This project impacted managers of checkoff programs, policy-makers overseeing these programs, and researchers. Managers were impacted through research that examines how to more optimally allocate producer checkoff money. Policy makers were impacted because they benefit from new information regarding the economic impacts of commodity promotion programs. Researchers were impacted because several methodological studies will be published that pushed out the frontiers in applied methods. This project also had an impact on the national dairy industry, including the farm, processor, and retail markets. The results of these studies had an impact on program managers since they use our results to help them make allocation decisions in the best interests of dairy farmers and processors.
impact statement issue
Most checkoff programs began after 1985. Federal and state policy makers who authorized these programs required objective oversight of these programs to determine if the economic impacts were beneficial to society and to ascertain that the benefits exceed the costs. Hence, objective research was needed and that is why I got interested in this research area. Much of my (and that by others) early research in this area was first of its kind. It provided valuable information to policy makers, who authorize these programs; to producers, who pay for these programs; and to consumers and other groups, who are impacted by these programs. The most impacted group by these programs are the producers who pay for them. A huge portion of my research measures the costs and benefits to determine whether producers profit from the programs, which my research generally supports. Consumers are also affected, since generic promotion generally increases consumer consumption, which in the case of healthy products like fruits and vegetables, is good for society. Finally, since export promotion is paid for by taxpayers, they are affected. Policy makers authorize the programs, so they have a stake in understanding the impacts.
impact statement response
The National Institute for Commodity Promotion Research and Evaluation (NICPRE) newsletter was published and distributed four times, which contained research articles (from Cornell and other universities) on generic advertising and promotion economics. Two NEC-63 (research organization on commodity promotion economics) conferences were organized and held in Parma, Italy (spring), and Vancouver, British Columbia (fall). Two studies were completed on the effectiveness of U.S. rice export promotion. The first study found U.S. rice export promotion to be profitable. Average benefit-cost ratios were computed for U.S. rice export promotion based on a range of excess supply own price elasticities (from 1 to 10). The BCRs ranged from 30.05 for the most inelastic estimate, to 5.51 for the most elastic. Since all of these values were well above 1.0, the main policy conclusion was that the benefits of export promotion programs in terms of enhancing producer welfare have been much greater than the costs of the programs. The other study examined the direct and cross effects of grain export promotion for rice, wheat, and sorghum. In terms of benefit-cost ratios, the direct effects of U.S. rice, wheat, and sorghum export promotion is benefiting grain producers in the United States. As for total effects, U.S. rice and wheat promotion is beneficial to rice, wheat, and sorghum producers combined, but U.S. sorghum promotion is not benefiting all three grains combined.
impact statement summary
The overall purpose of this project is twofold: (1) to provide public- and private-sector decision makers with information to help them judge the appropriateness of continuing authorization for commodity checkoff and export promotion programs, and (2) to collaborate with and provide information to boards of directors and the managers of commodity promotion checkoff programs to help better utilize promotion funds. Commodity checkoff programs are marketing programs responsible for such well-known ads as "Got Milk?," "Beef. It's What's for Dinner," and "The Incredible Edible Egg." Authorized by the U.S. Congress, they are run by agricultural producers and processors and overseen by the U.S. Department of Agriculture (USDA). More than 70 checkoff programs for various agricultural commodities are funded through mandatory assessments on farmers, ranchers, and processors based on a portion of their sales. About $1 billion annually of farmer checkoff money is used by commodity promotion organizations in their attempt to expand the demand for their commodities, which includes $200 million Congress appropriates to fund export promotion programs. Until this project was funded, only a modest amount of work had been done to determine if these programs were effective or even in the public interest from an economic or societal point of view. The research and evaluation activities proposed here will help assure that the $1 billion of total checkoff money is effectively invested.
