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National Honey Board Annual Report

2010

Contents

Chairman's letter Board Members Marketing Report General Consumer Public Relations Hispanic Public Relations Sports Marketing Public Relations Foodservice Public Relations Ingredient/Baking Public Relations In House Public Relations Research Report Production Research Other Research Emerging Opportunities Treasurer's Report 11 13 14 15 3 4 5 6 7 7 8 9 10

Chairman's Letter

It's been an eventful year for the honey industry, as well as for the National Honey Board. Honey has been a hot topic in the news with stories ranging from the honey laundering to honey purity issues. Now more than ever, there is a great need to promote honey and all of its natural benefits at both the retail and industrial levels, especially with higher honey prices in the marketplace. The National Honey Board and staff have done a great job generating positive coverage of honey this year. Bruce Boynton, CEO, has provided strong leadership to our team during this critical time in our industry. We continued our marketing and public relations efforts to find new ways to promote the usage of honey through partnerships with public relations agencies specializing in consumer, Hispanic, ingredient, foodservice, and sports marketing communications. Through the transition from a Producer/Importer board to a Packer/Importer board, we have been able to implement some valuable efficiencies, which allow for more of our budget to be put to work promoting honey. By utilizing conference calls, we have been able to reduce our annual meetings from three meetings to two meetings per year, creating a significant savings in our travel and meeting expenses. We have also streamlined our Board nomination process for additional savings to our budget. The National Honey Board commits five percent of its anticipated assessment revenues to fund bee research, and we are excited to continue to learn more about current issues facing the beekeeping industry. Additional funds have been designated toward a testing program to verify the purity of honey in the marketplace. I would like to thank the current and past Board members, along with the alternates and staff, for their continued commitment to our industry. Their input and support are vital to the success of this board. It's been a pleasure serving as your Chairman. Thank you, Buddy Ashurst National Honey Board Chairman

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2010 National Honey Board Members & Alternates

FIRST HANDLERS:

BOARD MEMBERS ALTERNATE MEMBERS

Buddy Ashurst, Chairman Nancy J. Gamber-Olcott, Secretary-Treasurer Steven Smith

Ilene Miller Jim Phillips Brent Barkman

IMPORTERS:

BOARD MEMBERS ALTERNATE MEMBERS

Bob Coyle Charles Kocot

Elise Gagnon Gregory Olsen

HANDLER/IMPORTER:

BOARD MEMBER ALTERNATE MEMBER

Hans J. Boedeker

Nicholas Sargeantson

MARKETING COOPERATIVE:

BOARD MEMBER ALTERNATE MEMBER

Mark Mammen

Robert Brandi

PRODUCERS:

BOARD MEMBERS ALTERNATE MEMBERS

Zac Browning Clint Walker III, Vice Chairman George Hansen

David Ellingson Mark Brady Bonnie Woodworth

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National Honey Board Annual Marketing Report

The National Honey Board (NHB) is dedicated to creating promotion and advertising programs that are designed to increase demand for honey and honey products. The organization reaches out to consumers, both English-speaking and Hispanic, the foodservice industry, food manufacturers, retail and wholesale bakers, fitness professionals, the athletic community and nutritionists. With such a diverse group of target audiences, the challenge lies in finding appropriate tactics that effectively reach each segment. To better understand the ever-evolving needs and tastes of its audiences, the NHB conducts market research geared toward finding the diverse perceptions of honey and how they're using it. Based on this information, the NHB positions itself as the go-to resource for all things honey, identifying trends in which honey can fit and creating various websites and resources for all target audiences to easily find the information on which they come to rely. The NHB's marketing program strives to strengthen and enhance the image of honey. In 2010, marketing efforts focused on generating widespread awareness of honey and its many uses and benefits, with special attention given to how consumers and other targets perceive honey and interpret marketing messages. Through NHB's market research and trend tracking, the Board identified ways to emphasize how honey fits into its audiences' demands and the movement toward more natural foods. Consumer and trade programs promoted honey in and out of the kitchen as an all-natural, flavorenhancing, one-ingredient sweetener, as an energy booster, as a skin moisturizer and as a cough suppressant and throat soother. With elements like recipe promotions, chef events, intensive media outreach, sports marketing events and more, NHB made a name for honey's versatility through increased publicity that showcased honey's marketability and popularity in products and promotions. For consumers, it was about renewing an emotional connection with honey. NHB used the iconic honey bear as a face for the program to convey a sense of nostalgia and family and as a reminder to pull it off of the pantry shelf and onto the kitchen table. For foodservice professionals, bakers and food manufacturers, it was about getting honey back on the menu through the appeal of honey's functionality and simplicity, keeping in line with the clean label trend and sustainable or regional ingredients their customers are demanding. For fitness professionals and nutritionists, NHB wanted to emphasize honey's purity as an ingredient or sweetener and natural energy booster.

