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US investment in export market development generates 20-fold return

by Grain Central, 21 February 2018

A CORNELL University study has found that for every dollar spent by United States taxpayers on export market development, the nation realises a return of US$20 in tax revenue.

Spending on overseas market development for US feed grains and related products increased the value of those exports by an average of US$1.71 billion per year from 2010 to 2014 and increased US gross domestic product (GDP) by an average of US$5 billion per year.

Cornell University professor of applied economics and management, Dr Harry Kaiser, rolled out his study of the Return On Investment of the US Grain Council’s (USGC) export market development programs.

The key takeaways from the review of the full economic value of the Council’s programs were presented by Dr Kaiser during the final day of the organisation’s 15th International Marketing Conference and 58th Annual Membership Meeting in Houston.

Dr Kaiser recently analysed the combined effect of USGC member support and funding from the US Department of Agriculture’s (USDA’s) Market Access Program (MAP) and Foreign Market Development (FMD) program, together totally approximately US$20 million per year during the study period.

In addition to successes related to export value and GDP, the Council’s activities created 23,699 full-time jobs with US$1.12 billion in labour income each year while reducing direct government payments to farmers of US grains by an average of US$15.3 million a year.

“Dr Kaiser has extensive experience in looking at programs like ours and telling stakeholders if they are getting their money’s worth,” USGC chairman and Iowa farmer, Deb Keller, said.

“We have a great story to tell in this regard. Our programs are not only working for our members, they are returning many times more to the federal treasury than they cost.”

On the cusp of the debate over the new farm bill, Dr Kaiser also presented his analysis of what would happen to grain exports and the economic benefits they produce if USDA funding for market development were to be cut.

He found a 50 per cent cut in FAS (Foreign Agricultural Service) funding would cause farm receipts to fall by almost US 1.7 billion, and government payments through farm safety net programs would increase by US$76.6 million annually.

“We know from nearly 60 years of experience that market development works, building close relationships with our customers works, and being active on trade policy issues that stymie growth works,” Ms Keller said.

“The study Professor Kaiser presented puts numbers to these outcomes and will help us tell our story to the stakeholders investing in us.”

Source: US Grains Council

Read Professor Kaiser’s presentation here.

 

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