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Return on Investment

Wednesday, April 1, 2009
filed under: Research and Development

By Larry Kleingartner

Knowing where your checkoff dollars are spent and how they are used helps justify the investment, according to Stan Buxa, chair of the North Dakota Oilseed Council and a member of the National Sunflower Association Board of Directors. The North Dakota Oilseed Council is presently supporting legislation in the state to increase the sunflower checkoff from three (3) to four (4) cents per hundredweight. Three other states — South Dakota, Colorado and Kansas — currently have farmer sunflower checkoffs, and efforts are underway in Minnesota to develop a similar checkoff.

Back in the early 1980s, the National Sunflower Association (NSA) was created in order to have one central voice for sunflower. The organizers put together a grower and industry membership organization that brought ideas and funding from all sources into one association.

Checkoff councils/commissions from North Dakota, South Dakota, Colorado and Kansas now participate in the NSA, with 50% or more of each state group’s annual revenue directed to the NSA. Those funds are enhanced with industry assessments of the oilseed crushing plants, the confection processing plants and the hybrid seed companies. The NSA is able to expand that income even further with other grants, including a market development grant from USDA’s Foreign Agricultural Service. All in all, every dollar coming into the NSA grows exponentially at least 10-fold.

The National Sunflower Association’s 2008/09 budget includes the following:

Anticipated Revenues:

• N.D. Oilseed Council $ 375,000

• S.D. Oilseed Council $ 150,000

• Kansas Sunflower Commission $ 61,000

• Colorado Sunflower Administrative Committee $ 7,500

• High Plains Committee $ 120,000

• Oilseed Crushers $ 100,000

• Confection Processors $ 100,000

• Hybrid Seed Companies $ 60,000

• Advertising/Subscription Sales for The Sunflower $ 185,000

• USDA Foreign Agricultural Service Grants $ 1,600,000

• Other

Total: $ 3,029,000

Anticipated Expenditures:

• Salaries/Benefits $ 360,000

• Production Research $ 550,000

• Domestic Promotion $ 150,000

• Foreign Promotion $ 1,600,000

• Publications & Grower Information $ 225,000

• Office & Related Costs $ 45,000

• Travel $ 70,000

• Washington, D.C. Representation* $ 135,000

Total: $ 3,135,000

* No grower checkoff dollars are used for Washington representation.

Representation on the NSA Board of Directors relates to the amount of contributions from each checkoff council/commission. Each checkoff state and industry group participating in an assessment has representation on the board of directors. Board President Don Schommer, a grower from Munich, N.D., explains that the board has to look forward several years as investments are made in research and market development. “We don’t get an immediate payoff. But through good planning, we are likely to see results in several years,” Schommer says. “We want to get the work done as quickly as possible without spending a lot of money. It has to affect the majority of the producers and industry.”

The development of NuSun® provides a prime example of looking into the crystal ball and hoping the decision was the “right” one. There were no guarantees. “But through lots of cooperation among all entities of the industry, NuSun today is a reality — and a very successful gamble,” Schommer observes.

Operating as a national organization provides many advantages. An example is the development of Clearfield® sunflower. Pursuit-resistant wild sunflower was identified in Kansas by KSU researcher Kassim Al-Khatib. He provided collected pollen and seed to the USDA-ARS Sunflower Research Unit in Fargo, where the gene was transferred to commercial germplasm. The NSA funded chemical efficacy trials in all of the states, using one protocol that then became the basis for EPA registration of the herbicide. Today, Clearfield is a key tool in sunflower weed control. It took multiple years to develop — and considerable investment by the NSA and others.

Expanding crop insurance coverage has been a high priority. Revenue Assurance (RA) initially was only eligible to North Dakota producers. The NSA was able to expand that coverage to all states in 2004. In 2008 the RA formula was changed, making RA a viable alternative to multi-peril coverage.

John Sandbakken, the NSA staff person overseeing crop insurance, recognized that the sunflower RA option was on the hit list. “Sunflower nearly lost this key insurance alternative. It wasn’t being utilized by producers because it wasn’t a viable insurance alternative,” Sandbakken relates. The NSA worked with the Risk Management Agency to change the RA formula. That change occurred in time for the 2008 season — and in that year, about 75% of the nation’s sunflower acres were covered by RA. “That would not have happened without all of us working closely together as one organization,” Schommer emphasizes.

So does the investment of producer checkoff and industry dollars provide a return? The answer is a definite “yes” if you look at just two examples: Clearfield and revenue assurance.

What is the value of the Spanish market for confections? Or what about the value of the domestic market for NuSun and high-oleic sunflower? It means everyone working together for the common good, says Tom Young, a South Dakota grower and NSA first vice president. “When one of my checkoff dollars brings a 10-fold return I consider that a great investment.”

Young points out that all of the sunflower herbicide registrations in the last 10 years — including Spartan®, Beyond® and Express® — were partially financed by the National Sunflower Association. “The NSA paid for the EPA-required residue trials, and we had to convince a lot of companies that sunflower would be a viable crop for them,” Young recounts. “Did we know for certain we would get the products registered? No, we did not! Was it worth the investment of grower and industry check off dollars? The answer is a resounding yes!” Young affirms.

Larry Kleingartner is executive director of the National Sunflower Association.