Feb 23, 2017PBNW analyzes economic impact of export programs
Just how effective and impactful are Northwest Pear export promotions? The Pear Bureau Northwest has completed an econometric study intended to answer how effective and impactful Northwest Pear export promotions are. The study, conducted by Harry Kaiser of Cornell, Timothy Richards of Arizona State and Roman Keeney of Purdue University, was an in-depth look into the marginal benefit cost ratio (BCR) and the promotion elasticity for each of the Pear Bureau’s top export markets, and the impacts that Northwest pear promotions have had on the overall farm sector.
Pear Bureau Northwest’s export promotional program is funded by grants from the USDA’s Market Access Program (MAP) as well as industry funding. The study looked at PBNW’s export promotion program from 2004 to 2014 to calculate the marginal BCRs and used the 2014/15 season for the overall impacts to the local economy.
Below is a summary of the key results of the study and an explanation from PBNW of the results:
- The marginal BCR for PBNW’s export promotional program was 2.25 in the short run and 2.33 in the long run. The marginal BCR is a measure of how much one extra dollar invested would return in industry benefits. This means that one extra dollar would have returned $2.25 in the short run and $2.33 in the long run in additional profits to the pear growers. This model is not a predictive model, but more of a reflective model of what happened over the 10-year period (2004 to 2014) that was being measured.
- Overall promotion elasticity for Northwest Pear promotions was 0.046. This means that a 10 percent increase in the export promotion budget would result in a 0.46 percent increase in exports. Though this figure may appear small, anything above zero shows that the export promotion program does indeed have a positive impact on overall export volumes.
While these numbers show an effective and profitable export promotional program, it is the impact on the local economy and the farm sector that may be most impressive. Below is a summary of those results for the 2014/15 season:
- PBNW export promotions led to an increase in export revenues of 8.3 percent.
- There were 240 additional jobs in the local economies due to Pear Bureau export promotions, generating $9.6 million in additional labor income and $19.1 million in economic output.
- Northwest Pear production is 26.1 million pounds (or 593,182 standard box equivalents) larger due to export promotions. This is based on export promotions increasing domestic production by 0.2 percent.
- Farm asset values increased by $22.46 million and the total economic benefit was $31.3 million due to Pear Bureau export promotions.
This study shows the importance of Northwest Pear exports, export promotions and the overall importance of the Market Access Program to the success of the Pear Bureau Northwest’s export promotion program, according to PBNW. The results of this study mirror the results from the two most recent econometric studies that the USDA conducted on behalf of the MAP program as a whole in 2011 and 2016.