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U.S. Grains Council earns about $592 million yearly

By DOUG SCHMITZ
Iowa Correspondent

HOLGATE, Ohio — An internal performance audit that the U.S. Grains Council (USGC) had conducted on its programs concluded that the council generated nearly $592 million annually for U.S. producers, according to data analyzed by Informa Economics, LLC.
“Our goal in conducting this review was to be as accurate as possible and alleviate any concerns that a bias exists,” said Rick Fruth, USGC treasurer and Holgate, Ohio farmer.

“We wanted to give our producer members a clear picture as to how their state checkoff dollars apportioned to the Council have a significant return,” he said of the study, which was performed to assess the USGC’s financial value to U.S. farmers.

The USGC’s mission is develop export markets for U.S. barley, corn, grain sorghum and related products, believing that exports are vital to global economic development and to U.S. agriculture’s profitability.

The Informa study concluded that the value of U.S. exports due to the USGC’s market development efforts resulted in $241.2 million annually, with the value of exports per dollar invested being $12.90; the total return to producers on their investment in international market development is $32.87 annually for each dollar invested. “Producers are fortunate that their checkoffs are investing in the council and increasing demand for U.S. feed grains, which means a greater bottom-line annually,” Fruth added.
Contributing members of the USGC include: the Illinois Corn Growers Assoc.; the Illinois Corn Marketing Board; the Illinois Farm Bureau; the Indiana Farm Bureau; the Iowa Corn Promotion Board and the Iowa Corn Growers Assoc.; the Iowa Department of Economic Development; the Iowa Farm Bureau Federation; the Ohio Corn Growers Assoc. and the Ohio Corn Marketing Program; the Ohio Farm Bureau Federation; and the Kentucky Corn Promotion Council.

“Each state checkoff board who is a member of the council chooses how much of their checkoff funds they want to apportion to the council. Some contribute a great deal and some very little,” said Mike Deering, a spokesperson for the USGC.

“For every member dollar from checkoffs and agribusiness we raise, the USDA gives us roughly four dollars,” he said. “The checkoffs we get funds from are barley, sorghum and corn.”
Headquartered in Washington, D.C., the USGC said it provided its members with only a minority share of the investment required, with 100 percent of the returns accrued to producers, which created about $591.7 million for producers annually.

“It is almost unheard of to invest one dollar and get a return of nearly $33,” Fruth said. “If the Council was a for-profit company generating comparable returns, Wall Street would be beating a path to our door bringing wheelbarrows full of cash to invest.
“The council’s top priority is to improve the lives of U.S. farmers and this study confirms we are doing just that,” he said.

The USGC asked Informa to develop the evaluation process, where the results were reviewed by Mike Dwyer, a USDA Foreign Agricultural Service (FAS) economist. Fruth said Dwyer was involved with the study since the beginning and said Informa’s conclusions about the USGC “were on track and perhaps even conservative.”

Dwyer added that the council was ahead of the rest of the industry, and complimented the efforts of the USGC’s leadership and the decision to hire Informa to serve as an objective outside party in the performance review process.

Founded in 1960, the USGC is a private, non-profit corporation with nine international offices and programs in more than 50 countries, whose membership includes producer organizations and agribusinesses with a common interest in developing export markets.

According to the USGC, membership funds trigger matching market development funds from the U.S. government and support from cooperating groups in foreign countries to produce an annual development program valued at more than $25 million.
The USGC said it tailors its programs to meet individual countries’ cultures and needs.

“Our technical programs teach livestock and poultry producers how to use feed grains effectively and manage their operations efficiently,” read a USGC statement.

“Our trade servicing efforts educate potential and current customers about the U.S. marketing system, including financing, government programs, U.S. feed grains quality and prices,” the statement read. “Our trade policy initiatives identify foreign barriers to U.S. feed grains exports.”

Wendell Shauman, past chair of the Illinois Corn Marketing Board, said the USGC’s efforts to develop new markets face unfair regulations or tariffs, such as India and the Philippines.

Shauman said the USGC’s efforts are critical to Illinois, which exports 40-50 percent of its corn crop each year.

“The USGC’s evaluation process quantifies exports that would not have occurred without Grains Council programs,”  Shau-man said.
“The ICMB has been a strong supporter of the council for 25 years.”

Julius Schaaf, chair of the Iowa Corn Promotion Board and Randolph, Iowa farmer, said the Informa assessment confirmed the board’s long-term belief that investing in foreign market development pays big dividends for Iowa corn growers as well.
“The ICPB provides major support for U.S. Grains Council market development programs because we’ve seen the value of this work,” he said. “We believe these programs contribute in a big way to corn farmer profitability, which is why we support them.”

This farm news was published in the April 16, 2008 issue of the Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.
4/16/2008