Sustaining the Return on Grower Investment

More than ever, marketing is key to programs successes

Published in the January 2009 Issue Published online: Jan 13, 2009
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You have likely listened to several United States Potato Board presentations and program updates in state and national grower meetings this past year. More than ever, the USPB remains committed to delivering on the promise of “Maximizing Return on Grower Investment.”

However, you are also aware of the increasing costs of production in your own operations. Unfortunately, the USPB global marketing work is not immune to the rising costs of doing business. The real impact is being felt in the eroded purchasing power of a weak dollar.

While the weak dollar has clearly driven export success in concert with our International Marketing programs, on the flipside, it makes conducting business overseas more expensive. Our dollar just doesn’t go as far with less than favorable exchange rates.

The 2008-09 USPB Executive Committee unanimously proposes increasing the assessment rate by half a cent in order to maintain the value in all of the USPB programs. This decision was arrived at after deliberate and extensive discussions. As growers ourselves, we too, are facing increased production costs on all levels, but we firmly believe maintaining market strength is especially imperative to the continuing long-term success of the U.S. potato industry. The half-cent increase, on average, is estimated to increase the grower’s USPB investment by $2 per acre.

This proposal actually originated from grassroots grower discussions where there was a clear understanding established about the results produced by USPB Marketing Programs. Much of the success of the U.S. potato industry is attributed to the USPB working effectively with the National Potato Council, United Potato Growers of America and all the state organizations. It is this effective synergy that will continue to produce long-term gains for all growers.

The USPB Grower Leadership does not simply want more money for future program expansion. Although each industry segment benefits from the results produced by USPB programs, these programs still cost money to maintain, even at a constant level.

In many cases, initial outlays have been made, but continuing successful results are dependent on continued funding. To withdraw or reduce the funding of these programs now, the USPB and the U.S. industry would lose the initial investment on these programs, as well as any momentum already achieved.

Another challenge in maintaining the USPB programs is the acreage decreases, a direct result of the industry’s successful “right sizing” of supply with short-term demand, as well as competition from other crops and overall higher program expenses.

As an Executive Committee, we first looked at cutting USPB expenses. We have already consolidated or restructured programs to make them less costly, more efficient and more productive. Now, without an increase, the USPB will have to cut investment in vital programs in future years.

Cut backs in these programs will affect each industry segment and reduce the ROI and demand building results each segment presently enjoys. Prioritizing which programs in which industry segments to curtail would be an insurmountable challenge, likely to leave many, if not all, industry members with less of a return on their investments.

With just a half-cent increase in the assessment rate, the USPB estimates $1 million in additional funding for the FY 2010 budget could be generated. This revenue would be used in correcting the projected shortfall and sustaining program investments to maintain current success levels.

A very large positive with regard to USPB International Programs, the USPB obtains about $2 of Foreign Agricultural Service (FAS) funding for foreign market development with each $1 in USPB funding invested in international programs.

Compared with other commodity programs, the USPB’s FAS allocation has increased every year for the last 10 years. Please note that foreign market development helps the entire industry by increasing demand, even for those who do not directly export potatoes.

The goal of the Executive Committee is to ensure this “Grower Leadership Initiative” receives adequate discussion by growers in all states. This discussion will be a part of state meetings this winter, leading up to the USPB Annual Meeting in March where it will be brought to a final vote.

If approved, the soonest the increase could take effect would be January 2010. We ask you to please give this careful consideration, so please contact myself or another member of the USPB Executive Committee to share your thoughts, ideas or concerns before the Annual Meeting in March. We look forward to your input.