Generic Advertising of U.S. Lamb

ABSTRACT

Generic advertising of U.S. lamb by the U.S. sheep and lamb industry is an effort to reverse an almost continual decline in the industry since World War II. This analysis explores the answers to three related questions: (1) What have been the effects of the generic lamb advertising on U.S. and foreign sheep, lamb, and wool markets? (2) Has the generic lamb advertising program effectively increased the consumption of domestically produced lamb as intended rather than imported lamb? (3) What have been the returns to U.S. sheep producers, feeders, and packers who pay for the advertising? Using a 70-equation, non-spatial, price equilibrium, simultaneous econometric simulation model of the world sheep, lamb, and wool markets, the analysis concludes that the U.S. lamb industry’s generic lamb advertising program has positively impacted their markets, enhanced profitability of the industry, and increased the industry’s share of domestic lamb consumption.

KEYWORDS:

• Lamb
• generic advertising
• checkoff
• benefit-cost analysis

Contributors

Somali Ghosh received her Ph.D. in agricultural economics at Texas A&M University. She is currently Research Economist with AgriLogic Consulting, LLC in College Station, Texas. This article is based on a part of her Ph.D. dissertation.

Gary W. Williams is Professor and Co-Director of the Agribusiness, Food and Consumer Economics Research Center in the Department of Agricultural Economics at Texas A&M University in College Station, Texas.

Notes

The term “checkoff” refers to the collection of a fee and comes from the concept of checking off the appropriate box on a form, like a tax return, to authorize a contribution for a specific purpose, such as the public financing of election campaigns or, as in this case, the financing of generic advertising programs.

The “lift” is the average annual increase in some variable like production, demand, trade, or price due to generic advertising over the period of analysis (1987–2013 in this case). A negative “lift” is a decrease in the variable value.