Third Party Review Shows Strong Returns to Program Stakeholders
The 1996 Farm Bill requires the Cotton Research & Promotion Program (the Program) conduct an independent, third-party evaluation of the Program’s effectiveness every five years. The most recently executed evaluation reflected very well on the Program’s effectiveness. In summary, the analysis found strong, positive returns to cotton producers and importers as a result of the Program. Some of the most significant findings from the preliminary report are listed below. 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.
- The 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,” said Ydavoy.
To conduct the evaluation The Cotton Board contracted with Forecasting & Business Analytics, LLC; a firm that has significant experience in analyzing check-off programs. After two months of analytical work, both a draft written report and an oral summary were delivered to the Cotton Board. The report has been peer-reviewed and approved by USDA. To view the full report please visit the Cotton Board’s Web site, www.cottonboard.org, and look under the “About” tab.
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