Dairy Information: Center Focus Column

Global Dairy Markets: Preserving Opportunity

By John Frey, executive director of the Center for Dairy Excellence

As members of a family, a community, a church, or even as business owners, the reputation we have shapes how people see us and how they respond to us. Any branded company would tell you that “reputation is everything,” and many invest significant amounts of capital in protecting that reputation, otherwise known as their brand.

FreyReputation is also very important in the dairy industry. As individual dairy farm families, we want to be recognized as dependable, hard-working and forthright business owners. And, as an industry, we want our consumers and customers to see dairy as a safe, wholesome product produced with the ultimate care and quality standards. However, once a reputation is compromised, it can be very difficult to rebuild it.

Recently, I attended the US Dairy Export Council Spring Board Meeting. The Center for Dairy Excellence has been a long time member of USDEC, which is a non-profit, independent membership organization that represents the global trade interests of US dairy stakeholders, from farm to marketplace.  At this meeting, Ian Goldin, former vice president of the World Bank and economic advisor to Nelson Mandela, former president of South Africa, was a keynote speaker. Goldin spoke on global population demographics, markets, and related opportunities and threats, along with the potential impacts on all stakeholders in the food value chain.

In his presentation, Goldin spoke about two areas of risk known as perception risk and reputation risk. Perception risk is characterized as the risk of having public societies view our production management systems and associated practices in ways inconsistent with how we view them or intend to have them viewed. Goldin said, “New technologies often lead to uncertainties in perception.” An example of this could be the use of approved but controversial technologies.

The second area of risk he discussed was referred to as reputational risk. This risk relates to how individual entities are viewed and how the view can again be inconsistent with intentions. Goldin said, “In a changing and often volatile world, don’t rely on world government systems to somehow mandate public perception. Develop coalitions of the willing.”

In dairy, the “coalitions of the willing” include those hundreds of dairy farmers who serve within organizations like US Dairy Export Council and other such entities working to assure a positive reputation for our products and our farm businesses. From our view on the farm, the industry’s efforts to develop consistent messaging to demonstrate our commitment to a safe, abundant and nutritious food produced at the highest level of integrity can seem like an endless and futile battle. However, programs like the “Telling Your Story” campaign extended through the national Dairy Checkoff program have made significant inroads in moving perceptions in the right direction.

Goldin stated, “Labeling  will become increasingly important to a discerning customer base, and farmers need to do the right thing, then tell people about it.” My observation is, to do this effectively, we need to be clear that we within the dairy industry aren’t who we are competing against. Our competition includes those many products and ideologies competing for the emotions, minds, and stomachs of a growing global population.

Following Goldin’s presentation, senior leadership from Walmart Asia spoke indirectly of perception and reputational risk. “Global customers will focus on healthy foods and improved health,” they said. “[To achieve growing markets for US dairy, we] will need to have the reputation of providing consistent quality and product safety in dairy and in all food product categories.

“The label is our contract with the consumer,” he stated.  “The reputation of that contract is essential to build long term customers around the world.  Walmart and other global food sellers are continuing to increase their ability to guarantee a consistently safe product delivered to every table.”

We know our dairy value chain is increasingly interconnected and integrated. In US dairy, organizations like USDEC are working to both preserve and grow the demand for our products around the world. With only 5.5 percent of the world’s population living here in the US, this is the right strategy to create long-term opportunity for those entrepreneurial families wanting to participate in this industry.

As we continue to work to take advantage of these opportunities, it will be essential for all dairy farm families and industry stakeholders to join “coalitions of the willing” working together to ensure the messages we send to the global marketplace communicate the right perceptions, resulting in a reputation of being a consistent supplier of the safest and most nutritious dairy products in the world.

Charlie Arnot, CEO with the Center for Food Integrity, spoke at the February Dairy Summit, and he said our goal should not be to persuade the activists or change their minds. Our first goal, he said, has to be to embrace the skepticism, understand consumer concerns are real, and help consumers understand that our food systems and production practices are better aligned with their values than they may have thought.

Statistics show time and time again that farmers are among the most trusted individuals in our society. “Most people trust farmers,” said Arnot. “However, they question if what we do today can still be called farming.” In other words, our reputation is ours to lose.

To learn more about resources to connect with consumers or join the coalition of the willing, contact the Center for Dairy Excellence at 717-346-0849 or email info@centerfordairyexcellence.org