Commodity checkoff programs as alternative producer investment opportunities: The case of soybeans

Abstract

Evaluations of commodity checkoff programs generally involve benefit-costs analyses. The typical benefit-cost approach, however, provides no clear criteria for judging whether program benefits exceeds the costs sufficiently to warrant continuation of the program. This article proposes a method for evaluating a commodity checkoff program as an alternative investment opportunity facing producers which allows a ranking of the program among investment alternatives facing producers. The procedure is demonstrated through an analysis of the soybean checkoff promotion program. The analysis clearly indicates that the soybean checkoff program has performed well as an investment alternative for soybean farmers and warrants consideration for continuation. In contrast, a benefit-cost analysis of the soybean checkoff program yields ambiguous results regarding both the magnitude of the producer benefit and whether the benefit is sufficiently large relative to cost to justify continuation of the program. [Econ-Lit citations: Q130, M300, M370] © 1999 John Wiley & Sons, Inc.

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