ONE DOLLAR = $6.51 RETURN

Published online: Apr 08, 2013 Potato Storage, Potato Harvesting, Seed Potatoes
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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 percent ROI) can be expected to increase grower welfare relative to other uses of capital. The overall USPB rate of return is 551.2 percent in the long run (more important metric) and 416.7 percent 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.

 

The attached files provide the summaries and detailed analysis behind these results. 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).

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