How To Divvy Up Checkoff Dollars Budgets...budgets...budgets! It's that time of year. I just completed my editorial staff budgets for '98; the National Pork Board recently announced checkoff allocations for '98. Got yours done?
This budget blitz always coincides with our annual Swine Research Review. That's part of what compels me to go directly to the research funding columns when checkoff allocations are announced.
You see, I'm a strong advocate of spending dollars on research that could make raising hogs easier, a little more profitable or solve a nagging industry problem.
Research findings usually don't fall in the "breakthrough" category. Rather, it is a slow, meticulous process advancing in small steps.
Of course, not all research is undertaken in the laboratories and fields of a university. Discovery research may start there, then be taken to the next level by company researchers specializing in an area. Occasionally, the research tables are turned. Company researchers may do the basic work, then university staffs verify or challenge their findings.
Either way, it is important work.
So, in my annual budgeting ritual, I find myself checking to see how much the folks on the Pork Board and at NPPC plan to put into "production-based" research.
Usually, they report a lump sum allocated to research, with little or no differentiation as production-, product- or consumer-based research.
Not this year. When the '98 research budget figures landed on my desk, they were pie-charted, bar-charted, color-coded and categorized (by percentages) in a dozen primary research areas.
But charts listing percentages always trouble me, because you always have to ask: "Percentage of what?"
Naturally, I asked.
The checkoff dollars allocated to each of the 12 areas listed (below) totals $4,581,902.
Now, roughly $4.6 million seems like a lot of money, but it's somewhat relative. Again, a question: "Compared to what?"
It helps to understand the economic gymnastics the Pork Board goes through in the budgeting process. The starting point for 1998 is $63.9 million in projected checkoff collections.
Before you start punching numbers to see if research gets a fair share, it's important to know that $11 million must first be subtracted and returned to the states and $1.3 million is needed to cover administrative costs.
The $51.6 million in the balance is referred to as "discretionary funds" - the real dollars left to work with.
Dividing the $4.6 million research allocation by $51.6 million tells us those 12 broad research areas account for roughly 9% of your checkoff dollars.
Taking a little liberty, I recategorized the 12 areas into three categories - hog production-based, consumer or retail product-based, and those that appear to overlap both areas.
In the hog production-based category, I put environment/odor research, production modeling and swine health.
In the consumer/retail research slot, I put human nutrition, new product, consumer, foodservice and retail research.
Those that seemed to overlap into production- and consumer-based research included animal welfare, pork safety, pork quality and economics. I split those funds 50-50 and added half to each of the overlapping areas.
Now I could figure the percentage of checkoff dollars used for hog production research - roughly 4.3%.
That leaves about 4.7% of checkoff funds earmarked for consumer-based research.
Most states will use a portion of their returned funds for research, too.
Is that enough?
Compared to what?
Compared to the $15.6 million budget for advertising in 1998? That's about 30% of the discretionary funds available.
Or, compared to retail merchandising, which captured $6.6 million (13%)?
If you lump advertising and retail merchandising under a banner of "pushing pork to the public," 43% of discretionary funds are spent promoting pork domestically.
In the area of Production Technology & Information, heavily weighted to production-based information transfer and producer education programs, the $9.3 million represents 18% of the budget.
Other major areas funded were foreign market development and world trade ($6 million), swine health/pork quality/pork safety ($4.5 million), foodservice, ($4.3 million), Pork Information Bureau ($3.4 million), and, new product development ($1.4 million).
You can do the rest of the math, but the underlying question is always whether this is the best balance. I know Pork Board members work long and hard to conscientiously allocate these funds to areas identified by pork producer members. If you agree with their decisions, tell them. If you don't, tell them. Remember - it's your money.