Wheat Producers See Sizable Return on Promotion Investment


U.S. wheat producers invested an average of $4.9 million in checkoff funds per year to promote their milling wheat overseas between 2010 and 2014, and for every one of those dollars they received up to $45 back in increased net revenue, according to a new economic analysis of wheat export promotion released last week by U.S. Wheat Associates.

Designer and lead on the study, Dr. Harry M. Kaiser, who is director of the Cornell Commodity Promotion Research Program, said the study showed that between 2010 and 2014, the total investment in wheat export promotion by farmers and the government increased total annual gross revenue by $2.0 billion to $3.0 billion.

“So for every $1 farmers and the government invested, the estimated return in gross revenue to the U.S. economy was between $112 and $179,” Kaiser said. He added that the most likely annual gross revenue return is about $149 for each dollar spent based on USDA supply elasticity studies.

Kaiser quantified the impact of wheat export promotion through models that account for several factors affecting commodity export demand such as prices and exchange rates.

The study determined that cutting promotion by 50{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130} between 2010 and 2014 would have reduced wheat exports by about 15{257ecae47c7fec349321aca28547072fa2160c1991a573be7695613338f0f130}. That represents a total potential export loss equal to nearly 161.5 million bushels per year. The value of that loss was determined, then compared to total wheat export promotion cost to calculate a series of benefit-to-cost ratios.


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Source:  Farm Futures



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