Episode 44 - Behind the Numbers: The True Impact of the Dairy Checkoff

In this episode of Your Dairy Checkoff Podcast, economist Dr. Oral Capps of Texas A&M University breaks down more than a decade of independent research measuring the impact of the dairy checkoff. Speaking from the 2025 Joint Annual Meeting, Dr. Capps shares how checkoff investments across food service partnerships, fluid milk innovation, whole-fat dairy science and exports are delivering strong, measurable returns for U.S. dairy farmers.

He explains the rigorous, peer-reviewed process behind his analysis, the role of third-party credibility and why programs like lactose-free milk, whole milk, butter and product innovation have contributed to a turnaround in fluid milk consumption. Dr. Capps also offers a farmer-focused perspective on what the checkoff means for the all-milk price and what the industry could look like without these efforts.

This is a revealing look at the data, the methodology and the real-world outcomes demonstrating that checkoff investments are paying off—and strengthening dairy’s future.

Host & Guest 

• Host: Scott Wallin, Vice President of Farmer Communications & Media Relations, Dairy Management Inc.
• Guest: Dr. Oral Capps, Executive & Regents Professor, Texas A & M University

Transcript (AI-Generated, please ignore typos)

Your Dairy Checkoff Podcast 00:02

Welcome to your dairy check off podcast from dairy Management, Inc, where dairy check off leaders and farmers share real stories, strategies and insights that grow sales and build trust for us dairy, let's get started.

Scott Wallin 00:19

Welcome to another edition of the your dairy check off podcast. I'm Scott Wallen with dairy management Incorporated, and we are in Arlington, Texas for the 2025 joint annual meeting hosted by the dairy promotion and policy groups. More than 750 people are on site, including many dairy farmers from across the United States. We've had. We have a powerful lineup of speakers, including Dr oral caps from Texas A and M University. Dr Capps, welcome to the meeting. How are you doing?

Dr. Capps 00:48

I'm doing great. Thanks for the invitation. Glad to be here.

Scott Wallin 00:52

Well, you are going to touch on a subject that we know many dairy farmers are interested in. Dairy check off impact. But before we get into that, can you just give us a little background about yourself and your department. Sure.

Dr. Capps 01:03

I been with Texas A and M for since 1986 so I've got a few miles on me, I suppose. I currently run a center called the agribusiness, food and consumer economics research center. It's a mouthful. We just call ourselves AF circ, and with that, we do a lot of marketing analysis, demand analysis, forecasting. We work not exclusively, but predominantly with the private sector like DMI, and we do a lot of check off program analyzes, particularly dairy.

Scott Wallin 01:38

So what's the history with you working with the dairy check off to kind of examine that impact I was

Dr. Capps 01:47

we have academicians around the country that analyzed the check off the 1996 FAIR Act mandated an evaluation of agricultural Check off programs. I actually began the analysis in 2011 so we've been working on this for about 14 years now,

Scott Wallin 02:08

and I know you really zeroed in on four main areas. How do you what? First of all, what are the four areas? And how do you determine what you want to examine?

Dr. Capps 02:17

DMI has four program areas, but the dairy check off actually focuses on fluid milk, butter, cheese, other dairy programs, as well as dairy exports,

Scott Wallin 02:30

right, right? And those are certainly areas that our farmers care an awful lot about, absolutely, absolutely. So let's go through you know, each of the areas I'd love to get a top line summary from each emphasis that you looked at, starting with food service partners. What did you find with food service partners?

Dr. Capps 02:47

So food service partners involves three food service folks, Taco Bell, Domino's and McDonald's, basically the way that analysis goes, we look at pounds in terms of milk fat equivalent that are generated by the food service agencies. We match that with the DMI investment, and then accounting for various factors, come up with, you know, an impact that the DMI investment has on the food service partnership. The bottom line, if you want, or top of line, is that it produced a net return cumulatively over the 2009 in 2024 period of about three and a half to one.

Scott Wallin 03:40

That's an amazing return. And I know that's one of those things we love talking to our farmers about, because any farmer in the country can go into a Taco Bell and McDonald's Domino's and see their work on the menu. So it's great to see the return that you found.

Dr. Capps 03:53

Yeah, and maybe one can argue that return is a bit of an underestimate, because they're not the only food service game in town, and who knows, you know, customers there could have been spurred on by the investment we would have, what economists would call spillover effects. Those weren't captured. There's no way of capturing that, but I agree the net return of three and a half to one solid return.