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Highlights of 2010 Marketing Programs

GENERAL CONSUMER PUBLIC RELATIONS $765,932

Laurey Masterton served as a spokesperson and served recipes to the editors who attended the event. Test kitchen seminars help generate interest and story ideas for these long-lead publications. Editor Deskside Visits | The NHB participated in editor deskside visits in New York City with editors from six women's publications. Staff and spokeswoman Mitzi Dulan met with 16 editors, all of whom received endangered honey bear media kits. News Bureau | Ongoing media outreach, with a variety seasonal, holiday, and food trend themes and recipe releases, was conducted to generate honey publicity. Cooking with My Honey Bear Recipe Contest | The NHB hosted an online recipe contest to generate traditional and social media attention for honey Endangered Honey Bear Campaign | This campaign was a major PR effort in 2010 and was launched in the first half of 2010 to raise awareness about imitation honey. It was designed to help consumers understand the importance and value of checking the label of the honey they purchase to make sure that "honey" is the only ingredient listed. The campaign also featured honey as the forgotten item on the pantry shelf, highlighting it as a versatile ingredient with many benefits including culinary applications, as a skin moisturizer, as an energy booster and as a throat soother. Test Kitchen Seminars | The National Honey Board gave a presentation at Meredith Publications, headquartered in Des Moines and home to Better Homes & Gardens, Midwest Living and Living the Country Life, among others. Chef and beekeeper recipes. Winners received a Le Creuset cookware set and recognition on the Honey Board's blog, Straight from the Hive. BlogHer Conference | To enter the social media/ blogger realm of marketing, the NHB exhibited at the 6th annual BlogHer conference in New York City. Staff connected with bloggers yearning for new topics like honey and its versatility, and provided them with honey information and materials. The conference boasted about 2,400 attendees and more than 600 of those visited the NHB booth. It gave the NHB a chance to establish relationships with key influencers in this genre that otherwise would not have happened. *Media coverage for General Consumer PR included print, online, TV, radio and direct to consumer, for a total of 126,312,400 impressions.

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Highlights of 2010 Marketing Programs

HISPANIC PUBLIC RELATIONS

Natural Soother Promotion | This campaign emphasized the use of honey and honey-based recipes to ease the discomforting symptoms of the cold and flu season such as a sore throat. Vocal coach, composer, and five time Grammy award winning producer Kenny O'Brien acted as a spokesperson, participating in media tours in New York City and San Diego. Purity Promotion | This promotion was a comprehensive educational program to help raise awareness and educate consumers about imitation honey. The goal was to help consumers understand the importance and value of checking the label of the honey they purchase to make sure that "honey" is the only ingredient. Mayte Prida, a television/radio host, author and speaker was enlisted as a spokesperson. The promotion included a media tour in New York and Miami, an apiary media event in Los Angeles, a public service announcement, Webisodes, a "how honey is made" video, an audio news release and a radio media tour. Ongoing Media Outreach | Chef John Sedlar was enlisted to develop new honey-based tapas, or appetizers or snack foods in Spanish cuisine. New recipes and photography, along with previously developed cocktail recipes, were used to generate interest with media during the summer season. *Media coverage for Hispanic PR included print, online, TV, radio and direct to consumer, for a total of 176,600,000 impressions.

