U.S Wheat Producers Benefit From Promotions

Increasing promotion investment has potential for greater returns to wheat industry.

Published on: Feb 2, 2010

A new economic analysis of wheat export promotion has been released by the U.S. Wheat Association, the wheat industry's export market development organization.  The report reveals that between 2000 and 2007, U.S. wheat producers invested an average of about $10 million per year to promote their products overseas, and for every one of those dollars they received $23 back in increased net revenue. According to Dr. Harry Kaiser of Cornell University, the study showed that U.S. wheat export promotion had a large and beneficial impact for producers and the economy that far exceeded its cost.

 

"One of the econometric models we used showed that the overall average revenue benefit to the entire wheat industry from the combined producer and Foreign Agriculture Service expenditures was estimated to be about $115 for each dollar spent," Kaiser said. "The study also predicted that increasing the promotion investment has the potential for even greater returns to wheat producers, the wheat supply chain, and the U.S. economy."

 

On the other side of the coin, the study determined that cutting promotion by 50% between 2000 and 2007 would have reduced wheat exports by 17.1%, a total export loss equal to almost 1.4 billion bushels or almost 172.7 million bushels per year. USW President Alan Tracy says the findings were similar to results from a study USW commissioned five years ago and to a study FAS conducted in 2006.