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Got Produce? Will Big And Small Producers Ever Agree On Generic Promotion?

Jim Prevor’s Perishable Pundit, July 1, 2009

Our analysis of the proposal for a National Fruit & Vegetable Research & Promotion Board brought this thoughtful commentary:

I wanted to add my two cents regarding the issue of a possible generic promotion board for the produce industry.

I write this as one who has worked for myriad commodity groups over a 20+ year career. The “big guys” are typically not behind generic programs because they believe that, with their sizeable marketing budgets, they can do a better job of building their own brand.

The “small guys” need help because, with small to no marketing budgets, they believe that generic promotion is the only way they can do promotion of a scale large enough that they can really benefit. Shall the twain ever meet?

Also, I am a surprised that the Produce for Better Health Foundation — key word here being “Health” — is navigating away from its core business and strengths into an area that is not their expertise, and which is apparently not helping their reputation, either.

We do need advocates for better HEALTH AND NUTRITION to help build produce consumption. Who will now take that role??

— Veronica Kraushaar
President
VIVA Marketing Strategies
Nogales & Scottsdale, AZ

We thank Veronica for her note as it raises several important issues.

As we mentioned in our piece focused on sufficiency, the plan, as proposed, may not include enough money to move the needle on consumption, and this assumes the money will actually be there, when it actually may not.

Now the advocates for this plan have said that they believe the new media environment, where consumers can be accessed with viral media and on Facebook, MySpace, etc., will allow for a less expensive, but still effective, program.

Yet this idea, if true, may actually cut the other way, against this proposal. After all, if what one needs to communicate effectively to consumers is access to “social media,” this means that produce companies that previously couldn’t dream of reaching consumers now can do so all on their own.

Bryan Silbermann of PMA has made a big point of the importance of industry firms telling their story to consumers, and this fits in with our work on sustainability, where we have pointed out that much of the consumer interest in “local” is really an interest in authenticity. It is quite likely companies, as they become aware of the possibilities of reaching out to consumers via social media, will prefer to keep their funds at home and use the money to reach out to consumers via these new technologies.

Put another way, the leveling effect of the Internet may be making more produce companies “big guys” defined as those capable of reaching consumers directly.

Veronica is correct that those boards that have failed tended to fail because large players didn’t feel they were getting value. Which raises the question: If major industries such as Washington Apples, California Iceberg Lettuce and California Tree Fruit have either eliminated or substantially reduced funding for their own industry marketing efforts, how likely is it that they will want to be assessed for a board that promises a much more indirect benefit?

One wild card in this matter is USDA. Although many such boards require a dual approval, say at least 50% of the growers representing at least 50% of the acreage, the law under which the advocates are proposing to act has no such requirement. Each “first handler” gets one vote.

So the mighty Dole has exactly the same voting rights as a two acre blueberry farm in upstate New York, as long as the farm meets the definition of a first handler.

This may defeat the project because companies of large size may say they will oppose it unless the voting rights are refigured to correspond to volume. Otherwise, they could be “dictated to” by large numbers of small “first handlers” even though it is the big guys who are paying the bill.

Although the law gives every “first handler” one vote, it does give USDA enormous discretion. So, although theoretically an industry of one producer with a million acres and 999 producers with one acre each could approve a board with 501 votes constituting 501 acres on a million-plus acre industry, USDA retains the right to not approve it.

In the end this is a serious matter. We are talking about calling in the police powers of the state to compel people to contribute against their will. If one doesn’t pay, one will lose one’s PACA license or be fined; if you don’t pay the fine, you may get jailed. It is not something you do without overwhelming industry support from the full range of commodities and businesses of all sizes.

On Veronica’s other point, the role of PBH, we agree. One of the sad things that is coming out of this is that the esteem in which PBH is held is declining. The executives there didn’t realize that many view a proposal to mandate payments as outside of the range of what they supported PBH for. Many who are happy to contribute to the Red Cross would object strongly to a special tax compelling them to do so.

By deciding to leap into the middle of a political battle, PBH will inevitably, and unnecessarily, alienate supporters and potential supporters. That is a sad byproduct of the way this issue has been presented to the trade.

To clear up a related point, even if the generic promotion board was approved, it seems silly to us to think that an industry promotion group could replace PBH. Much of the work the Produce for Better Health Foundation does involves interaction with government agencies on both the State and Federal level. These agencies simply won’t interact in the same way with a commodity promotion group as they do with a non-profit foundation dedicated to public health.

This means the industry will need, and should be prepared to support, PBH for a long time. This is regardless of what happens with this proposal.

Many thanks to Veronica Kraushaar and VIVA Marketing Strategies for weighing in on this important issue.

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