the law does not 

specify information required to be included in the independent economic 

evaluations, representatives from one industry organization we 

interviewed said that having the information in a consistent format could 

help ensure that stakeholders could compare information from one 

evaluation to the next for a given check-off program.

The independent economic evaluations provided useful information to key 

stakeholders and the general public, but we found that they also included 

a number of caveats and limitations. Some of these limitations resulted 

from the nature of a commodity or program itself and others from the 

modeling procedures used. According to economists we interviewed and 

senior agency officials, the law is not prescriptive about how evaluations 

are to be conducted, and the boards differ in the amount of resources 

available to devote to the evaluations. If, for example, a board has limited 

resources available for an evaluation, there may not be funds available to 

purchase a certain set of data. For the sample of eight evaluations we 

reviewed, these limitations included the following:

• Data limitations: A number of the independent economic evaluations 

had data limitations. For example, one independent economic 

evaluation (highbush blueberry check-off program) lacked either 

wholesale or retail price data for its demand model, and another 

(sorghum check-off program) lacked program data as it had only been 

in existence for 5 years when the evaluation was performed. All of the 

economists we interviewed who had completed the eight evaluations 

we reviewed said that data are a challenge when conducting the 

evaluations either because such data do not exist or the check-off 

boards do not have the resources to buy the data.

• Not discounting the BCR to present value: The cotton check-off 

evaluation was the only one in our sample with a methodology that 

discounted the BCR to present value to account for the time value of 

money. Discounting a program’s benefits and costs to present value 

transforms gains and losses occurring in different time periods to a 

common unit of measurement.
Page 25 GAO-18-54 Agricultural Promotion Programs

• Not accounting for spillover effects:31 Some independent 

economic evaluations did not include the spillover effects—the crosscommodity impact of promotion—on related markets, though some, 

such as the cotton evaluation, did account for spillover effects on 

competing commodities. If spillover effects pertain to a commodity, 

failure to account for these effects could overstate the benefits of a 

program and cause an upward bias in computing the BCR.

• Not adjusting models for structural changes: Some independent 

economic evaluations did not adjust models for structural changes in 

the industry over time. While some independent economic evaluations 

we reviewed, such as those for the honey and beef check-off 

programs, did use data or methods that accounted for changes in 

market structure over time, others did not. For example, for the pork 

check-off program, some hog farms have specialized in a single 

phase of production,32 and have encountered substantial gains in 

productivity because of technology over the past several decades, but 

the independent economic evaluation did not reflect this. Failure to 

correct for such structural change, if applicable to a commodity, can 

lead to incorrect modeling and misleading policy implications.

AMS’s standard operating procedures acknowledge that each check-off 

program varies in size and scope; therefore, the amount of resources 

each program can devote to an independent economic evaluation varies. 

Smaller programs may have independent economic evaluations that 

reflect the realities of program scope, financial capability, and data 

availability. Our discussions with the economists who conducted the 

evaluations that we reviewed confirmed that this is the case. They said 

that the smaller programs are able to devote fewer resources to 

independent economic evaluations; therefore, the economist conducting 

an evaluation may not be able to complete all of the analysis that could 

be completed for a larger program that is able to pay for more complex 

analysis. According to senior agency officials, in some instances, a 

broader evaluation is not necessary because of the emphasis and goals 

 31Spillover effects refer to the cross-commodity impacts of promotion. For example, an 

increase in generic beef promotion has been shown to decrease demand for poultry. The 

decrease in poultry demand lowers the price of poultry, which erodes the demand for beef 

because of second-round or “feed-back” effects. Harry M. Kaiser et al., The Economics of 

Commodity Promotion Programs: Lessons from California (New York: Peter Lang 

Publishing, Inc., 2005). Spillover effects may not be relevant to all commodities.

32The phases of pork production include (1) breeding-gestation; (2) farrowing or 

pregnancy and lactation; (3) nursery where baby pigs are placed after they wean; and (4) 

grow-finish, where pigs are fed until they reach market weight.
Page 26 GAO-18-54 Agricultural Promotion Programs

of the program. In addition, the resources a board is able to devote may 

vary from evaluation to evaluation. For example, one economist said that 

he worked with a board that wanted a more comprehensive evaluation 

than was previously done. The new evaluation model included additional 

data over a longer period of time, which ultimately led to an increased 

ROI.

