Fluid Milk Check-Off Program

Pursuant to a legislative requirement, GAO reviewed the Fluid Milk Processor Education and Promotion Program, focusing on: (1) the program's impact on fluid milk sales; (2) recommendations for the program's future funding and assessment levels; (3) planned program activities and use of program funds; (4) national and state programs to promote fluid milk consumption; and (5) whether milk processors have illegally passed back their assessments to milk producers. GAO noted that: (1) it is too early to determine the program's effectiveness or make recommendations on assessment levels, since the program only became fully operational in July 1994; (2) the National Fluid Milk Processor Promotion Board has taken the initial steps to promote fluid milk consumption and plans to use several marketing techniques to evaluate consumers' and health professionals' attitudes toward milk; (3) the board plans to spend 83 percent of its budget on promotion activities, 5 percent on general and administrative costs, 1.6 percent on research, 1.5 percent to reimburse the Department of Agriculture for administrative costs, and 9.2 percent for a state processor program; (4) state and industry promotion programs have different levels of funding, target their promotion efforts on different market segments, and use various methods to evaluate program results; and (5) although controls are in place to detect unauthorized passbacks, detection cannot be ensured in all cases because complex milk pricing mechanisms allow passbacks to be hidden.