$374,605

SPORTS MARKETING PR (Minor League Baseball)

This year (2010) marked the third annual NHB partnership with Minor League Baseball that is intended to expand awareness of honey and communicate its positive attributes. The five teams selected this year included the Columbus Clippers, Iowa Cubs, Nashville Sounds, New Britain Rockcats

$249,975

and the Norfolk Tides. Promotions included honey as the "official natural energy booster" of the teams, stadium signage, nightly in-stadium honey trivia fan contests, broadcast radio announcement of the "Pure energy play of the game," team website banner ads, honey on the team training tables, and a honey purchase incentive promotion. Four out of the five regions showed a 12 percent or more increase in honey units sold during the promotion period compared to the previous year. *Media coverage for Sports Marketing PR included online, radio and direct to consumer, for a total of 1,513,400,000 impressions.

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Highlights of 2010 Marketing Programs

FOODSERVICE PUBLIC RELATIONS

News Bureau | NHB worked with targeted foodservice media and social media influencers to identify opportunities to promote honey. NHB provided information and press releases on the Honey Locator, honey varietals and the new foodservice poster, as well as pitched and placed recipes and photography. Recipe and/or editorial placements were secured in the following publications: · RestaurantBusiness · Flavor&theMenu · CateringMagazine · FoodManagement Hot from the Hive | In 2010, NHB created this brand new e-newsletter for foodservice professionals that details news and information about honey. NHB sent out two issues in 2010, the first in August and the second in November. The issues covered topics such as honey as a top trend for 2010 and 2011, survey information and results, winter recipes, poster availability, honey varietals and honey purity messaging. Through the newsletter format and contacts, NHB sent out two additional e-blasts. The first covered National Honey Month and the second discussed the release of the new foodservice poster. The Honey IQ Survey | This survey was initiated among foodservice professionals to measure their knowledge about honey's purity, sustainability, taste, versatility, cost/value, etc. More than 600 professionals participated in the survey, which provided a solid platform to dispel myths and educate chefs, purchasers, distributors, foodservice media, key influencers and foodservice professionals International Foodservice Editorial Council (IFEC) | IFEC is an annual conference for foodservice media that provides an unmatched opportunity to connect with key media and influencers and secure priority placement in many of the top foodservice publications. The conference allows attendees to conduct one-on-one meetings with editors to pitch story ideas, recipes, photos and other information that fits the needs of editors' editorial calendars. NHB attended the conference November 7-11, 2010, in New Orleans, Louisiana, and hosted an action station during an editor break, providing a honey tasting, honey refreshments developed by a chef and honey marketing materials.

NATIONAL HONEY BOARD ANNUAL REPORT 2010 BACK TO CONTENTS

$207,588

about the benefits of using honey in culinary applications. The results of this survey offered broadranging content to help shape NHB foodservice programming and support NHB messaging and outreach opportunities. Sweetening the Pot with Honey Poster | The NHB created a poster geared toward foodservice professionals that showcases honey's versatility in culinary applications. The poster serves as an educational piece, detailing honey's use in all menu parts (appetizer, entrée, beverage, dessert, etc.) and honey's role in a seasonal menu, and gives numerous honey tips and ideas. NHB printed 2,000 copies that will be handed out at tradeshows and will be available for free (in limited quantities) upon request. Recipe Development/ Photography | The NHB worked with Chef Todd Downs to develop seven new foodservice recipes that align with today's top food trends. The recipes were photographed late in 2010 and are made available to the foodservice media to generate interest and honey placements.

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Highlights of 2010 Marketing Programs

FOODSERVICE PUBLIC RELATIONS (cont'd)

There was also an opportunity for conference attendees to sign up for Hot from the Hive during the action station break. NHB staff participated in editor desk-side meetings and included a water bottle, lip balm, honey sticks and a brochure in each of the 225 attendee gift bags (225 of each item). *Media coverage for Foodservice PR included print, Catersource | The NHB participated in the 2010 Catersource tradeshow, held March 9-10 in Las Vegas, as a co-sponsor with Chilean Fresh Fruit. The online and direct to consumer, for a total of 507,943 impressions. sponsorship included a 10-foot booth, a 30-minute chef demonstration with chef and caterer Laurey Masterton, and three prominent ad placements throughout the Catersource Magazine platform (print and online).

