Research and development, marketing investments are small for most farmers 

By Alan Dunn, President of Indiana Corn Growers Association 

This past February I had the opportunity to attend the Commodity Classic in San Antonio, Texas. This event is the annual convention and trade show for the national corn, soybean, wheat and sorghum associations. 

The Classic functions as an annual opportunity to conduct association business and to communicate the latest news and innovations in production agriculture to farmers from across the country and the world. I was proud to represent Indiana corn growers in the National Corn Growers Association (NCGA) Corn Congress, where NCGA discusses policy matters related to corn production at the federal level. 

It was during these Corn Congress sessions that I was reminded of something that is readily apparent but not always front of mind. Each of our farms is part of an industry. Have you ever thought about your farm that way and what that means? 

As corn growers, we should think of our farms as part of a large and vital bio-manufacturing industry. We purchase a few key raw material inputs like seed, fertilizer and crop protection, provide the labor to facilitate the production process, and create an end-product for sale – corn. 

Thinking of your farm as a mechanism of a broader industry can offer a new and invigorating mindset as we consider how to position our farms to face the challenges in production agriculture today. 

As individuals we are often challenged to benchmark our farms against published operational standards presented by Purdue University. But how does our bio-manufacturing industry stack up against other industries in certain key measures, namely research and development and market promotion? 

Any industry that produces a product for sale wants to continually improve their product offering to find improved versions or potential new uses. To do this, investments are made in research and development. According to data gathered by the National Science Foundation, the average U.S. manufacturing industry investment in research and development is around 3-4 percent of revenues. 

Any industry that produces a product for sale also wants to promote that product in the marketplace, in both existing markets and potential new markets. We would commonly call this marketing, or what is more formally known as market promotion. A survey conducted by the research firm Gartner, Inc., showed that the average manufacturing industry budget for market promotion was approximately 5 percent of revenues. 

So, how do we stack up as corn growers? 

When you sat down this year to plan your crop budget, did you include line items for research and development and market promotion? If you are like me, the answer is almost certainly no. 

But here is the good news. You do have a line item for these two services in the form of your contribution to the Indiana Corn Marketing Council, our state’s corn checkoff program. Chief among the primary purposes of this fund is research and development and market promotion for corn and corn-based products. 

So now let’s do the math. According to the most recent USDA production report, Indiana produced an average of 204 bushels of corn per acre. Let’s assume that corn is worth $4.25 per bushel. Gross revenue would be $867 per acre. Indiana’s corn checkoff rate is one-half cent per bushel. The average checkoff contribution would be $1.02 per acre. That represents an investment rate of .12 percent of revenues. 

To me, that is an eye-opening and humbling number. What do you think?