A new study has re-confirmed what many in agriculture have long known - crop development research delivers tremendous investment value to farmers and their industry.

The study was conducted to determine the return on investment to farmers who support variety development through the Wheat and Barley Check-off Fund, administered by Western Grains Research Foundation (WGRF). It found that every dollar invested in wheat development returns a minimum $4 to the farmer and every dollar invested in barley returns a minimum $12.

The barley figure is higher because there is less barley research, but both findings reveal a remarkably high return on investment, says Dr. Hartley Furtan, agricultural economist at the University of Saskatchewan. "These are clearly very strong returns. They re-confirm what previous studies have found, adding to the weight of evidence that crop development research delivers one of the highest and most consistent investment returns of any type of agricultural research."

WGRF is funded and directed by producers from across the Prairies. Since 1994, its major funding source has been the Wheat and Barley Check-off Funds, which are based on a check-off from the CWB final payment on wheat and barley to producers. (Alberta barley is an exception, covered by a separate provincial check-off.)

With 10-years of Check-off investment completed and the first wave of varieties emerging, WGRF commissioned the independent Return on Investment Study to determine the value producers are getting on every Check-off dollar they contribute.

The study was conducted by the private firm TESCO Consulting Ltd. of Regina, in conjunction with Furtan and fellow University of Saskatchewan agricultural economists Dr. Richard Gray and Dr. Alper Guzel.

According to the findings, the benefit/cost ratio for producers for the Wheat Check-off is estimated at 4.4:1, meaning that every dollar of Check-off invested generates $4.40 of increased producer surplus for western Canadian wheat growers. For barley growers in Western Canada, the benefit/cost ratio is 12.4 to 1, meaning farmers get back $12.40 for every dollar they invest.

Because it takes from six to 12 years to develop a new cereal crop variety, the benefits from WGRF Check-off investment are just now beginning to affect wheat and barley growers' returns, notes Furtan. "Based on our analysis, the bulk of the estimated returns to producers' Check-off invested thus far by WGRF will have been realized by producers within the next four to five years."

The study compared the cost of the Check-off paid by producers to the economic benefits generated by the Check-off investments that arise from improvements associated with new crop varieties. Benefits to producers were estimated as producer surplus, which is the return to fixed factors of production.

"We began by identifying those varieties developed with Check-off assistance that represent significant breakthroughs in genetic technology," says Furtan. "With this approach, it was expected we would account for the bulk of the gains from the Check-off investment. We then estimated the benefits of these varieties and determined the return on investment using standard cost/benefit methodology."

The results should be viewed as conservative estimates, he says. "The study provided solid overall estimates, but some market attributes of varieties are not fully reflected in the analysis. The estimates should therefore be considered as reflecting the minimum return producers can expect from Check-off invested by WGRF on their behalf."

More information on the Return on Investment Study will be available in the December edition of the WGRF Industry Report newsletter, available at www.westerngrains.com, in early December.