Dairy promotion programs analyzed

USDA submitted its report to Congress regarding 2011 activities of the National Dairy Promotion and Research Program (NDB) and the National Fluid Milk Processor Promotion Program (MilkPEP). 

Assessments collected under NDB’s mandatory 15¢/cwt. checkoff totaled $98.4 million in 2011. Of that, $97.6 million came from U.S. dairy producers, and $761,000 came from a 7.5¢/cwt. importer assessment.  According to the summary, NDB (managed by Dairy Management Inc.) spent about $90 million on programs and about $4.2 million on administration and general expenditures, with a $20.7 million balance at the end of the year. Revenue for other “qualified programs” totaled $184.5 million in 2011.

MilkPEP is funded by a 20¢/cwt. processor assessment on fluid milk products. Those assessments generated $104.6 million in 2011. The order requires that 80% of the funds received from California processors be returned to the California Milk Processor Board for its got milk?® advertising campaign. (The amount returned was $9.8 million.) MilkPEP program spending totaled about $91 million; general administration expenditures totaled about $3 million. The end-of-year fund balance was $15.7 million.

Independent analysis conducted by Texas A&M University estimated DMI, MilkPEP and qualified program generic fluid milk marketing activities have helped mitigate the decline of fluid milk consumption for the period of 1995 to 2011. Fluid milk consumption was 5.8% higher than it otherwise would have been over the period. 

 Similarly, the demand-enhancing marketing activities of DMI and qualified programs resulted in a 2.8% incremental increase in cheese consumption and a 1.4% incremental increase in butter consumption. Finally, the efforts of all programs led to a 2.3% incremental increase in all dairy products on a skim solids basis and a 2.4% incremental increase in all dairy products on a fat basis over the period 1995 to 2011.

Gains in revenue at the farm level were greater than the costs of the programs, the report said. The benefit-cost ratios for fluid milk were calculated to be $3.95 for every dollar invested; for cheese $4.43 for every dollar invested; and for butter $6.26 for every dollar invested. 

Find the 150-page report at www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5104671.