INGREDIENT/BAKING PUBLIC RELATIONS

Media Outreach | The NHB worked with editors throughout the year to secure favorable mentions of honey in the baking, snack, candy and dairy markets. Both print and online placements were earned with several industry trade publications. NHB secured placements in the following ingredient and baking trade publications: · SnackFood&WholesaleBakery · Baking&Snack · SnackWorld · ModernBaking · FunctionalIngredients · FoodProcessing · BakingBuyer · BakingManagement

$179,916

New Market-Specific Websites | The NHB launched market-specific websites geared to inspire and encourage more honey usage in the baking, snack, candy and dairy industries. Each site features new products in that particular category that use honey as an ingredient, and provides formulas with honey and information on honey's properties and versatility. To better target food manufacturers and gain attention through online advertising, www.MadeWithHoney. com was created, which brings users to a web page with four site options and allows them to easily toggle among the sites: www.BakingWithHoney.com; www.SnackingWithHoney.com; www.DairyWithHoney. com; www.CandyWithHoney.com. Trade Shows | The NHB attended and exhibited at

Advertising | NHB used an ad that was created in 2009 for the Baking with Honey campaign and advertised in the following ingredient and baking trade publications during 2010: · SnackFood&WholesaleBakery · Baking&Snack · SnackWorld · ModernBaking · PreparedFoods · FoodProcessing

the International Baking Industry Exposition (IBIE) in Las Vegas in September. The triennial tradeshow is the largest and most predominant tradeshow in the baking and snack industries, with more than 20,000 attendees and 700 exhibitors. NHB handed out the Baking Resource Guide and honey substitution charts, as well as answered questions about honey from attendees and networked with ingredient trade magazine editors, food manufacturers and bakers. NHB also exhibited at SNAXPO 2010 in Fort Worth, Texas, in March.

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Highlights of 2010 Marketing Programs

INGREDIENT/BAKING PUBLIC RELATIONS (cont'd)

Snack Ideas with Honey Brochure | A 12-page, full-color brochure that details honey's use in the snack food segment was developed in late 2010. It offers multiple ideas on how snack food manufacturers can incorporate honey into an assortment of products. The brochure will be disseminated at trade shows and by request in 2011. Honey Resource Binder | Created in late 2010, this resource binder is geared mainly toward the wholesale baking industry to serve as a helpful tool when creating new products with honey. impressions. *Media coverage for Ingredient/ Baking PR included print, online and direct to consumer, for a total of 1,866,355 Included in the binder are new wholesale formulations, two retail formulations, honey substitution chart, research on the foodservice industry honey usage and highlights from consumer research studies that detail perceptions of honey in baked goods. It will be available upon request to interested retail and wholesale bakers and at the All Things Baking Show in 2011.

IN HOUSE PUBLIC RELATIONS

Many activities are implemented and managed solely by NHB staff, without agency involvement or costs. These activities may crossover into some of the above areas, but they are managed internally and referred to as "In House" programs. Colorado Crossroads Volleyball National Qualifier | This was the NHB's second year of exhibiting at the nation's second largest indoor volleyball event. The tournament, held in Denver over two back-to-back weekends in late February and early March, is for athletes between the ages of 12 and 18. The NHB reached out to young athletes and their families with information about honey's ability to be an all-natural energy booster. Trade Shows and Conferences | The NHB promoted honey at several trade shows and conferences including: The American Dietetic Association's Food & Nutrition Conference and Expo, the International Association of Culinary Professionals Annual Conference, and the IDEA World Fitness Convention.