In addition to ensuring that independent economic evaluations are 

conducted every 5 years and encouraging boards to make them available 

to assessment payers, AMS’s standard operating procedures state that 

marketing specialists should ensure that independent economic 

evaluations (1) have a credible methodology and results, (2) articulate 

shareholder benefits, and (3) present results in a non-technical manner. 

To verify that these three directives are met, the standard operating 

procedures state that marketing specialists may consult with agency 

economists. They are directed to document verification in writing. Outside 

of any agency review, there is no requirement that independent economic 

evaluations be peer reviewed. A National Academies report states that 

peer review is characterized, in part, as being a documented, critical 

review of assumptions, calculations, and methodology, performed by a 

person with technical expertise in the subject matter to be reviewed who 

is independent and external of the work being reviewed.33 The report 

further states that the peer, to the extent possible, should have sufficient 

freedom from funding considerations to ensure that the work is impartially 

reviewed. According to senior agency officials, AMS economists meet this 

definition; and their review of the independent economic evaluations can 

be considered peer review. Officials said that the economists on staff 

critically review the evaluations; they all have PhDs in economics and are 

independent as they do not work directly with the check-off programs

except for reviewing the evaluations.

Three of the four AMS commodity areas—Cotton and Tobacco, Dairy, 

and Specialty Crops—utilized an AMS economist to review the 

independent economic evaluations and document that review. Senior 

agency officials said that the Livestock, Poultry, and Seed commodity 

area has an AMS economist review the independent economic 

evaluations but does not document that review. According to senior 

 33National Academies, Definition of Peer Review, Peer Review in the Department of 

Energy Office of Science and Technology: Interim Report (Washington, D.C.: The National 

Academies Press, 1997).

AMS Does Not 

Consistently Document 

Reviews of Check-off 

Evaluations
Page 27 GAO-18-54 Agricultural Promotion Programs

agency officials, the Livestock, Poultry, and Seed commodity area has 

relied on informal reviews of the evaluations by an economist, which are 

orally presented to the director of the commodity area. Further, the 

economists who completed the eight independent economic evaluations 

we reviewed indicated that although their preference is to have the 

evaluations peer reviewed, this is not always possible because of time 

constraints and other priorities. One economist said that the board he 

worked with included a contractual requirement that the independent 

economic evaluation be peer reviewed.

Because the Livestock, Poultry, and Seed commodity area does not 

document its reviews of independent economic evaluations, only four of 

the eight check-off programs in our sample had documented reviews of 

the evaluations. All four of the documented reviews ensured that the 

independent economic evaluations had a credible methodology and 

results and articulated shareholder benefits, as stated in the standard 

operating procedures. However, only two of these four check-off 

programs included in their documented review whether results were 

presented in a non-technical manner, as also stated in the standard 

operating procedures. Further, the internal reviews did not use standard 

criteria to determine whether the independent economic evaluations had 

a credible methodology or results, which is important because, as noted 

earlier, the evaluations we reviewed varied in their methodology and we 

found that they had certain limitations.

Although check-off programs are not subject to the guidelines in the 

Office of Management and Budget’s Circular A-94, the circular provides 

general guidance for conducting analyses to help federal agencies 

efficiently allocate resources through well-informed decision making. For 

example, Office of Management and Budget Circular A-94 establishes

key elements of an economic analysis, including (1) a statement of the 

objective and scope of the analysis, (2) an identification of alternatives, 

(3) an analysis of the economic effects, (4) a sensitivity analysis, and (5) 

adequate documentation and transparency. Conducting and documenting 

reviews of independent economic evaluations using criteria can be useful. 

For example, in 2014, a senior agency official found several 

inconsistencies in a check-off program independent economic evaluation. 