Scott Wallin 04:17

Yeah, next area, again, near and dear to farmers, fluid milk innovation. Can you talk about what you found there?

Dr. Capps 04:24

Fluid Milk innovation is very exciting. I like the term. We're talking about lactose free milk, we're talking about Ultra filtered milk. We're talking about, you know, milk products that improve gut health. The reason I like that is a bit of an excitement. It's really helped turn around per capita consumption of fluid milk. The investment actually took place for DMI going all the way back to 2015 to 2024 you. Not getting in the technical details, we weren't able to measure 2015, 16 and 17. So our measurement actually ran from 2018 to 2024 similar to the food service partnerships. What I do? I model the impact of DMI. How do you do that? Well, we have to control for a lot of factors, price, income, you know, whatever factors that could be influential in affecting the demand for fluid milk, innovation, products, and then, you know, isolating those, we're able to disentangle those and focus on the DMI impact. The bottom line there. Now, again, this is over 2018 to 2024 the net return is about 1.7 to one. Now, we think that's a bit of an underestimate, because a lot of the DMI dollars actually began in 2015 16 and 17. I'd like to think of it as maybe stirring the pot and continuing on. And if you were to look at a graph of the pounds or gallons that is coming from fluid milk, innovation, it's been up up, up, up and and the actual contribution for DMI has gone the opposite direction. And if you look at the most recent return on investment, what I gave you of 1.7 to one was over that whole 2018 to 2024 period, the most recent investment, we see a healthy investment of about six to seven to one. When I say most recent, the last two years, that

Scott Wallin 06:43

innovation certainly, certainly is an exciting thing for our farmers. Next subject is another one near and dear to farmers, is whole fat science and research. Now we have such a legacy through the check off National Dairy Council has been around for more than a century, and I know sometimes it might not be understood how much work we really do in this area, but we talk a lot about there's been 80 studies in the last 20 years on whole fat dairy and dairy foods. What did you find in this area?

Dr. Capps 07:12

Another exciting area, principally when you say whole fat science, because that may not mean much to dairy farmers, but it's whole milk, pretty much exclusively white milk and non flavored milk and butter. Those two areas, butter has just been jumping off the page in terms of per capita consumption and whole milk. You know, along with the fluid milk, innovation has helped a turnaround in per capita consumption of fluid milk. So once again, it seems like a common thread here, controlling for a lot of factors, taking into account the DMI investment. What did we find? Well, similar to the food service partnerships, similar to fluid milk innovation, DMI investment was a positive in terms of boosting volumes, and the bottom line for net return on investment was a whopping 35 to one.

Scott Wallin 08:12

Whopping, I'm no economist, but that's pretty good stuff there. Yes, very sizable. Fourth area is exports. And you know, our dairy farmers had the vision back in 1995 to create the US dairy Export Council through their check off, and it has been a game changer for farmers. So I'm excited to hear what she found in the area of exports.

Dr. Capps 08:33

Exports are exciting as well. When you look at dairy exports, you you know USDA, where most of the data come from. In this analysis, they break dairy exports down into two groups. The first group is on a milk fat equivalent basis. The other is on a skim solids basis. When you look at the investments made by DMI, except for cheese, which is milk fat equivalent, most of the investments have focused on skim solids. So our analysis focused on skim solids. And once again, you know the modeling, which is the big black box here that I, that I do, when you control for other factors, we get a nice return cumulatively. And the period in question is 2013 to 2024 the cumulative return is about 12 to one another, solid net return. When I say net, that means we have to subtract off the investment made by DMI. So even when you do that, and that was consistent with the other net returns that I spoke about, very healthy.

Scott Wallin 09:47

I mean, all these findings show us we're on the right track with our with our dairy check off mission and strategy to drive sales and build trust.

Dr. Capps 09:53

It's a nice news story in the sense that I can't always say that whenever we do. Check off programs will get comparable results, you know, necessarily for other commodities, this is truly a success story across the board.

Scott Wallin 10:10

If someone were to ask you about the integrity and reliability of your work, what do you say to them?

