The U.S. Department of Agriculture’s latest report to Congress on the National Dairy Promotion and Research Program and the National Fluid Milk Processor Promotion Program shows econometric evidence indicating a “significant association” between expenditures by the checkoff programs and consumer demand. The report, recently posted to USDA’s Agricultural Marketing Service website, notes that while expenditures have a modest effect on demand when they are made, the longer-term, cumulative impact on demand is measurably larger.

The econometric analysis, prepared by Texas A&M University, provides an independent evaluation of the effectiveness of the dairy industry marketing and promotion programs for 2011. The quantitative analysis covers the period 1995-2011.

According to the report, “The incremental commercial consumption of fluid milk amounts to 5.8 percent of the total cumulative consumption of fluid milk over the 1995 to 2011 period.” That means the efforts of Dairy Management Inc., the Milk Processor Education Program and the qualified programs in states and regions “led to a 5.8 percent increase in fluid milk consumption, more than it would have been over the period 1995 to 2011.”

Other key findings include:

• The incremental consumption per dollar spent was 2.6 gallons for fluid milk, 3.5 pounds for cheese and 5.2 pounds for butter.
• The level of consumer income was a significant driver of the consumption of cheese, butter and all dairy products, but not for fluid milk.
• Fluid milk consumption was affected negatively by advertising from other beverage manufacturers, namely fruit juice, soy beverages and bottled water.

Read an executive summary and the full “Report to Congress on the National Dairy Promotion and Research Program and the National Fluid Milk Processor Promotion Program” here.

The National Fluid Milk Processor Promotion Program, or MilkPEP, is funded by a 20-cent per hundredweight assessment on fluid milk products processed and marketed to consumers in the contiguous 48 States and the District of Columbia. The program exempts companies that process and market three million pounds or less of fluid milk products each month, excluding home deliveries. Assessments generated $104.6 million in 2011.

For more information, contact Bob Yonkers, IDFA vice president and chief economist, at byonkers@idfa.org.