Study Shows Nice Return on Checkoff Dollar

| August 28, 2014
Print Friendly

Press Release Courtesy of

Checkoff Return on Investment

ROI study shows $11.20 return on checkoff dollar

COLUMBIA, MISSOURI – In the most comprehensive study ever rendered about the return on investment (ROI) of beef checkoff assessments, Harry Kaiser of Cornell University concludes that each dollar invested in the Beef Checkoff Program between 2006 and 2013 returned about $11.20 to the beef industry.

“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, who shared study results at the 2014 Cattle Industry Summer Conference.

“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 Visalia, Calif., 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 (lb.) – or 11.3% 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 lb. 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% 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 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,” 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,” 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. “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.”

About the Missouri Beef Industry Council:
The Missouri Beef Council is a nonprofit organization responsible for administering programs of promotion, education, research, and consumer and industry information.  The MBIC is part of a coordinated state/national effort funded and controlled by beef producers who are assessed $1 per head each time a beef animal is sold.  Half of each dollar is forwarded to the Cattlemen’s Beef Promotion and Research Board (CBB) and the other half of the dollar is retained by the Missouri Beef Industry Council to fund state-based programs that complement and extend the industry wide effort to promote beef. Find more information at www.mobeef.org.

About The Beef Checkoff: The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen’s Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval.

 

Tags: , , , , , , ,

Category: Farm, Farm News, News, State News