The senior agency official assigned an AMS economist and marketing 

specialist to work with the evaluator to revise econometric models to more 

accurately capture the activities of the check-off program. According to 

the official, if the independent economic evaluation had not been 

reviewed, benefits of the program would have been understated and 

would have misled those paying into the check-off program. Without 
Page 28 GAO-18-54 Agricultural Promotion Programs

developing criteria by which AMS can assess the methodology and 

results of independent evaluations and document those assessments to 

ensure that the standard operating procedures are met, the agency’s 

assessments of independent economic evaluations may be inconsistent 

across check-off programs and misleading to agency officials, check-off 

boards, and assessment payers.

AMS oversees commodity check-off programs that conduct research and 

promotion activities to strengthen 22 commodities’ position in the 

marketplace. The agency has taken steps to improve oversight activities 

based on recommendations in USDA OIG’s 2012 report, but it continues 

to face challenges in other oversight activities. For example, AMS has not 

consistently reviewed subcontracts during its management reviews. 

Without revising its standard operating procedures for check-off programs 

to recognize that management reviews should include a sample of 

subcontracts for review, AMS’s ability to prevent misuse of subcontract 

funds is impaired.

In addition, AMS has not consistently followed up on recommendations 

made to check-off boards, although its guidelines and standard operating 

procedures state that marketing specialists are to ensure that corrective 

actions are taken by the boards in a timely manner if a matter is 

recommended in a management review. Without establishing a 

mechanism for documenting and tracking follow-up with checkoff boards 

on the implementation of management review recommendations, AMS 

has no assurance that it is consistently monitoring the status of corrective 

actions. Moreover, AMS has not ensured that independent financial 

audits contain statements of assurance as called for in the agency’s 

program guidelines or standard operating procedures. Without ensuring 

that its annual independent financial audits include the five statements of 

assurance outlined in the standard operating procedures, AMS will have 

less certainty that check-off funds are not subject to waste, fraud, or 

mismanagement.

Further, although principles of corporate governance state the importance 

of transparency for stakeholders, AMS has not ensured that certain 

information, such as budget summaries and program evaluations, are 

presented on check-off program websites and has not included in its 

guidelines or standard operating procedures that certain information 

should be included on program websites, although the agency’s program 

guidelines recognize that transparency of check-off funds is critical. 

Without including in the guidelines and standard operating procedures 

Conclusions
Page 29 GAO-18-54 Agricultural Promotion Programs

that key check-off board documents are to be posted on the check-off 

program’s website, AMS may miss the opportunity to ensure that some 

assessment payers have access to information on program operations 

and effectiveness.

Finally, check-off boards are meeting legislative deadlines by completing 

independent economic evaluations of effectiveness every 5 years; 

however, the evaluations vary and have certain methodological 

limitations. Without developing criteria by which AMS can assess whether 

evaluations have a credible methodology and results and documenting 

those assessments, the assessments may be inconsistent across checkoff programs and misleading to agency officials, check-off boards, and 

assessment payers.

We are making the following five recommendations to the Administrator of 

the 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)

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)

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)

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)

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)

Recommendations for 

Executive Action
Page 30 GAO-18-54 Agricultural Promotion Programs

We provided a draft of this report for review and comment to USDA. An 

auditor with AMS’s Management and Analysis Program responded via email on October 24, 2017, that the agency generally agreed with our 

findings and recommendations.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Agriculture, and other interested parties. In 

addition, the report is available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or morriss@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made key contributions to this 

report are listed in appendix I.

Steve Morris

Director, Natural Resources and Environment

Agency Comments
Appendix I: GAO Contact and Staff 

Acknowledgments

Page 31 GAO-18-54 Agricultural Promotion Programs

Steve D. Morris, (202) 512-3841 or morriss@gao.gov

In addition to the individual named above, key contributors to this report 

included Thomas M. Cook (Assistant Director), Rose Almoguera, Kevin S. 

Bray, Barbara El Osta, Cindy Gilbert, Holly Halifax, Khali Hampton, Dan 

Royer, Holly Sasso, Sheryl Stein, and Kiki Theodoropoulos.

Appendix I: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(101061)
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