World Commodity Supply Chains and Agricultural Commodity Marketing and Promotion
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abstract
Globalization is affecting the effectiveness of cooperative producer and agribusiness promotion and marketing efforts like voluntary and mandatory generic advertising and promotion financed by producers and/or various agribusinesses at the state or national level known as commodity checkoff programs. Extending and linking commodity supply chains worldwide across national borders, globalization is influencing the rate and extent of the effects of retail-to-farm transmission of commodity promotion. As a consequence, the benefits and market effects of checkoff programs can no longer be expected to transmit solely through domestic channels to the farm level as in the past. Instead, the market effects now are likely to move through often lengthy global supply chains before any benefits accrue to producers. Thus, the net effect on the farm-level returns from generic advertising by checkoff groups whose commodities move through a global supply chain, is largely ambiguous. In other words, the process of globalization could be either increasing or reducing the profitability of producer investments in commodity promotion programs. Because of the differential effect of globalization on commodity markets, whether or not globalization enhances or reduces the returns of the commodity checkoff programs to producers and/or agribusinesses that finance them is an empirical question that must be analyzed commodity by commodity. A large and growing body of literature demonstrates that, by and large, generic promotion programs of U.S. agricultural commodity groups have been highly successful in expanding demand in both domestic and foreign markets across a broad range of commodities. However, the literature on the influence of increasingly important global commodity supply chains and the transmission of generic advertising effects is sparse. Most studies of commodity checkoff programs continue to either ignore the problem of global (or domestic) supply chain transmission of benefits to stakeholders and assume full transmission from retail promotion to producers or make some simplifying assumptions to estimate the share of generic-advertising-induced benefits that accrue at the farm level while ignoring the increasing interaction of domestic and world markets through expanding commodity and food supply chains.This project will analyze the interaction of expanding world commodity supply chains and agricultural commodity marketing and promotion for strategic decision-making by U.S. agricultural producers and agribusinesses. Specifcally, the project will: 1. Qualitatively analyze the structure and changes in world commodity and food supply chains specifically for U.S. agricultural commodities that are promoted through checkoff programs and other domestic and international advertising and promotion programs; 2. Develop and utilize empirical models and techniques to measure and analyze the supply chain consequences and interactions of the marketing and promotion of specific agricultural commodities; 3. Evaluate alternative marketing, trade, and management strategies and policies for managing the supply chain effects of commodity marketing and promotion efforts based on the results of associated qualitative and quantitative analyses; and 4. Disseminate the research results to U.S. agricultural producers and processors, commodity organizations, rural communities, food industries, and government agencies through various reports, conferences, seminars, and symposia to support strategic decision-making to enhance the marketing and promotion of agricultural and food products in the context of globalization.
