Powerful case for wheat foods checkoff program

by Josh Sosland
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Josh Sosland
In coming months, grain-based foods executives likely will face a decision of monumental importance over whether to back a wheat checkoff program to fund the largest industry effort ever aimed at boosting the domestic market for wheat-based foods. Judging by how the process has proceeded under the guidance of the Grain Foods Foundation, challenges currently facing the industry and the long, successful track record of such programs for other commodities, the case for supporting the initiative is compelling.

For those grappling with the important mix of issues surrounding a wheat checkoff program, a 2016 research paper by agricultural economists Gary W. Williams and J. Mark Welch of Texas A.&M. University offers a good starting point, answering many fundamental questions that require clear, objective answers.

Most basic among these is whether agricultural checkoff promotion programs work. Answering in the affirmative, the researchers cite consensus across a range of studies conducted by numerous researchers looking at many different checkoff commodities. Specifically, programs overwhelmingly have been effective in increasing sales by more than necessary to cover the checkoff funded costs. The researchers estimate that benefit-to-cost ratios, a key measure of a checkoff program’s effectiveness, vary widely but generally range between $2 and $10 for each dollar invested.

In milling and baking industry discussions about a prospective checkoff program to date, it is the unprecedented cost of the program, potentially in the tens of millions of dollars, that understandably represents the single greatest concern. While worries about the near-term financial impact of the investment are understandable, the validated track record of return-on-investment of checkoff programs should go a long way to ease apprehensions.

Interestingly, the researchers caution that programs with the highest benefit-to-cost ratios should not be judged the most successful. Instead, very high such ratios suggest underinvestment by the industry (though they acknowledge that a low ratio may indicate that a program is ineffectively administered). Milling and baking executives should take 
care not to underinvest in this program.

Conversely, the researchers warn advocates against overstating the potential impact of a checkoff program or characterizing checkoff to constituents as a “panacea to their financial problems in an effort to gain support for the establishment of such a program.” Even with a successful checkoff program, forces pressuring demand will not magically disappear.

Still, those forces include grain-bashing critics promoting shoddy science, something the checkoff program will allow the industry to counter more vigorously than ever before.

Grains remain the largest energy source in the American diet and as the leading food category finds itself forever with a large target squarely on its back.

In fact, it is the need to level the playing field with competitive foods that makes pursuit of a checkoff program so urgent. The degree to which grain-based foods stands nearly alone without a checkoff program may not be widely appreciated by millers and bakers. Of the roughly 2,500 calories consumed daily, grains in 2015 accounted for about 524, or a little more than a fifth, according to U.S. Department of Agriculture data. Excluding grains and more indulgent energy sources such as sweeteners and added fats, energy intake totals about 959 calories a day from remaining food sources, including dairy, protein and produce. It is this collection of eating options that represents the playing field on which baked foods has and will continue to compete. Of the 959 calories from competitive foods, 675 calories, or 70%, come from products with ongoing checkoff programs. The only major food source other than grains without a checkoff is poultry (accounting for 166 calories per day). Realism is required when setting expectations for what may be accomplished through a checkoff program, and millers and bakers must be assured program resources will be directed to the segments that fund it. Still, it must be appreciated that failure to launch such a program will leave the industry disadvantaged versus competitive segments that continue to enhance their checkoff programs. It is a disadvantage the industry simply must not allow to endure.
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