Does Generic Advertising Benefit Producers?

[farmers_son]

This clip deals with pork but I thought the conclusions reached may equally apply to beef promotion.

ILLINOIS: Do pork producers benefit from the slogan, "Pork. The Other White Meat."?
26.jul.07
University of Illinois Extension
Stu Ellis
http://www.farmgate.uiuc.edu/archive/2007/07/do_pork_produce.html
Everyone knows the marketing slogan: Pork, the Other White Meat; but has it made pork products any more desirous to the consumer asks Stu Ellis in this column? After all, that is the intent of the pork check-off program, as it tries to produce and market a better product to enhance the price of pork. Has it achieved what it set out to do, particularly with consumers also being bombarded by marketing messages also promoting beef and poultry?
Ellis goes on to say that the $60 million pork check off program is controlled by the National Pork Board, and NPB Directors hired economists from North Carolina State University and RTI International to evaluate the impact of the pork advertising expenditures. The research took advertising expenditures into consideration, along with health issues that tend to soften demand. Those included foot and mouth disease in Britain in 2001, BSE in Washington State in 2003, listeria fears in poultry in 2002, and Avian influenza in poultry in 2004.
Ellis writes that the economists report, “We find the impacts of advertising and food safety effects to be economically small compared with price and expenditure effects. However, cost-benefit analyses are needed to evaluate whether such practices are profitable to producers.” However, they believe that generic pork advertising appears to help demand for poultry more than pork. Poultry, of course, does not have a check-off program but may be getting a “free ride” from the pork producers.

[smcgrath76]

I recall a very similar case in tomatoes a few years ago. The basic argument there was that generic advertising for the product may undermine brand specific or value chain initiatives. Basically promoting that beef is beef is beef may be detrimental to a specific beef program.
I personally think that we may not do enough product advertising. Look at what milk has done with a concerted effort. If you tried to tell mothers of young children that milk is unhealthy they would laugh you out the door. If you told them beef was, they might not feed their children beef (although they probably would still let them eat a McD hamburger). Go figure?

[Willowcreek]

{However, they believe that generic pork advertising appears to help demand for poultry more than pork. Poultry, of course, does not have a check-off program but may be getting a “free ride” from the pork producers.}

Either way - Tyson comes out the big winner..I'm sure they don't mind the pork producers paying to raise the demand of chicken.....

[farmers_son]

I do not believe anyone can say with certainty if generic advertising actually increases profitability at the producer level.

Within Canada, producers spend significant amounts of money are spent on generic advertising of beef. At least $12 million dollars in Canada in 2006 and I would estimate at least $50 million dollars in the last five years.

Academics do major research projects on the benefits of generic advertising to producers and the results are always unclear, needing more study. Smcgrath76… you put forward the idea that it may take more money to realize tangible benefits. A valid point.

I am wondering what would happen if we took that money and invested it in producer owned packing plants. The kind of money we are spending on advertising beef for Cargill and Tyson could be spent building and completely paying for our own packing plants allowing us to then advertise a branded product instead of a generic product.

Now I know that producer packing plants are not a popular topic right now like they were in 2004 but it could be that, as a group, producers owning their own packing plants is something we need to do just like we, individually, need to have a stock trailer. It may be just something the cattle business cannot do without.

At some point it would seem to me that we have matured to the point where we do not need Cargill and Tyson to market our products for us, we can do it ourselves in our own plants.

[grassfarmer]

Well said f_s, I agree totally that the producer paying their checkoff dollars to market beef on behalf of Cargill and Tyson does not help the producer. I raised that very issue at the fall producer meetings of the ABP in the last two years. On both occasions I was laughed out of town as a madman - how could we upset our "packer friends" like that?? As I said good idea - but how to we make it happen?

[rkaiser]

Encourage diversity. Generic advertising ANYTHING does very little for suppliers in any industry. What is the feeling in the offices of ABP these days farmerson? Is there any tendency toward producer ownership? I doubt like hell if anything has changed, especially when you consider that the same old boys are there that laughed at not only grassfarmer, but Cam and the gang and anyone else who suggested producer ownership three years ago.

I truly feel that the message that ABP?CCA needs to hear is "encourage diversity". Ask any direct marketer from Bern Kotelko to grassfarmer, to Doug Price, to yours truly how much assistance is offered from ABP/CCA. Generic advertising is about competing with these captains of the industry (and little ol me).

The fear at the ABP/CCA level is similar to that of those taking part in integration programs with Tyson and Cargill. We are trying to survive the best way we know how and are unwilling to tip the apple cart.

The best way for this (the cattle industry) industry to survive is for folks to compete and industry leadership need to encourage that "competition". Had a good friend and Limo breeder over for dinner last night and he talked of how their association meetings focus on EPD's and cattle shows. He tried to make a point about branding a Limo beef product and got a similar response as the one ol grassfarmer got presenting motions at ABP fall meetings.

Whether its the Limo association, the Angus boys or ABP/CCA or our packing industry, diversity needs to be encouraged.

[farmers_son]

I think that a mechanism to allow primary producers to capture any financial benefits from their dollars spent on generic advertising presently does not exist. I do think that as budgets for generic advertising expand that some thought needs to be given that there may be different ways to spend that money that brings a more direct and tangible benefit to producers. If the people in authority cannot demonstrate clearly that generic advertising puts money in the hands of the primary producer they should not be surprised to have their advertising budgets threatened.

I am not sure what “diversity” means. If it means do more for less that is what has been happening for a long time now. Been there, done that. I prefer the words adding value and capturing value. If I want to diversify I could raise chickens or sheep (not going to happen).

