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Abstract
This report is an empirical analysis of the effectiveness of the marketing/promotion, nonagricultural
research, and agricultural research activities associated with the cotton checkoff
program over the period of 1986/87 through 2004/05. The analysis is based on a multi-equation,
econometric, non-spatial, price equilibrium simulation model of U.S. and foreign fiber markets
using annual data. The key average annual impacts of the cotton checkoff program on U.S. and
foreign cotton and man-made fiber markets and their associated textile markets are reported.
The results show that the returns to cotton producers as well as to cotton importers from the
cotton checkoff program are positive. The average discounted benefit-cost ratios (BCR) for the
cotton checkoff program were found to be 5.7 for domestic cotton producers and 14.4 for
importers. The higher BCR for importers reflects revenue gains not only from additional sales of
cotton fiber textiles but also from additional “spillover” sales of man-made fiber textiles
prompted by the cotton checkoff program. The results also show that U.S. taxpayers are better
off because the cotton checkoff program has tended to reduce government outlays directed to
cotton farmers. The analysis also finds that neither U.S. producers nor importers pay the full cost
of the checkoff assessments. Finally, cotton checkoff expenditures on agricultural research were
found to have positively and significantly affected U.S. cotton yields with no discernible effects
on cotton harvested acreage.