$112,038

Social Media | January 2010 marked the launch of the National Honey Board's social media platform, complete with a Facebook page, Twitter profile, You Tube channel and a blog. In its first year, the NHB's pages have generated more than 2,600 Facebook fans, 660 Twitter followers, as well as positive feedback from consumers on the content and posting on YouTube and the blog. All of the social media platforms were created and managed by NHB staff. New Materials | Honey... Pure Energy ­ a new brochure; A Sweet Story: The Making of Honey ­ redesigned brochure for kids Popup booth displays for specific messaging (energy, purity); Promotional items for tradeshows. *Media coverage for In-house PR included print, online and direct to consumer, for a total of 76,190 impressions.

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Research

For the National Honey Board, "research" means any type of test, study, or analysis designed to advance the image, desirability, use, marketability, production, product development, or quality of honey and honey products. It includes scientific research, as well as market research. Most of our scientific research includes studies to improve our knowledge of the composition, functional properties and health-related applications of honey, or product development to find new uses for honey.

PRODUCTION RESEARCH

Project PR2010-01 | A Long-Term Plan to Improve Honey Bee Genetics ($10,000) Dr. Marla Spivak, University of Minnesota Abstract: This project will support the formation of a tech transfer team to assist bee breeders with stock selection for disease and mite resistance. The project has the potential to improve bee genetics and help the beekeeping industry nationwide in the long term. Project PR2010-02 | Dealing with Nosema ceranae ­ Infection Cycles and Treatment Needs and Approaches ($27,117) Dr. Richard Fell, Brenna Traver, Virginia Polytechnic Institute and State University Abstract: In an effort to better understand the transmission and annual cycle of N. ceranae, researchers plan to monitor the infection cycle of N. ceranae in 10 hives over a twelve-month

$115,995

$5,000

$6,779

period to learn more about the disease and its impacts on colonies during different seasons. The data collected in this study will provide a better understanding of the seasonal cycle of nosema infections and provide a base for the development of more effective control procedures. Project PR2010-03 | The Costs of Following the Bloom ($47,520) Drs. Mark J. Carroll, Diana Sammataro, and Gloria DeGrandi-Hoffmann USDA-ARS, Carl Hayden Bee Research Center, Tucson, AZ Abstract: Honey bee colonies in migratory beekeeping operations encounter multiple forms of stress unique to large-scale crop pollination (National Research Council, 2007). This project will track changes in nutrient processing and colony microbes (both beneficial and pathogenic) over a full pollination season to assess the impact of forage nutrition and microbial communities on colony performance in a migratory beekeeping operation. The researchers intend to use their understanding of nutritional and microbial stresses in migratory colonies to develop practical solutions that promote favorable nutritional and microbial conditions within the colony. Findings could then be converted into management recommendations and products that will be made widely available to migratory beekeepers. Project PR2010-04 | 2010 International Conference on Pollinator Biology, Health and Policy Penn State University's Center for Pollinator Research Abstract: This grant supported the July, 2010 Conference. $10,000 $23,760

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Research

PRODUCTION RESEARCH (cont'd)

Project PR2009-08 | Improving Colony Productivity and Health by Improving Forager Longevity ($28,050) Michelle Elekonich and Charles Milne, University of Nevada, Las Vegas Abstract: The goals of this project are 1) to investigate the physiological and molecular genetic bases of colony level differences in worker longevity; 2) connect differences in longevity to differences in colony productivity; 3) to develop a robust measure of worker longevity that can be incorporated into breeding programs to develop lines of bees with longer lived workers resulting in increased colony health, pollination and honey production. Project PR2009-02 | Quantification of the sub-lethal effect of various crop pollens on Honey Bee Health ($35,305) Dennis vanEngelsdorp, Pennsylvania State University Abstract: The objective of this study is to collect and analyze samples of bee-collected pollen for pesticides on a number of different crops that are important to beekeepers such as citrus, almonds, apples, blueberries, alfalfa, etc. Both pollen collected from the incoming foragers returning to the hive and pollen made into beebread by the bees will be analyzed. The sublethal effect of these pollens will then be determined by performing longevity studies on adult bees fed on the collected pollen. Half of all bees will be fed a solution containing Nosema spores in order to determine if any immune system suppression occurs in these bees. Project PR2009-04 | Determining if varroa mites (Varroa destructor)and pesticides interact synergistically to harm developing honey bees (Apis mellifera) ($48,106) Jamie Ellis, Mike Scharf, University of Florida Abstract: The objective of this project is to determine if pesticides and varroa mites interact synergistically to affect immature honey bees negatively. The long term goal is to use this information to improve colony health. Project PR2009-05 | Benefits of Propolis to Honey Bees: Does Propolis Reduce Levels of Viruses in Larvae? ($29,450) Marla Spivak, University of Minnesota Abstract: The objective of this study is to measure the efficacy of propolis against common bee viruses, including Israeli Acute Paralysis (IAPV),Deformed Wing Virus (DWV), and Chronic Bee Paralysis Virus (CBPV). $14,725 $24,053 $17,653 $14,025