Dr. Capps 10:17

I say I'm a third party, independent, credible analyst. And you know, if my program manager, Lauren burns, were here, she would say, we find what we find. And that's basically correct. It's much it's nicer to give good results. But no guarantee. I'm not a hired gun coming in to say, Look at this. The other thing I would mention that's very important to me, my work is replicable. In other words, if I handed over all the data that I had to other economic analysts, they should find exactly the same results. And the other thing that's important is that my work has been peer reviewed, peer reviewed by, you know, AG, economist. So, you know, independent third party, credible peer reviewed would stand up to review. And, you know, no partisan politics here.

Scott Wallin 11:17

Not sure. What else you need there that's amazing that has gone through such scrutiny. Yes, what's next? Are you going to continue to examine dairy and were other check offs? Can you talk about what's what's ahead?

Dr. Capps 11:29

Sure, currently, you know, I told other groups when I've talked with them, I'm sort of like the Wizard of Oz behind the curtain. If you want to know who the analyst is that's putting out these reports to Congress, not just these four programmatic areas, but, you know, to evaluate the effectiveness of the dairy check off. Dairy is such an important area. You know, they're responsible for close to $50 billion they responsible for about 3.2 million workers. And even though the number of dairy farms is going down, they become more concentrated, and fluid milk is becoming the fluid milk production has been relatively stable despite the decline in number of dairy farms, just such an important contribution to US agriculture I never envisioned working on dairy I actually grew up in an inner city in Baltimore. You had to travel quite a bit to find a dairy farm, so I kind of married into that. Not that my father in law was a dairy farmer, but neighboring farms were, and I became fascinated with that.

Scott Wallin 12:59

Yeah, there's something honorable about working in agriculture for farmers, and those of us who work at the check off are so proud to represent our dairy farmers, because we know how hard they work and and we are excited beyond belief to share your findings with our farmers, and it's been great to work with you. I'm going to finish with one question. Pretend I'm a dairy farmer for a moment. What do you say to me about your research. What's the one takeaway you would want me to know as a farmer?

Dr. Capps 13:25

Well, I'm, you know, my name is oral. So I don't know if I can do it in 20 words, but I'll make an attempt here. The investments that are made are paying off, not just with the four DMI investments that we've talked about, and the numbers speak for themselves. But in general, when you take a look at the overall dairy check off program where you include, you know, importers qualified programs, DMI, milk, Pep, the program is just successful and has had a track record of success, not just in the 14 years that I've been doing it. One of my colleagues, Harry Kaiser, was analyzing the dairy industry before I took over, and he found comparable findings. We're getting into some exciting things. Now fluid milk in particular, because we're beginning to see a turnaround. Previously, when you looked at fluid milk consumption, you know, except for some seasonal variation, a downward trend. Well, that trend is beginning to be reversed. Now, because of whole milk, organic milk, lactose free milk, ultra filtered milk, those products would fit under the classification of fluid milk innovation. So the other thing I think that's important to a dairy farmer is, well, how good is it from my wallet? I mean, we can talk about returns, four to one, five to one. We do this. Is for other commodity organizations. And a frequent question I get is, where is my four to one? Where is my five to one? So one of the things that we have done since I have taken over analyzing the dairy check off is to try to make it on a more personal basis. So for example, what is the what would have been the all milk price had you not had the check off and our findings, and I'm working with the University of Missouri folks, we have a simulation model that we work with to do the simulations. The what if we took away this, then what about $1 per 100 weight? So you know, you may not see it, but if you did away with the program, you would definitely see it about $1 less return per capita consumption across the board, butter, fluid, milk, cheese, non fat, dry milk up as a result of the program, take it away. Down. Another question I got from various people, how can you have a positive return on fluid milk when it's been down, down, down, down. Now, remember, you have to control for other factors. Yes, it's been down, down, down, but it would have fallen off a cliff had you not had the dairy check off. And now you're beginning to see a point where at least it's leveling off. And again, who's, who's responsible for that the dairy check off?

Scott Wallin 16:39

Well, that ties in so nicely to kind of a mantra our CEO, Barbara O'Brien now says, if not for the check off, who, like, who would be leading these programs we just reviewed, and it is the dairy check off that leads in these spaces to drive sales and trust, I cannot thank you enough for the great conversation today. It was very exciting to learn more about your research. So thank you for being here.

Dr. Capps 17:00

Thank you, Scott. I appreciate it very much, sir. Thank you.

Your Dairy Checkoff Podcast 17:06

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