Study calculates solid return for investing in agricultural export market development
Posted June 2, 2022
Kansas farmers cultivate more than crops through their checkoff contributions. Spending those dollars cultivating export markets directly benefits wheat growers and the general U.S. economy, according to a new econometric study by IHS Markit and Texas A&M University.
Researchers concluded two export programs — the Market Access Program (MAP) and the Foreign Market Development (FMD) program — added an average of $9.6 billion per year to export value between 1977 and 2019. That’s great news for Kansas wheat growers, as roughly half of the Kansas wheat crop is exported each year.
“Our work indicated that MAP and FMD have accounted for 13.7% of all the revenue generated by U.S. agricultural exports between 1977 and 2019,” said Dr. Gary Williams, one of the lead agricultural economists on the project. “The additional export revenue bolsters the entire U.S. agricultural sector and creates a multiplier effect throughout the U.S. economy.”
Investment in export market development starts at the combine. The Kansas Wheat Commission is funded by a two-cent per bushel, voluntary assessment on each bushel of wheat grown in Kansas and sold to a Kansas grain elevator. The Kansas Wheat Commission uses those funds to invest in agronomic research projects, consumer outreach and supporting agricultural export market development as a contributing member of U.S. Wheat Associates (USW).
Wheat is the most trade-dependent of the major food and feed crops grown in the United States. But individual farming operations cannot effectively market wheat overseas. USW combines funding from 17 state wheat commission members with federal funding through the MAP and FMD programs to market U.S. wheat, including Kansas hard red winter (HRW), to customers around the world. USW staff and consultants add expertise in how best to use the various classes and qualities of U.S. wheat for end-products from loaves of bread to instant noodles to pasta and more. USW also works to address trade or technical barriers that inhibit the flow of wheat to world markets.
“These export market development programs enable U.S. Wheat Associates to build a critical reserve of trust and goodwill with our overseas buyers, end-users and influential government officials, as well as key U.S. government agencies and officials,” said USW President Vince Peterson. “And there is a clear return on investment — for every dollar spent on export promotion, there is a return of $24.50 in additional net export revenue — and the return is even higher to the U.S. wheat supply system.”
In addition to calculating the value of the MAP and FMD programs, researchers also analyzed the potential impact of the Agricultural Trade Promotion (ATP) program established by the USDA in 2019.
The ATP program provided $300 million to cooperating organizations like USW, and, in turn, these groups contributed $90 million in cash, goods and services. The study’s analysis of future expected returns from those investments between 2019 and 2026 predicts that incremental funding for agricultural export market development will provide an excellent return.
Read the study and learn more about the value of U.S. agricultural exports to the farm at www.AgExportsCount.org.
Written by Julia Debes for Kansas Wheat