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An economic evaluation of market development programmes for US dairy products

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  • Liang Song
  • Harry M. Kaiser

Abstract

'This study measured the effectiveness of US dairy export promotion programmes on increasing foreign demand and enhancing producers' revenues. An import demand equation based on panel data was used to test whether export promotion has a positive and significant impact on US dairy exports. The effects of various promotion scenarios on the dairy market were then simulated, and benefit-cost ratios (BCRs) for these programmes were estimated. There were three key findings. First, the combined effort of public and private dairy export promotion expenditures had a positive and statistically significant impact on demand for US dairy products in the world market. The findings indicated that export promotion stimulated total dairy exports by 4.14 billion pounds, on average, per year, which represented 55.8% of total exports. Second, US dairy export promotion has been highly profitable for the nation's dairy farmers. The calculated BCRs, based on assumed elasticity of supply, ranged from a low of 8.54 for the most elastic assumption to a high of 30.12. Third, from an optimality standpoint, dairy farmers are underinvesting in export promotion. The marginal BCRs ranged from a low of 3.79 to a high of 15.22, which means that, at the margin, increasing export promotion expenditures would be profitable for dairy farmers.

Suggested Citation

  • Liang Song & Harry M. Kaiser, 2016. "An economic evaluation of market development programmes for US dairy products," Applied Economics, Taylor & Francis Journals, vol. 48(3), pages 212-221, January.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:3:p:212-221
    DOI: 10.1080/00036846.2015.1076152
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    1. Alston, Julian M. & Chalfant, James A. & Christian, Jason E. & Meng, Erika C.H. & Piggott, Nicholas E., 1997. "The California Table Grape Commission's Promotion Program: An Evaluation," Monographs, University of California, Davis, Giannini Foundation, number 11932, December.
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    Cited by:

    1. Freixanet, Joan, 2022. "Export promotion programs: A system-based systematic review and agenda for future research," Journal of World Business, Elsevier, vol. 57(4).
    2. Williams, Gary W. & Capps Jr., Oral, 2020. "Generic promotion of Norwegian seafood exports," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), August.

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