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Got Produce? PBH Puts Fate Of Generic Promotion In Industry’s Hands

Jim Prevor’s Perishable Pundit, November 9, 2009

We’ve focused on the issue of generic promotion for some time and, in different circumstances, have wound up on different sides of the issue.

For example, back in 1998 there was a proposal for the Washington State Apple Commission to get a substantial assessment increase. The plan called for the commission to increase consumer advertising from $7 million to $23 million per year. We had concerns, but in the end, our piece, Assessing Assessments dealing with the issue in Pundit sister publication, PRODUCE BUSINESS, issued a clarion call:

The only solution is marketing. And the only mechanism set up to do that right now on the scale needed is the Washington Apple Commission. I recommend a yes vote on the increased assessment.

Yet in October 2001, we wrote a piece in PRODUCE BUSINESS, titled The Watermelon Vote, where we addressed a proposal that called for a dramatic increase in revenues for the National Watermelon Promotion Board, which would be achieved with a multi-channel assessment that would have disadvantaged wholesalers and we came down just as strongly on the other side:

The National Watermelon Promotion Board (NWPB) is holding a November referendum hoping to break the long tradition that commodity board assessments be marketing-channel neutral.

Under the rubric that everyone who profits from selling watermelons ought to pay to promote them, the NWPB is proposing to levy assessments not only on the grower/shipper level but also at the broker, wholesaler and processor level.

The argument is superficially appealing, and PRODUCE BUSINESS is giving the NWPB the chance to say its piece… But this proposal is wrong and will hurt the trade. It should be defeated…

So when the proposal for a national generic promotion program for produce was announced earlier this year, we already had a track record of analyzing these matters and we had already shown the intellectual independence to endorse such programs when they seemed likely to work and reject them when they were problematic.

We have written dozens of pieces analyzing the proposal. You can review most of them in our round-up, here.

In the end, though, just as we issued a call to pass the apple assessment and a call to reject the watermelon proposal, we felt the need to state the obvious: That the industry needed to move on, and we did so in a piece we titled Got Produce? Let’s Cancel The Effort And Start Afresh.

Now comes word that the Produce for Better Health Foundation has decided to do exactly that:

NATIONAL FRUIT AND VEGETABLE RESEARCH
AND PROMOTION BOARD NEXT STEPS

PBH Involvement is Winding Down

Wilmington, Del. — Between April and October of 2009, Produce for Better Health Foundation (PBH) sought feedback from the fruit and vegetable industry about the possible development of a national fruit and vegetable research and promotion board. After various webinars, presentations, town hall forums, and an industry survey, PBH’s Executive Committee has concluded that the decision about next steps needs to be in the hands of industry leaders most affected by such a promotion board.

”PBH acted as a catalyst to spark the discussion about a national promotion board and we’ve heard a great deal of valuable feedback, from individuals who support the concept, as well as from those who oppose it,” said Paul Klutes, Director of Brand Sales at CH Robinson and Chairman of PBH. “Our industry survey over the summer highlighted some of the concerns on both sides of the issue. PBH’s Executive Committee believes that only those most affected by such a promotion board can truly decide what is in their best interest moving forward.”

Several industry leaders have expressed their interest in exploring next steps, and if they come together to do so, it will be at their own initiative and without direct PBH involvement or sponsorship. PBH will share all that has been learned, both positive and negative, with these leaders if they desire, but these individuals will not be bound to follow the recommendations of the PBH Task Force, whose thoughts have framed this discussion since April.

”Our role, consistent with the Foundation’s mission, has been to stimulate the conversation and to provoke industry consideration of the idea”, Klutes said, “We have accomplished that task, and now it is the time for industry stakeholders, the people who would be writing the checks, to pick up the ball and carry it forward, or not, as they see fit. If there is a decision to move forward, it will be under independent industry leadership; and, at this point, PBH will not play a direct part in that effort.”

The proposal as outlined in April was: To increase consumption in the United States of all forms of fruits and vegetables for better health through implementation of a comprehensive health marketing, communications, and education effort. A total of $30 million was proposed to be collected from first handlers. This amount was proposed to be collected via a 0.046 percent assessment (less than 1/20 of one percent) of the free-on-board (FOB) market value of all first handlers and importers of both fresh and processed fruits and vegetables. The creation of such a promotion board would be dependent on the outcome of a referendum, or vote, of first handlers.

”Everyone agrees that the industry needs to do more to market itself. Currently, PBH is the preeminent industry wide voice promoting the benefits of eating more fruits and vegetables. We’re still very excited about that mission, and are finding new, effective ways to promote our Fruits & Veggies-More Matters® message to the consumer every day! For example, one of PBH’s major initiatives for 2010 is to develop a plan to get doctors, pharmaceutical companies, and insurance companies to help us communicate the benefits of eating more fruits and veggies to their patients. We have a great message and we need to get everyone who shares an interest in a healthier America to collaboratively promote the benefits of eating more fruits and vegetables” said Klutes.

In our article, we had pointed out that both United and PMA had representatives on the PBH executive committee, so on at least some level they had acquiesced in at least having the discussion. We called, though, for United and PMA to exert their influence:

The silence of the industry speaks very loudly. It is time that the folks from United and PMA speak up and say that we need to set this initiative aside and start working to salvage PBH before that comes down in a whirlpool with this generic promotion initiative.

