Market development programs yield solid returns
Sept. 19, 2011
by Meat&Poultry Staff
DENVER – US Meat Export Federation export market development programs are yielding solid returns for US beef, pork, corn and soybean producers on their checkoff investments, according to a study completed recently by Harry Kaiser, Ph.D., the Gellert Family Professor of Applied Economics and Management at Cornell University and director of the Cornell Commodity Promotion Research Program.
USMEF relayed 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.
Titled An Economic Analysis of the US Meat Export Federation’s Export Market Development Programs, the study was commissioned by USMEF to quantify the returns that the US Department of Agriculture’s Foreign Agricultural Service and the beef, pork, corn and soybean checkoff programs receive from their investments in USMEF’s export market development programs. The study was funded by the USDA and Kaiser was chosen from several researchers who proposed to do the research.
The economic model showed combined producer and USDA marketing expenditures increased US red meat exports by more than 30 percent per year. According to 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.”
Reducing export promotion and development program funding by 75 percent between 1995 and 2010 would have reduced US beef exports by 36.1 percent and US pork exports by 30.1 percent, a total export loss equal to almost 537 million lbs. per year for the eight top foreign markets analyzed in the model, the study determined. 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 [or pork] times their investment, which are very high returns,” Kaiser said.
Kaiser also looked at the regional impacts of these programs and found two of the most important markets for US 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 lbs. per year in increased exports of US beef and pork.