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Research

OTHER RESEARCH

The Value of Honey Bees to U.S. Agriculture ­ The Value of Honey Bees as Pollinators of U.S. Crops (Total: $11,000) Dr. Nicholas Calderone, Cornell University This project was started in 2009 and continued into 2010. Abstract: This project is intended to be a revision and update to the 2000 study (Morse, R.A. and Calderone, N.W.). Honey & Beauty Research The purpose of this project was to evaluate honey's benefits to the moisturization and firmness of human skin. Honey's affect on hair is also being studied. Positive results as a skin moisturizer added support to additional messages to consumers about honey's benefits. Analysis of Baking Application American Institute of Baking A study of honey's functional characteristics in a baking application. Carbon Footprint of U.S. Honey Production and Packing University of California, Davis Summary: The goal of this project was to establish a life cycle inventory for U.S. honey production and processing, and to estimate the greenhouse gas emissions (GHG) associated with honey production activities. Greenhouse gas emissions were calculated for honey production and processing based on a limited survey sample. Researchers were not able to conclude whether honey performs better or worse from a life cycle GHG emissions perspective; however, the range identified in this study falls within or near estimates of other sweetener's life cycle GHG emissions. Survey Research Community for Honey Purity Test This year the NHB conducted an extensive survey of the research community to ascertain the feasibility of developing a test or tests that can identify a product as pure honey, and can differentiate it from honey pretenders that impact the image and marketability of pure honey. The goal is to develop a simple, cost effective test that can be used by the honey industry, honey users and consumers. The result was the selection of two laboratories, one in the U.S. and one overseas, to begin work on this project in 2011. $16,762 $21,954 $15,200 $28,499 $5,500

$87,915

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Emerging Opportunities

For unexpected opportunities/needs that may occur during the year.

ACTIVITIES

Baking Formulations Summary: The American Institute of Baking developed formulas for seven bakery products containing honey. The formulas were then included in a Resource Guide developed for the Ingredient/Baking industry and posted on our food ingredient websites. AIB School of Baking Scholarship The Baking Science & Technology course includes a special applications project using honey. Other Agency attendance at a training meeting with AMS.

$33,622

$19,950

$10,000

$3,672

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National Honey Board Treasurer's Report

CALENDAR YEAR 2010 ACTIVITY

CASH SUMMARY 2010

Cash in bank, beginning of year Receipts: Assessments - domestic honey Assessments - imported honey Market Access Program Budget $ 827,560 1,100,000 2,250,000 120,593 Actual $ 827,560 1,310,444 2,459,213 120,570 Explanatory Comments

35% of assessments received 65% of assessments received NHB terminated its participation in the MAP program 12/31/09; amount shown is residual from 2009 activity.

Merchandise sales Investment income Total receipts Disbursements: Marketing: General consumer Hispanic consumer Minor League Baseball Food service Baking & ingredient industry In-house public relations programs Export promotion (Market Access Program) Other Total marketing disbursements Research: Other research Production research - 2010

29,900 700 3,501,193

35,408 620 3,926,255

810,820 384,543 250,000 222,550 231,146 125,000 67,136 46,622 2,137,817 209,472 167,500

765,932 374,605 249,975 207,588 179,916 112,038 67,126 45,916 2,003,096 87,915 59,564

Amount is a carryover from 2009 activity.

