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The Payoff from Generic Advertising by the Australian Pig Industry: Further Results Relative to the Payoff from R&D

  • Mounter, Stuart W.
  • Griffith, Garry R.
  • Piggott, Roley R.
  • Mullen, John D.
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    Australian Pork Limited collects producer levies and matching contributions from the Federal government (on some of the levy income), and uses these funds to invest in R&D, domestic and export marketing campaigns and strategic policy development. In 2003/04, more than $18 million in funds were available. Levy payers and other stakeholders want to know that these funds are being well spent to generate positive net returns to the industry. This issue is particularly important at present, with the Australian pig meat industry competing in a global market environment, producing significant quantities of pork exports but also facing significant quantities of pork imports for further processing. An equilibrium displacement model of the Australian pig meat industry, described in an earlier paper in this Review (Mounter et al. 2005), was used to estimate the potential annual returns to producers and other industry sectors from different hypothetical R&D and advertising scenarios. The results indicated that pig producers receive the largest potential returns from effective bacon/ham advertising and from effective pork advertising that increases the domestic demand for these products by 1 per cent, and from effective R&D that reduces the cost of production of porkers by 1 per cent. Other investment scenarios generated substantially lower returns. However these results do not say anything about the cost of achieving the hypothetical 1 per cent shifts in demand or supply curves, so we cannot say which investments have the highest net returns. We can say though that investing in porker production R&D always provides the greatest share of total benefits to pig producers. We can also say, based on past empirical evidence, that it is very difficult to demonstrate any positive demand response to domestic pig meat advertising.

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    Article provided by University of Melbourne, Melbourne School of Land and Environment in its journal Australasian Agribusiness Review.

    Volume (Year): 13 (2005)
    Issue (Month): ()

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    Handle: RePEc:ags:auagre:126555
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    1. Cox, Thomas L. & Mullen, John D. & Hu, Wensheng, 1997. "Nonparametric measures of the impact of public research expenditures on Australian broadacre agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(3), September.
    2. Scobie, Grant M. & Mullen, John D. & Alston, Julian M., 1991. "The Returns To Investment In Research On Australian Wool Production," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(02), August.
    3. Nicholas E. Piggott & James A. Chalfant & Julian M. Alston & Garry R. Griffith, 1996. "Demand Response to Advertising in the Australian Meat Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 268-279.
    4. Mounter, Stuart W. & Griffith, Garry R. & Piggott, Roley R., 2005. "The Payoff from Generic Advertising by the Australian Pig Industry in the Presence of Trade," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 13.
    5. Freebairn, John W. & Goddard, Ellen W. & Griffith, Garry R., 2005. "When Can a Generic Advertising Program Increase Farmer Returns?," Australasian Agribusiness Review, University of Melbourne, Melbourne School of Land and Environment, vol. 13.
    6. Zhang, Lin & Goddard, Ellen W., 1999. "Revisiting Australian Pork Sales Response to Advertising 1985 - 1997," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 125044, Australian Agricultural and Resource Economics Society.
    7. J. M. Alston & J. D. Mullen, 1992. "Economic Effects Of Research Into Traded Goods: The Case Of Australian Wool," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(2), pages 268-278.
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