PMA was, at least publicly, silent but United Fresh, over the signature of Jim Lemke, Senior Vice President, C. H. Robinson Worldwide, Inc., Eden Prairie, Minnesota, and current chairman of United, made this point:

Statement by United Fresh Chairman Jim Lemke
on PBH Decision Regarding National Promotion Order

“On behalf of the United Fresh Board of Directors,I’d like to thank the Produce for Better Health Foundation for advancing the discussion of a potential national promotion order for fruits and vegetables during the past six months. It’s important that all of us in the industry work together to always be looking at creative ways we can help increase consumption of fresh fruits and vegetables. Thinking outside the box is an important contribution to that effort.

But I’d also like to congratulate PBH today for listening to the many industry members who felt that this was simply not the right proposal at the right time. After six months of dialogue and industry debate, it was clear that there was not a substantial majority of the industry that wanted to drive this concept further.

We also believe it is time now for all of us to recommit our energies in support of current PBH efforts, which have sometimes been clouded during this discussion of a national promotion order. Our industry cannot sit back and hope that produce consumption grows; we need to be pursuing all available opportunities to make that happen.”

Jim was channeling three points: First, with its government affairs focus, United was never as concerned with having a generic promotion program as with making sure the industry wasn’t embarrassed in the councils of government. If the vote wasn’t going to be an overwhelmingly strong industry endorsement, better to not get USDA involved. Second, not only was there not overwhelming support; there was hardly any at all. This came out clearly during discussions held by United’s board. Third, it had become clear that donations and support of the Produce for Better Health Foundation were threatened by the whole matter and that cutting the losses and getting back to basics were absolutely essential if PBH was to be preserved as an industry institution capable of interacting with government and public health authorities for the benefit of the people and the industry.

Elizabeth Pivonka, President of the Produce for Better Health Foundation, Mark Munger, Vice President of Marketing at Andrew & Williamson and immediate past chairman of the Produce for Better Health Foundation, and Paul Klutes, Director of Brand Sales at C.H. Robinson and the current Chairman of the Produce for Better Health Foundation, have been the primary advocates for the proposal and all, clearly, wanted better health for the citizenry and prosperity for the industry.

Though they seem to want to stick to the idea that it was appropriate for PBH to spearhead this effort, we don’t see the issue so much as a question of appropriateness; we see it as a question of effectiveness. And on that score, the answer, at this point, is self-evident.

We could argue that the leadership at PBH didn’t perceive the extent to which many would see the advocacy of a mandatory program to be a political act, outside of PBH’s warrant.

What we will argue is that there are three really good lessons here for anyone looking to make anything happen:

1) The availability of PBH money to fund the effort allowed the effort to proceed prematurely. Had the advocates set out to raise money for an advocacy effort, they would not have been turned down, but they would have been asked many questions. They wouldn’t have been able to proceed until satisfactory answers had been produced. This might have saved the initiative.

2) The importance of go/no-go points. The odd thing about this initiative is that they had a study group that was assigned to draft the plan, but when all was said and done and the report was issued, it didn’t come with the endorsement of the organizations represented on the committee. Any effort of this type requires a series of go/no-go points: Can we raise $250,000? Can we get the endorsement of at least 80% of the organizations represented on the steering committee? Can we get the endorsement of our own Board of Directors? There needs to be these interim steps that provide indications as to whether further effort is justified. No matter who said no, this was a steamroller that was going to go on. Steamrollers typically offend because, at base, that attitude means that the attitude of others doesn’t matter.

3) Transparency should be the default option. We all know that sometimes secrecy can facilitate negotiations. But much of this effort had nothing to do with negotiations. Why draft a secret committee to come up with a proposal? Why not announce that you are planning on developing a proposal and are seeking great ideas? Why not post drafts on the Internet to encourage comments? Virtually all objections to the plan could be surfaced long before the plan is presented.

Although Elizabeth, Mark and Paul all had the best of intentions, it would be wrong to view the end of this process as a failure for the industry. As every businessperson knows, often the best deal is the one you didn’t get.

PBH’s goals are to enhance health through increased produce consumption, not to maximize profits for the produce industry. Much of the objection to the proposal came from those who would pay the assessment and who realized that there was a lot of space in between increasing produce consumption in general and increasing the profitability of any individual operation.

We think the industry owes a debt to those who were willing to engage publicly on these issues. Here at the Pundit, we had many letter-writers who asked for their confidentiality to be protected, but we also had some bold individuals, on both sides of the issue, who were willing to speak out and contribute to the debate:

The industry also owes a debt of thanks to Lorri Koster, Co-Chairman at Mann Packing and Chairman at the Grower-Shipper Association of Central California, and to Rick Antle, CEO of Tanimura & Antle. PBH is like mom and apple pie, so when Lorri and Rick took to the stage — Lorri at PMA’s Foodservice Conference and Rick at the PMA convention in Anaheim — daring to speak truth to power, they gave needed voice to industry concerns. Most would see no upside for themselves in speaking out, but Lorri and Rick spoke what others would not dare. We owe them both much.

It would be a mistake to think that this seals the fate of generic promotion. One of the problems with this initiative has been that it went prematurely to timelines before need and efficacy were fully established.The history of things like the National Mango Board is that such efforts can easily take a decade, sometimes more.

The advocates should not be disheartened. They started something and certainly those in this industry know one can wait many years before a sapling bears fruit. Seeds once planted, grow in their own time. Few wars are won without many battles lost.

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