Agricultural News
USMEF Study Finds Favorable Returns on Market Development Programs
Mon, 19 Sep 2011 09:46:59 CDT
U.S. beef, pork, corn and soybean producers are receiving a solid return on their checkoff investments in the U.S. Meat Export Federation's (USMEF) export market development programs, according to a study completed recently by Dr. Harry Kaiser, the Gellert Family Professor of Applied Economics and Management at Cornell University and director of the Cornell Commodity Promotion Research Program.
In fact, every industry dollar invested in these programs over the past 10 years returned an average of $15 in net revenue for the pork industry and $8 to the beef industry.
"An Economic Analysis of the U.S. Meat Export Federation's Export Market Development Programs" was commissioned by USMEF to quantify the returns that the U.S. Department of Agriculture's Foreign Agricultural Service (FAS) and the beef, pork, corn and soybean checkoff programs receive from their investments in USMEF's export market development programs. The independent study was funded by the USDA and Dr. Kaiser was chosen from several researchers who proposed to do the research.
"It is clear that U.S. beef and pork export market development and promotion programs have had a significant and positive impact on meat export net revenue," said Dr. Kaiser.
The economic model showed that combined producer and USDA marketing expenditures increased U.S. red meat exports by more than 30 percent per year. According to Dr. Kaiser, "this increase in exports due to export market development translated to between $46.3 million (for beef) and $85.7 million (for pork) in average annual extra net revenue to the industry, which is far higher than the average annual $27.5 million cost invested by producers and the USDA."
The study determined that reducing export promotion and development program funding by 75 percent between 1995 and 2010 would have reduced U.S. beef exports by 36.1 percent and U.S. pork exports by 30.1 percent, a total export loss equal to almost 537 million pounds per year for the eight top foreign markets analyzed in the model. The value of that loss was determined, then compared to total beef and pork export promotion cost to calculate a series of benefit-to-cost ratios (BCR).
The overall BCR for USMEF market development programs had median values of 3.87 for beef and 7.42 for pork. This means that the average return to meat producers on each $1 invested by them and the government in market development activities in international markets was $3.87 for beef and $7.42 for pork.
"Because producers contributed approximately half of the total dollars spent on export marketing, the median BCRs for their half of the spending averaged between 7.74 (for beef) and 14.84 (for pork) times their investment, which are very high returns," noted Dr. Kaiser.
These results suggest that U.S. export promotion have a very important impact on import demand for U.S. beef and pork. In comparing the results of this study to those of 16 studies of similar programs for other commodities, Dr. Kaiser notes: "the results of this study suggest that U.S. beef and pork export promotion has had a larger impact on imports of U.S. meat than most other export promotion programs."
Dr. Kaiser also looked at the regional impacts of these programs and found two of the most important markets for U.S. meat exports, Mexico and Japan, had the highest gains in imports due to export market development. Collectively, USMEF programs in these two countries accounted for 373 million pounds per year in increased exports of U.S. beef and pork.
"Dr. Kaiser's study is beneficial because it provides an independent analysis of the returns that U.S. producers' investments as well as USDA funds generate through USMEF's international market development programs," said Philip Seng, USMEF president and CEO. "When the process is transparent and measurable, our funding sources can make informed decisions on how to invest their funds and feel confident that the benefits to producers and taxpayers are solid."
Click here to read a copy of the full report.
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