NAPLES, FLA. — Vigorous support of a baked foods checkoff and resistance to its mandatory nature and participation thresholds were expressed at an open town hall meeting April 7 to discuss the checkoff proposal, about to be submitted to the U.S. Department of Agriculture for consideration.
Separate from the proceedings of the A.B.A. all-members meeting, the well-attended town hall was held in another room at the Ritz Carlton hotel in Naples and was led by Christine Cochran, executive director of the Grain Foods Foundation. Exploration of a baked foods checkoff program has been conducted for more than a year by a steering committee of the G.F.F.
Launching the town hall meeting, Ms. Cochran said the committee worked hard to “put together a fair and equitable proposal,” but she acknowledged that some members of the audience did not agree.
Joining Ms. Cochran in the town hall were several millers and bakers as well as Jennifer Porter, deputy administrator of the U.S.D.A.’s Agricultural Marketing Service. The A.M.S. oversees checkoff programs as well as other programs handled on a contractual basis with industry. In offering background on the role of the U.S.D.A., Ms. Porter cited as an example of this contractual work the shields on meat packages designating beef quality (e.g., prime or choice).
“We’re really used to working with customers,” she said. “It drives our operating budget.”
Most of Ms. Porter’s remarks were devoted to making the point the U.S.D.A. oversees checkoff programs but doesn’t dictate how they are run.
“Industries need to decide how they want to spend their money,” she said. “The government provides some oversight.”
On a day-to-day basis, the A.M.S. reviews checkoff programs “at a relatively high level,” reviews budgets and contracts.
There is communications oversight, which Ms. Porter acknowledged has become a challenge because of the proliferation of social media.
“We wrestle with how we can carry out that oversight function without being burdensome,” she said.
The U.S.D.A. will be represented at checkoff board meetings in what Ms. Porter characterized as a “fairly passive” role of listening, learning and answering questions.
Asked about drawbacks of checkoff programs, Ms. Porter cautioned that most programs face opposition, often from constituencies that don’t like the fundamental idea of a checkoff program.
“There are people who use the fact there is a checkoff program affiliation with government to gain access to information they may not otherwise have,” she said. “Freedom of Information Act basically said citizens have the right to see the business of the government. Because checkoffs have a relationship with the government, it gives folks something of a window into those materials and decisions. That isn’t to suggest everything gets released all the time. Far from it.”
Checkoff programs have numerous requirements, she said.
“But (we) don’t dictate how you do them,” she said. “We require a return-on-investment study every five years (the R.O.I. results are quite positive) to tell people in the industry what they are getting for their money. We require a financial audit. We review the results.
“Establish bylaws, have a travel policy. We don’t dictate what the policy should be. It isn’t our travel policy.”
Other town hall panelists included Daniel P. Dye, chief executive officer, Ardent Mills, L.L.C., Denver; Tony Martin, executive vice-president, Martin’s Famous Pastry Shoppe, Inc., Chambersburg, Pa.; Craig H. Pizer, associate general counsel, Bimbo Bakeries USA, Horsham, Pa.; J. Bohn Popp, vice-president of marketing, Aunt Millie’s Bakeries, Fort Wayne, Ind.; and Allen L. Shiver, president and c.e.o., Flowers Foods, Inc., Thomasville, Ga.
Mr. Dye warned bakers that grain-based foods has reached a “critical time,” with per capita consumption moving lower in recent years. He urged the audience to view the checkoff program as an investment rather than a cost.
“Can we use these dollars to create more demand, tell a better story?” he asked.
Mr. Shiver, a past G.F.F. chairman, offered analogies and anecdotes in support of moving forward with the checkoff program.
“I remember a football coach in high school would say, ‘It’s time to break the huddle and run the play,’” Mr. Shiver said. “We’ve been in the huddle for quite a few years, trying to figure out what is the right message from a consumer standpoint. Now, you can pull any I.R.I. (Information Resources, Inc.) numbers on our category, pick any time period you want, and you can see each category continues to trend down 7%, 8%, even more than that in some markets. We have such a great story to tell. Now is the time to get that message out.”
Beyond the numbers, attitudes of influencers are a problem, Mr. Shiver said. He recalled his last visit to Mayo Clinic for a physical exam. Following a day of examinations and tests, his doctor came in and told him his report was favorable but would require weight loss ahead.
