DENVER — If you gave me $1, and I gave you $6.51 back, would you be happy? Of course you would! As it turns out, the latest Econometric Study, conducted by Dr. Timothy Richards from Arizona State University, and Dr. Harry Kaiser from Cornell University, reveals this high return on potato grower assessment dollars invested in United States Potato Board (USPB) marketing activities. This study covers the USPB marketing years of 2007-2011, and is a USDA mandated program assessment every five years.
To set the stage for these results, an ROI (return on investment) to any program that is greater than the cost of capital (approximately 0.07 or a 7% ROI) can be expected to increase grower welfare relative to other uses of capital. The overall USPB rate of return is 551.2% in the long run (more important metric) and 416.7% in the short run. Either way you look at it, the USPB programming is an extremely solid investment for U.S. potato growers’ money.
To put this into perspective, we must look at the market factors impacting the state of demand. We know per capita consumption is down versus 10 years ago, but why? Potential causes include: prices (absolute and compared to other side dish alternatives), state of the economy, new products competing for stomach share, and demographic changes, to name a few. However, the more relevant question is, “Where would it [demand] be without the USPB programming?”
On average, across all markets and type of investment (Domestic and International), USPB scored a BCR (Benefit Cost Ratio) of 5.167 in the short run and 6.512 in the long run. Because these BCRs are estimated using econometric models, they are interpreted as returns on investment holding everything else constant, or the value of the USPB programming relative to a world absent USPB programming. In other words, the industry receives back $5.16 in the short run and $6.51 in the long run for every dollar invested in USPB programming.
For questions or more information about the Evaluation of Grower-Funded Marketing Activities by the United States Potato Board report, please contact USPB Domestic Marketing Vice President Kathleen Triou at ktriou@uspotatoes.com or 303-873-2312 (direct) / 303-369-7783 (main) / 303-873-2303 (efax).
For more information on the USPB as the nation’s potato marketing organization, positioned as the “catalyst for positive change,” and the central organizing force in implementing programs that will increase demand for potatoes, please visit www.uspotatoes.com.
David Fairbourn is Manager, Industry Communications & Policy, at the United States Potato Board in Denver. The mission of the USPB is to increase demand for potatoes and potato products through an integrated promotion program, thereby providing US producers with expanding markets for their production. David can be contacted at 303-369-7783 or david.fairbourn@uspotatoes.com. For complete information about the programs, ROI results, resources and tools available to all members of the industry through the USPB, please visit www.uspotatoes.com. The United States Potato Board—Maximizing Return on Grower Investment.
Source: United States Potato Board