ROI Study Shows Positive Return on Peanut Grower Assessment Dollars

AUGUST 18, 2014--ATLANTA—In the most comprehensive study ever conducted for the National Peanut Board about the Return on Investment (ROI) of peanut assessments, Dr. Harry Kaiser of Cornell University concludes that each dollar invested in the Board’s checkoff program between 2007 and 2013 returned $8.87 to the peanut industry.

America’s peanut farmers, through the National Peanut Board, invest around $8 million annually to increase overall demand for peanuts and peanut products as well as reduce production costs and improve efficiency for peanut growers.  The Board commissioned Dr. Kaiser, the Gellert Family professor of applied economics and management at Cornell University and director of the Cornell Commodity Promotion Research Program, to study the effectiveness of their marketing and research programs on increasing the demand and supply of peanuts.

“This study demonstrates the tremendous impact of NPB on the domestic peanut market,” said Kaiser, who presented study results August 12th, at the National Peanut Board’s quarterly meeting in Atlanta. “Had there been no promotion conducted by the Board from 2007-2013, peanut consumption would have averaged 15 percent less than it actually was.”

Furthermore, the study emphasized had there not been any NPB-sponsored production research over this period, peanut yield would have averaged 3,184 pounds per acre, or 10.8 percent less than it actually was, according to Kaiser.

“We are accountable to our nation’s peanut growers who fund the market development work we do, so we wanted to know how much difference we are really making in the marketplace,” said Bob Parker, NPB’s president and CEO. “Dr. Kaiser’s research methods are well-respected, so we are confident about the analysis and very pleased with the results. Moving forward, our Board will be able to utilize these results to plan and manage its future programs.”

Dr. Kaiser analyzed the benefit-cost ratio of five individual promotion and research categories. “In other words,” said Kaiser, “our research model measures the benefits to the industry in terms of additional profits from an extra dollar invested in each activity.”

Key findings:
  • Reputation management—an extra dollar invested returned $42.03 to producer profit
  • Public Relations—an extra dollar invested returned $38.54 to producer profit
  • Business Development—an extra dollar invested returned $5.07 to producer profit
  • Generic peanut advertising—an extra dollar invested returned $2.75 to producer profit
  • Fund production research—an extra dollar invested returned $4.29 to producer profit

“It is clear to me the activities funded through the National Peanut Board’s budget have a substantial impact on peanut demand in the U.S.,” said John Harrell, NPB’s chairman and Georgia delegate. “This analysis confirms that checkoff dollars truly have had a profitable return on the investments producers make. That’s a dollar well-spent.”

To view and download the full ROI Study, click here.


About Dr. Harry M. Kaiser: Dr. Kaiser is an economist and the Gellert Family Professor of Applied Economics and Management at Cornell University. Professor Kaiser has expertise in price analysis, marketing, industrial organization, policy, agricultural policy analysis and quantitative methods. He has written 129 journal articles, five books, 17 book chapters, and over 200 research bulletins in these areas. Kaiser was one of the first economists to investigate the economic impacts of climate change on agriculture. He has served as the editor of Agriculture and Resource Economics Review, and as the president of the Northeastern Agricultural and Resource Economics Association. Kaiser has also served on the executive board of directors of the American Agricultural Economics Association; among other distinctions. He is the recipient of numerous awards including Outstanding Journal Article of the Year from the Northeastern Agricultural and Resource Economics Association and from the Canadian Agricultural Economics Society, the Alumni Distinguished Achievement Award from the University of Wisconsin-Eau Claire and the Outstanding Alumni Award from the Department of Applied Economics from the University of Minnesota.

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