Quartered stick of butter.
October 16, 2017

Dairy Checkoff Returns $5 for Every Dollar of Promotion Spent

 |  By: Jim Dickrell

USDA has finally released audit reports of the dairy checkoff programs for 2013, 2014 and 2015.  Those reports had not been released for years, and came only after a request from the Organization for Competitive Markets was made last month.

In the end, the news is good. The aggregate benefit-cost ratio (BCR) of the dairy checkoff was $5.53 for 2013 and 2014, and $4.97 in 2015. That means that for every $1 spent in demand enhancement activities, dairy farmers realized $5.53 in 2013 and 2014, and $4.97 in 2015.

“The gains in profit at the farm level were far larger than the costs associated with the National Programs combined,” notes the 2013-2014 USDA report. The actual analysis is done by Texas A&M University. Note, the BCRs do not account for operating expenses such as overhead, technical support or industry relations. These expenses for the National Dairy Research and Promotion Board, for example, typically run just under $5 million out of budget of nearly $110 million.

Benefit-Cost Ratios                                                                     2013/2014                         2015

Fluid milk                                                                                          3.98                                     2.99

Cheese                                                                                             6.21                                     7.72

Butter                                                                                              29.49                                   32.06

Export Promotion                                                                              5.58                                     5.59

MilkPEP Fluid Milk                                                                            4.88                                     3.79


Also note that the 63 qualified dairy programs, such as the United Dairy Industry Association or the California Dairy Promotion Board, actually spend about half of the check-off dollars. Between 1995 and 2015, these qualified programs expenditures range from $158 to $217 million. Dairy Management, Inc. expenditures ranged from $65 to $99 million, and the Milk PEP (Milk Processor Education Program) ranged from $37 to $102 million. The import assessment ranged from $3.4 to $4.2 million between 2012 and 2015.

Checkoff funds come from a 15¢/cwt assessment on farm milk to fund dairy checkoff programs, a 20¢/cwt assessment tacked onto the Class I price to fund Milk PEP, and a 7.5¢/cwt assessment on imported dairy products to fund dairy export enhancement programs.

You can read the full reports here  and here.