Grassfarmer asked how do we make it happen. Actually, “we” probably will not make it happen, others will make it happen for us. Change is inevitable but if history is any indicator “we” have consistently shown a lack of focus on how “we” might direct that change ourselves. We leave the door wide open for others to change the industry as they see fit.

Darned if I know what the feeling is in the offices of ABP. If their office is anything like my tractor cab the feeling is HOT. However I expect their AC is working while mine is not and I cannot fix it on the weekend. LOL.

[grassfarmer]

I'm not following you f_s when you state that: "we" will probably not make it happen.." Who are the others who will make it happen?
You suggested that "if we took that money and invested it in producer owned packing plants. The kind of money we are spending on advertising beef for Cargill and Tyson could be spent building and completely paying for our own packing plants allowing us to then advertise a branded product instead of a generic product." I assume that the money you speak of is our checkoff dollars - if that is the case who else can make this decision but producers?
Cargill and Tyson won't, they are doing very nicely as is.
Alberta politicians won't as they seem to be happily in bed with the afore mentioned companies.
ABP/CCA won't as they seem to be happily in bed with both the AB Government and the afore mentioned packers.

Which leaves the producers, "us/we" - the only ones with the ability to change the situation if only we could get all our neighbours on side and fight this like a team.

[farmers_son]

Change is inevitable, would you agree?

I do not see where as producers we have embraced that change, indeed all efforts up to now have been to maintain the status quo.

So if change is inevitable and assuming cattle producers do not change then opportunties that come as a result of change will be embraced by others, not by North American cattle producers. There are many out there who could benefit from our inaction. Competing meats like chicken and pork come to mind. Non-NAFTA beef is a threat to the status quo even now.

At present we remain dependent upon Tyson and Cargill who do not seem interested in advertising our beef leaving it to North American producers to try to increase the derived demand for beef with no mechanism in place for any benefits to accrue back to the producer level.

[rkaiser]

Here I thought that I was over explaining what I thought of as diversity. I guess I meant anything but that norm that you talk of f_s.That norm being an industry geared toward a final end that is Cargill and Tysons kill floor and bank account. I would consider any sort of producer packing plant diverse or even another company other than the two that control more every day. We have a brand new plant here in Lacombe for instance. I wonder if the folks at ABP/CCA even know it exists. I tried to say that even branded beef programs with breed names attached are diverse and need to be encouraged. BSE testing - cool - grass finishing etc. etc. Anything that does not feed into the master plan of the beef trust to make our industry look the same as the chicken or pork industries.

I still believe that "we" can make change happen, but those who continue to run down and pull the lobsters who want to escape back into the pot need to open their eyes, come out to ABP fall meetings and not only listen and agree with the things that folks like Cam or grassfarmer have to say, but support and move toward those things without fear. Insulation in Alberta Iain - insulation. Almost too bad that Albertans run the CCA. If we had more Saskatchewan representation we would all be better off. Those folks are survivors and don't have the good old Oilberta advantage to keep them from ignoring bottom line truth.

[grassfarmer]

So what are you saying f_s? is it game over for Canadian producers? do you suggest we just give up and go find an alternate job?
I would dispute your comment "I do not see where as producers we have embraced that change, indeed all efforts up to now have been to maintain the status quo." I think that is the position that ABP thinking and lack of democracy has led to. If every beef producer in Alberta had voted for or against the BIG-C proposal I feel Cam would have been given a clear mandate with his proposals. However the "wise guys" at ABP managed to prevent democracy prevailing by absolutely refusing to allow such a vote. A great opportunity missed.

[farmers_son]

Is it game over for Canadian producers? We cannot take our cattle industry for granted. It would be wise for producers and our governments too to ask themselves just how long can the status quo continue before Canada no longer has a competitive cattle industry.

It is folly to just sit back and think all is well, that we do not have to address industry concerns like low producer returns. Now some would say that if we had not been spending millions on generic advertising of beef that producer returns would be even lower. That may or may not be true. But at some point the question needs to be asked if there is a better way to spend $12 million a year.

I am going to put out an idea that is very, very controversial. I have heard a lot of talk of building a producer packing plant to compete with Cargill and Tyson. Something I have never heard discussed is what would happen if producers, as a whole, bought into to a packing plant or packing plants that shared ownership with these big players. Co ownership. It is not as crazy an idea as it might first seem.

[rkaiser]

Not as crazy as bringing the idea to Cargill or Tyson. LOL Always knew you were a dreamer old boy.

[grassfarmer]

Would you care to expand on that idea farmers_son? I'm curious how you would see that working. My first reaction was like the old saying "you need a long spoon to sup with the de'il" but we do need to consider all options.

[cswilson]

I think everybody is a little too hung up on the-we've got to own a packing plant-to be honest if you build one big enough to compete with the big guns you have to do business like them to survive. In our town of 5,000 we have two superstore groceries but we also have two private butcher shops that are doing very well. Why not form a holding company-purchase some portable abbatoirs or else build some smaller ones and set up shop in the midsize towns all over the west.You'd move alot of product and fly under Cargill's radar. I know most small towns are open for business and have some buildings that would work. I think it's better to start small and grow rather than build up big expectations and fail.Unfortunately good intentions and great ideas don't put kids through college or pay off bank loans. Good intentions and great ideas do if they are approached in a business like manner-simply thinking I'm doing the right thing-now show me the money often doesn't. As for the beef advertising I don't see anything wrong with it-maybe I'm just too dense to see the greater evil that seems to lurk everywhere in the cattle business.