Does producer checkoff money being spent on soybean promotion programs really pay? Definitely, according to a study by Gary Williams, Texas A&M University.
The study, commissioned by the United Soybean Board, concludes that investment of funds into foreign market development (FMD) and production research since the early 1970s has been a big plus for U.S. soybean growers.
The investments have tended to increase the size of the U.S. soybean industry and reduce the competitive threat of the South American soybean industry, Williams reports.
The benefit-cost ratios calculated by most studies for domestic generic advertising and promotion programs fall in the range of $2-12 earned per promotion dollar spent. For foreign market promotion programs, the reported benefit-cost ratios are generally higher, from $14 to $60 per dollar spent.
From 1978 through 1995, U.S. farmers invested approximately $163 million of checkoff funds in soybean production research and FMD activities.
Using a modeling approach called Soymod, Williams' research shows that U.S. soybean farmers earn $8 in additional profit for every checkoff dollar invested.
Overall, he says, FMD investments alone have been profitable and have effectively expanded world demand for U.S. soybeans and products.
On the downside, the research shows that the U.S. soybean industry has been underinvesting in FMD and production research. Investing more in FMD should bring more profits to producers' bottom lines, Williams says.
(Gary Williams, Texas Agricultural Market Research Center, Texas A&M University)