“She went on to say, ‘The way you’re going to lose the weight is to stop eating bread,’” Mr. Shiver said. “It’s a real story. I told her ‘Doctor, you need to understand that the odds of me changing doctors are a lot greater than the odds of me stopping eating bread.’ There is so much misinformation out there about our products and so many nutritional stories we could be telling. Now is the time to tell that story. We need to turn the category around.”
Caring for its employees is a high priority at Aunt Millie’s, something that is “hard to do when the pie keeps getting smaller,” Mr. Popp said.
“As an independent, what we want to do is sell more bread than our competition,” he said. “We’ll take care of our brands. To try to move the needle in an industry setting — we can’t do that on our own.”
Posing the question of how Martin’s Famous Pastry Shoppe reached a point of being “more okay with this from not okay,” Mr. Martin described Martin’s Famous Pastry Shoppe as “very skeptical of government programs, trying to keep them at bay.”
“I wasn’t a believer, but demand is falling year after year after year,” he concluded. “We have to invest as an industry as a whole to counteract that downtrend. Gluten-free, wheat belly, you name it. Listen to the commentators. Listen to Hollywood and their message. Our message isn’t there.”
Mr. Pizer highlighted the challenge as a result of the vacuum created by the industry’s absence as a driver of consumer perceptions.
“Perception is key,” Mr. Pizer said. “I Googled ‘Is bread healthy?’ Four of the top five articles results were negative for bread. That perception is something we can’t attack from a brand standpoint. Our consumer is smart. We need to come at them as a team.”
He predicted the effort would boost grain-based foods even beyond breadbasket products.
“Look at the Got Milk? campaign,” he said. “They reinvigorated the campaign with chocolate milk. You’ve seen what we need to do. We need to turn the perception around. We can’t do it on our own. You can’t do it with brands.”
Whether $15 million will be adequate for a successful program was asked when the session was opened for questions and comments. The questioner noted that some checkoff programs are 10 times larger.
“We have to start somewhere,” Mr. Shiver said in response. “We need some experience that shows our investment is truly generating the kind of returns we are all looking for. That will give the entire industry more confidence to raise the ante.”
He expressed optimism that with an effective marketing message, the program will generate results with a $15 million budget.
Ms. Cochran noted that the soybean checkoff program was launched at $20 million and currently stands well over $100 million.
Among concerns raised by those in the town hall meeting was unease over the exemption of baking companies that use less than 750,000 cwts of flour per year. Leonard M. Amoroso, president of Amoroso’s Baking Co., Philadelphia, said the cutoff would leave his business at a disadvantage versus smaller companies.
“I’m in a market in Philadelphia and South Jersey,” he said. “I have competitors, and the largest does about 3,000 cwts a week. None of them would be forced into this program. I still have to compete with those folks. This is adding cost for me.”
A similar concern was voiced by Giancarlo Turano, vice-president of sales and marketing, Turano Baking Co., Berwyn, Ill.
“Make it level across the board for everyone,” he said. “There are other wheat-based products that are going to get a free ride if that’s where we’re going.”
Ms. Cochran said the cutoff was the subject of considerable discussion and study.
“The goal was to be very focused and to cover 80% to 90% of the market,” she said, noting that the U.S.D.A. required economic analysis and justification for any changes that are made.
The mandatory aspect of the checkoff program did not sit well with Lawrence L. Marcucci, c.e.o. of Alpha Baking Co., Chicago.
“It appears that the industry is moving down this road,” he said. “I’m kind of wondering how if I don’t necessarily agree with this and how it should be done, how do we say, ‘I’m not interested in that?’ ‘Do I get dragged along?’ How do we say, ‘I don’t think that’s a good idea. I don’t want to do it.’”
Opponents of the program will have many vehicles for expressing their views but will not be able to opt out, unless the program is ended, Ms. Cochran said.
The U.S.D.A. will subject the planned program to a comment period, which could lead to changes in the program. A three-year trial period is planned, and if during this period three different companies seek a referendum, a vote will be taken. No more than three years will pass before an initial referendum.
For the referendum to pass, more than 50% of the market volume and at least 50% plus one of the participants must vote in favor of the program.
Opponents also will be able to gain board representation. The board will include eight bakers and two flour millers. There will be mandatory term limits, assuring broad representation.
“Everyone assessed is eligible for a seat, even those who do not support the program,” Ms. Cochran said.