The return on pork checkoff programs greatly outweighs the costs.
In a recently completed study of the economic value of pork checkoff programs, economists at RTI International of Research Triangle Park, NC, and North Carolina State University concluded the pork checkoff has a “significant positive effect on the demand for hogs and pork.”
The peer-reviewed study, “An Economic Analysis of the Effectiveness of the Pork Checkoff Program,” evaluated pork checkoff's performance between 1999 and 2005. The U.S. Department of Agriculture (USDA) requires the study be completed every five years as part of its oversight of the National Pork Board and pork checkoff programs. Results were presented to Pork Board members during their mid-July summer planning meeting in St. Louis, MO. The study now goes to USDA for review.
“This research was done by some of the most highly respected agricultural economists, working independently and using the best evaluation methods known to the economics profession,” says Steve Meyer, president of Paragon Economics and a consultant to the National Pork Board. “The results are reasonable when compared to similar analyses of a broad array of producer-funded checkoff programs.”
The study concludes that marginal increases in checkoff program expenditures would translate into increased producer profitability, on average.
The study suggests pork checkoff programs yielded a benefit-cost ratio of 13.80 to 1, meaning that producers would gain $13.80 for each additional $1 of program expenditures.
Four checkoff categories were analyzed: production research, marketing chain research, domestic promotion and foreign market development.
For the four areas reviewed, the study found the highest return for marketing chain research, followed by foreign market development.
The researchers note, “There have been several years of low prices and high production costs for the average hog producer during 1999 through 2005. However, the econometric models presented in this study suggest market conditions for hog farmers would have been significantly worse without the program.”
The study's authors also point out that the results are consistent with a previous study of the pork checkoff program conducted by Texas A&M University economists in 2001. That study found an average benefit-cost ratio of 16 to 1 for the years 1986 to 1998.
For an executive summary of the study, go to www.pork.org/NewsAndInformation/default.aspx. The complete study is available upon request.