5% of assessments was budgeted & committed; unspent balance for 2009 & 2010 will be disbursed in subsequent years as projects are completed.

Production research - 2009 Market research & data collection Scientific & technical consulting Other Total research disbursements Industry Services: Fulfillment material Fulfillment shipping Crisis communication Industry meetings Total industry services disbursements Emerging Opportunities Other: Personnel Office expenses Facilities expense Professional services Travel Board meetings Federal fees Producer reserve Equipment purchases Total other disbursements Total disbursements

95,614 55,250 20,447 2,500 550,783 91,600 18,100 20,000 5,000 134,700 50,000 747,500 91,100 97,800 18,500 28,100 67,300 132,900 58,753 13,500 1,255,453 4,128,753

56,431 30,386 15,472 1,482 251,250 76,417 17,433 11,709 3,472 109,031 33,622 742,823 77,660 92,899 20,397 20,644 41,528 141,137 58,753 9,257 1,205,098 3,602,097

Incomplete projects from 2010 were carried over into 2011. The 2011 budget includes $262,300 of funds committed to completion of these projects. Fully collateralized in accordance with USDA requirements

Cash in bank, end of year

$ 200,000

$ 1,151,718

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National Honey Board Treasurer's Report

CALENDAR YEAR 2010 ACTIVITY

To ensure accurate and reliable reporting of the National Honey Board's financial results, an annual independent audit is conducted by a certified public accounting firm chosen by the Board. The audit is conducted in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Audit Standards, issued by the United States Comptroller General. The audit of the 2010 financial statements was completed in February 2011 and was presented by the auditor to the Board at their February meeting. The audit resulted in an unqualified audit opinion, as well as audit assurance that the Board is in compliance with investment guidelines established by the Agricultural Marketing Service of the USDA. Copies of the audit report and complete financial statements are available from the National Honey Board office. Call (800) 553-7162 to request a copy. The Balance Sheet (Exhibit A) and the Statement of Revenue, Expenses and Changes in Fund Balance (Exhibit B) from the audited financial statements are included in this report. To ensure that the members of the National Honey Board are aware of the Board's most current financial results, monthly financial reports and budget variance reports are prepared by the Board's staff. This information is regulary reviewed by staff project managers and Board members. Submitted by Nancy Gamber Olcott, Secretary/Treasurer

_______________________________________________ Nancy Gamber Olcott

March 23, 2011 _______________________ Date

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Exhibit A

NATIONAL HONEY BOARD BALANCE SHEET ­ MODIFIED CASH BASIS

December 31, 2010 2009

Assets

CURRENT ASSETS Cash on hand and in banks MAP reimbursements due Prepaid expenses Fulfillment inventory Deposits on leases Total current assets PROPERTY AND EQUIPMENT Computer equipment Office machines and equipment Images portfolio Less accumulated depreciation Net property and equipment TOTAL ASSETS $ 10,248 11,409 50,000 71,657 (31,676) 39,981 1,274,972 $ 6,996 5,404 50,000 62,400 (17,578) 44,822 1,060,104 $ 1,152,018 _ 16,792 56,692 9,489 1,234,991 $ 827,860 120,592 6,652 50,689 9,489 1,015,282

Liabilites and Fund Balance

CURRENT LIABILITIES Payroll liabilities Total current liabilities COMMITMENTS AND CONTINGENCIES FUND BALANCE Unrestricted Restricted ­ producer reserve Restricted ­ budgetary reserve FUND BALANCE (Exhibit B) TOTAL LIABILITIES AND FUND BALANCE $ 1,064,971 ­ 200,000 1,264,971 1,274,972 $ 792,854 58,753 200,000 1,051,607 1,060,104 $ 10,001 10,001 $ 8,497 8,497

