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Analysis Shows Value of Cotton Research & Promotion Program

Analysis Shows Value of Cotton Research & Promotion Program

A recent analysis of the Cotton Research & Promotion Program has shown that the Program provides strong, positive returns to cotton producers and importers.

The 1996 Farm Bill requires an independent, third-party evaluation of the Program’s effectiveness every five years. The recent two-month review was conducted by Forecasting & Business Analytics, LLC, a firm with significant experience in analyzing check-off programs. The group delivered a draft written report and oral summary to the Cotton Board, which have been peer-reviewed and approved by USDA.

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Significant findings from the preliminary report show that over the life of the Program:

  • Producer revenues are up $175 million annually, on average, or 3.2%.
  • Annual farm program costs have been reduced $168.4 million, on average.
  • The return on investment (ROI) for cotton producers and government is 7 to 1.
  • Program generates a benefit-cost ratio of 3.6 for Producers.
  • Importer after-tax profits increased by $732.9 million on average.
  • Importer benefit-cost ratio is 14.0 over the life of the Program.
  • Increase in Importer sales revenue as a percentage of historical retail revenue is 12%.

“The report concludes that the Program has enhanced cotton demand, augmented U.S. cotton yields and production over time, generated a positive return to both cotton producers and importers, and reduced the dependence of cotton producers on government farm programs,” said Janet Ydavoy, current Cotton Board Chairman and cotton importer.

“We believe this is a very positive report and is a strong objective measure of the returns generated by the Program,” she added.

 

Source – The Cotton Board