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U.S. Meat Export Federation – New Study Finds Favorable Return on Investment in USMEF’s Market Development Programs

September 19, 2011 Comments off

New Study Finds Favorable Return on Investment in USMEF’s Market Development Programs
Source: U.S. Meat Export Federation

U.S. beef, pork, corn and soybean producers are receiving a solid return on their checkoff investments in the U.S. Meat Export Federation’s (USMEF) export market development programs, according to a study completed recently by Dr. Harry Kaiser, the Gellert Family Professor of Applied Economics and Management at Cornell University and director of the Cornell Commodity Promotion Research Program.

In fact, 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.

“An Economic Analysis of the U.S. Meat Export Federation’s Export Market Development Programs” was commissioned by USMEF to quantify the returns that the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) and the beef, pork, corn and soybean checkoff programs receive from their investments in USMEF’s export market development programs. The independent study was funded by the USDA and Dr. Kaiser was chosen from several researchers who proposed to do the research.

“It is clear that U.S. beef and pork export market development and promotion programs have had a significant and positive impact on meat export net revenue,” said Dr. Kaiser.

The economic model showed that combined producer and USDA marketing expenditures increased U.S. red meat exports by more than 30 percent per year. According to Dr. 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.”

The study determined that reducing export promotion and development program funding by 75 percent between 1995 and 2010 would have reduced U.S. beef exports by 36.1 percent and U.S. pork exports by 30.1 percent, a total export loss equal to almost 537 million pounds per year for the eight top foreign markets analyzed in the model. 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 (for pork) times their investment, which are very high returns,” noted Dr. Kaiser.

+ Full Report (PDF)

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