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Exhibit B

NATIONAL HONEY BOARD STATEMENT OF REVENUE, EXPENSES AND CHANGES IN FUND BALANCE ­ MODIFIED CASH BASIS

December 31, 2010 2009

Revenues

Assessments Market Access Program revenue Investment income Other (merchandise sales, donations) Total revenues $ 3,769,657 ­ 620 35,408 3,805,685 $ 3,345,543 239,232 1,366 31,100 3,617,241

Expenses

Administrative expenses: Administrative (Office) Administrative (Board) Administrative (Federal) Total administrative expenses Program expenses: Advertising, public relations, and research Industry service and support Emerging opportunities Total program expenses Provision for depreciation and amortization Write off of prepaid supplies Total expenses EXCESS OF REVENUES OVER (UNDER) EXPENDITURES FUND BALANCE, as previously reported Prior period adjustment FUND BALANCE, beginning of year Refunds charged to reserve Charges to producer reserve Change in inventory included in industry services FUND BALANCE, end of year (Exhibit A) $ 2,638,403 232,802 33,622 2,904,827 14,098 ­ 3,539,571 266,114 ­ ­ 1,051,607 ­ (58,753) 6,003 1,264,971 $ 3,348,718 236,857 9,316 3,594,891 15,241 5,085 4,176,517 (559,276) 1,632,245 (2,165) 1,630,080 (290) ­ (18,907) 1,051,607 437,981 41,528 141,137 620,646 405,971 56,938 98,391 561,300

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National Honey Board Treasurer's Report

CALENDAR YEAR 2010 ACTIVITY BY PROGRAM AREA

(Amounts include indirect costs) Marketing & Promotions $2,345,749 66.3%

Research $292,654 8.3% Industry Services $232,802 6.6% Emerging Opportunities $33,622 0.9% Administration & Depreciation $634,744 17.9%

2010 PROGRAM AREAS

RESEARCH · Developcomprehensiveknowledgeofthecomposition, functionalpropertiesandhealth-relatedapplications ofhoney. · Advancescientificinterestinhoneyresearch andapplications. · Conductmarketresearchand/orcollectrelevant marketingdataand/orconsumptionandtrendsdata. · Supportthehoneyindustryineffortstomaintain honeyquality. · Guidedbymarket-drivenand/orscience-basedresearch, pursueproductdevelopmentforthepurposeoffinding orcreatingnewandincreasedusesofhoney. · Conductresearchdealingwithhoneybeecolony managementtohelpproducersmaintaincolonyhealth whileallowingfortheproductionofqualityhoney. INDUSTRY SERVICES · Providepracticalmethodsandtoolsthathelphoney industrymemberscapitalizeonNHBresearchand promotionalprograms. · InformandeducatethehoneyindustryaboutNational HoneyBoardprogramsandactivitiesandchangesinthe regulatoryenvironmentaffectingthehoneyindustry. · Fosterindustryrelationshipsanddevelopment. · Anticipatepotentialthreats,createandimplement programstoprotecthoney'spure,naturalimage. EMERGING OPPORTUNITIES · Provideaflexiblesourceoffundsforuseat thediscretionoftheChiefExecutiveOfficer torespondtoissuesunanticipatedinthe annualbudgetwhichariseduringthecourse oftheyear. ADMINISTRATION & DEPRECIATION · Officeadministrativepayrolland payrolloverhead · Officeadministrativeexpenses (supplies,postage,insurance,rent andutilities,financialaudit,legal) · Boardmeetings · Federaloversightfees,U.S.Customs collectionfee,OfficeofGeneralCounselfee. · Depreciation MARKETING & PROMOTIONS · Increaseconsumptionandpurchasefrequency ofhoneyusingfoodandnon-foodstrategies. · Increasetheuseofhoneyinfoodservice operations. · MaintainandincreaseU.S.honey'smarketshare inkeyexportmarkets. · Increasehoney'susageasaningredientwith food,beverageandnon-foodmanufacturers.

NATIONAL HONEY BOARD ANNUAL REPORT 2010

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