Sorghum Checkoff Evaluates Producers' Return on Investment


The Sorghum Checkoff has had a positive impact on sorghum yields, acreage and farm value, illustrating a positive return on producer investment, an independent study finds.

Over the past 10 years, the Sorghum Checkoff has worked to properly invest producer dollars into areas that offer growth, profitability and industry strength, and this return on investment evaluation indicates the organization is positively impacting the sorghum industry.

Funding in crop improvement program areas has successfully boosted the average acreage and farm value of production since the Sorghum Checkoff launched in 2008. Crop improvement investments also demonstrate a slight increase in sorghum yields, moving from an average 57.6 bushels per acre from 1960-2008 to an average of 65.2 bushels per acre during the time of the checkoff program (2008-2017). Figure 1 demonstrates the increase of sorghum yield over time, spanning from 1960-2017.

Figure 1. U.S. Sorghum Yield by Selected Periods of Time

Sorghum Yield by Selected Periods of Time

 

The farm value of U.S. sorghum production increased by an average of $12.6 million per year during that same time period, given estimated production and price impacts of Sorghum Checkoff investments. These investments show a tangible benefit to producers evidenced by the evaluation that for every Sorghum Checkoff dollar invested in crop improvement, the net return to producers was $8.57.

Efforts by the Sorghum Checkoff to invest in food and industrial use have also been successful, showing that sorghum use in these markets increased by an average of 6 million bushels per year from 2008-2017. This equates to a total of 47.8 million bushels of additional sorghum sales since the checkoff began.

The Sorghum Checkoff's investment into high-value markets and renewables combined enhanced the farm value of sorghum sales by near $107.4 million. The net return to the producer in this area is nearly $11.60.

With such successful returns in these program areas, the evaluation recommends the allocation of funds to promote the use of sorghum in ethanol, gluten-free products, pet food, aquaculture and renewable chemicals to maximize the opportunity for increasing future producer profitability.

The evaluation also showcases the shift in demand for sorghum across multiple markets. Starting in 1975, the primary market for sorghum was classified under Feed and Residual Use. This area accounted for over 60 percent of sorghum in 1975, but in 2016 this market now accounts for roughly 15 percent of the crop.

Exports is now the leading market for sorghum accounting for more than 50 percent of the grain. Over the same time period, the market for Food, Alcohol and Industry Use increased significantly. This market increased from an average of 16.7 million bushels between 1975-1998 to an average of 86.6 million bushels between 2008-2017.

Figure 2 demonstrates the shifting demand for sorghum across Feed and Residual Use; Exports; Food, Alcohol and Industry Use; and Seed Use since 1975.

Figure 2. Sorghum End Uses by Type of Use

Sorghum End Uses by Type of Use

 

This independent evaluation was conducted in order to measure the effectiveness of the Sorghum Checkoff, ensuring the checkoff is properly investing funds and expanding markets that have a higher opportunity to return producer profitability and create success for farmers.

Recommendations were provided to increase funding for crop improvement activities that have successfully boosted acreage and farm value of production. In addition, it was recommended to continue increasing investment into food and industrial uses to provide maximum opportunities for producer profitability, market expansion and overall growth of the industry.

The Sorghum Checkoff board of directors has reviewed the evaluation and recommendations provided, and they will meet to discuss ways to strategically invest in the areas shown to provide the best possible return to producers.

This evaluation took into consideration all projects and investments made over the course of the past 10 years, regardless if they are complete or at the initial stages. Producers may not feel the full weight of the net return or increase to farm value at the moment because of this, but the Sorghum Checkoff expects the impact to be felt as results continue to deliver positive outcomes in the future.

A full copy of the report can be found here. The evaluation was conducted by Oral Capps, Jr., Ph.D., executive professor, regents professor and co-director of the Agribusiness, Food, and Consumer Economics Research Center along with Gary W. Williams, Ph.D., professor and co-director of AFCERC and Mark Welch, Ph.D., professor and extension economist at Texas A&M University.