CONTENTS

A Bigger Bang for the Milk Advertising Buck?

Evaluating Returns to the Cotton Checkoff Program

Editor's Notes

Manager's Viewpoint

Director’s Corner

Next Meeting

NEC-63 Fall 1997 October 6-7, 1997 Washington, DC A Symposium to Examine the Effectiveness of Different Nutrition Education Programs

Manager's Viewpoint

by David Fraser
Vice President of Communications
Cotton Board

Evaluation Confirms Significant Returns to Cotton Producers and Importers

As noted in the cotton checkoff program study also appearing in this issue, funding for cotton promotion and research was originally authorized through the Cotton Research and Promotion Act of 1966 and amended in 1990. The intent of the legislation was to strengthen the competitive position of cotton against primarily man-made fibers in addition to expanding domestic and foreign markets and uses for U.S. cotton.

The Cotton Board contracts with Cotton, Incorporated (CI) to carry out the research and promotion activities authorized by the legislative Acts. Cotton promotion activities include national television advertising campaigns via television commercials, seasonal promotions, and special public relations programs. CI also assists mills, manufacturers, and retailers in marketing cotton and cotton products for domestic and international users. Textile research activities include technical processing and production support to mills, as well as product and textile development.

From all of the market research we have conducted over the last 26 years, we knew our Cotton Research and Promotion Program had grown to be an outstanding success. Cotton Board chairman, Rick Wegis, acknowledged, “Cotton had hit an all-time retail market share low of 34 percent in 1975. But now, after 16 consecutive years of growth, our retail market share has skyrocketed to 59 percent. And the 'Seal of Cotton' is the third most recognized trademark in America with 75 percent of all consumers able to identify it, even without the word 'cotton' as part of the logo test.”

Market research has been extremely positive for a number of years and producer awareness of and satisfaction with the program, as conducted by CI and administered by the Cotton Board, has reached record highs. However, there was a critical piece of research that had never been done for us: an independent evaluation to determine the actual economic return on investment received by U.S. cotton producers and importers funding the program through their assessment payments. We all needed to know if program benefits outweighed costs and if the benefits were greater, by how much? Or as Rick Wegis put it, “In undertaking this study, we wanted to not only evaluate the effectiveness and return on investment of the Cotton Research and Promotion Program in its objective to build demand for cotton, but we also wanted an independent research study that was designed in such a way that the results generated could undergo considerable scrutiny and still be successfully validated and substantiated.”

We first discussed commissioning an independent evaluation in June of 1995. By the spring of 1996, the researchers in the Agricultural Economics department at Texas A&M University had nearly completed their data collection. Ironically, the 1996 Freedom to Farm Act contained a provision that mandated all commodity organizations periodically conduct independent evaluations. Not only were we a step ahead on the new provision, but now we also have the bottom-line proof of the program’s success.

Needless to say, we are extremely pleased with the report produced by Texas A&M. Not only did it meet our criteria of validating benefits vs. costs, it also held up to an intensive peer review and featured a unique methodology using two different analytical approaches that achieved identical results. As Dr. John Nichols and Dr. Oral Capps, Jr. of Texas A&M concluded in the report, “Unequivocally, promotion and research expenditures, adjusted for inflation and seasonality, do significantly stimulate domestic consumption, farm-level demand, and imports of cotton.”

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