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Agricultural News


Beef Checkoff Benefits 11.2 Times Greater Than Cost

Wed, 01 Oct 2014 12:28:11 CDT

Beef Checkoff Benefits 11.2 Times Greater Than Cost




The benefits of the beef checkoff are much greater than initially though. A 2009 study revealed the beef checkoff reported a return of $5.55 on each dollar invested into the checkoff by producers. This year the Cattlemen's Beef Board asked for a more comprehensive study, where Dr. Harry Kaiser of Cornell University found the Return on Investment (ROI) of beef checkoff assessments between 2006 and 2013 returned about $11.20 to the beef industry for each dollar invested in the Beef Checkoff Program.


Radio Oklahoma Ag Network Farm Director Ron Hays interviewed Dr. Kaiser at the 2014 Cattle Industry Summer Convention in Denver in July about his study. You can listen to the full interview by clicking on the LISTEN BAR below.


“The news for beef checkoff investors couldn’t be better,” said Kaiser, the Gellert Family professor of applied economics and management at Cornell and director of the Cornell Commodity Promotion Research Program.


“It is clear to me that activities funded through the Beef Board budget have a substantial impact on beef demand in the U.S. and in foreign markets. The return on producers’ and importers investments into this program is vastly greater than the cost of the program.”


Commissioned through the checkoff’s Joint Evaluation Committee, this new ROI study could be a useful tool for producers who make decisions about how to invest checkoff dollars.


“This really tells us that we’re on the right track with how we plan our checkoff programs,” said cattleman Ted Greidanus of California, who chairs the checkoff’s Evaluation Committee. “We are accountable to beef producers and importers who fund the work we do with checkoff dollars, so we wanted to know how much difference we were really making in the marketplace, good or bad -- and I must say that I am quite pleased at how good the news really is.”


Some additional key findings in Kaiser’s benefits-cost analysis include:


Had there not been any CBB-funded marketing between 2006 and 2013, total domestic beef demand would have totaled 15.7 billion pounds – or 11.3 percent less than it was with the checkoff programs in place. Holding the effects of all other demand drivers constant, the activities funded by the CBB resulted in an increase in beef demand of 2.1 billion pounds per year.


Had the national Beef Checkoff Program not invested in foreign-market development between 2006 and 2013, foreign demand for U.S. beef would have been 6.4 percent lower.
The statistical results indicate that all eight CBB demand-enhancing activities -- generic beef advertising; channels marketing; industry information; new-product development; public relations; nutrition research; beef-safety research and product-enhancement research -- have a positive and statistically significant impact on increasing per capita beef demand.


At the bottom line, the increase in beef demand due to CBB-funded marketing efforts resulted in higher prices for beef producers and importers, which means higher net revenue than they would have experienced without those checkoff programs.


Given the tremendous budget challenges of the checkoff in recent years, the Cattlemen’s Beef Board commissioned the all-encompassing study to provide a more thorough evaluation possible of checkoff activities than it traditionally has. As a result, this new study presents a more complete and accurate picture of checkoff returns and provides a new benchmark.


“Let me caution against trying to compare the results of this study with the 2009 study, which reported a return of $5.55 on each checkoff dollar,” Dr. Kaiser said. “This time around, the Beef Board asked for a more comprehensive study than ever before, so I evaluated all commercial beef disappearance, including retail, foodservice, and international data over eight years, whereas the 2009 study looked solely at domestic retail data for a five-year period.


“Furthermore,” Dr. Kaiser continued, “my study analyzed individual categories of nine marketing categories separately, and then brought the categories together to identify an overall beef checkoff return on investment. In 2009, the Beef Board commissioned a study analyzing only the checkoff as a whole.”


Greidanus said he is quite confident in the study results.


“As chairman of the Evaluation Committee, I know that Dr. Kaiser’s research methods are well-respected, so we are very confident about the analysis and very pleased with the results,” Greidanus said. “And this tells us that the benefits of all CBB programs are 11.2 times more valuable than their costs… As a cattleman who pays into the program, it’s invigorating to know that my investment is making a difference.”


Kaiser, who has performed similar analyses for other checkoff programs, said the results should be encouraging to the country’s beef producers and importers.


“If I was investing my hard-earned dollars into the checkoff, as beef producers and importers are, I would be proud to do so, based on the findings of this study,” Kaiser said. “Most of us probably wish we could get that kind of return on all of our expenditures!”


For more information on the ROI of the beef checkoff, check out the following links.

Summary of Report Conclusions/Findings, click here.

Beef Checkoff ROI Study: Full Video featuring Dr. Kaiser.


   
   

Ron Hays Interviews Dr. Harry Kaiser of Cornell University
right-click to download mp3

 

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