Public Relations Consultant, Melbourne
Marketing is one of those jobs that everybody agrees that somebody has to do. In fact it reminds me of the story about the four people named Everybody, Somebody, Anybody and Nobody.
There was an important job to be done and Everybody was sure Somebody would do it. Anybody could have done it but Nobody did it. Somebody got angry about that because it was Everybody’s job. Everybody thought Anybody could do it, but Nobody realised that Everybody wouldn’t do it. It ended up that Everybody blamed Somebody when Nobody did what Anybody could have done!
It is my job to get the ball rolling on the subject which is going to occupy your minds for the rest of the day - and hopefully for sometime in the future.
Topics of this nature are usually left to experts or economists, but I have no claim to either vocation.
I am reminded that an economist is a man who knows 1000 ways of making love but never gets the opportunity to do so.
The story I best like about economists is about the two who went duck shooting - one shot six feet above their first duck and the other six feet below. On average - they got him! So much for averages and economists.
My topic - The need to re-think marketing strategies” - and the theme of this Conference - “Market or Perish” -. implies (a) that something is drastically wrong with our marketing efforts and (b) that we have the power and ability to set things right.
What I propose to do during the next half hour is canvass the validity of these claims; kick a few sacred cows in the sensitive portions of their anatomies; offer some sagacious and perhaps even some unwelcome advice, and hopefully stir your blood pressure to a slightly higher level than it is right at this moment.
I cannot pullout a 303 which shoots solutions to marketing problems; all I can do is stimulate you to think about the kind of ammunition that could.
I can dig the ground for you and put the seed in but you will have to use your own fertiliser and your own time to reap the crop.
I hope it will not be another great bum-aching presentation, and I hope not to give you verbal indigestion or to psychologically amputate your thought processes.
No doubt you have heard the old saying “there are lies, damn lies, and statistics
The world’s three greatest lies are: “The cheque’s in the mail”; “I’ll still love you in the morning darling”; and “I’m from the Government and I’m here to help you".
A lot of what I will have to say today will have to do with The Government because Australian primary producers perennially inflict this death wish upon themselves of running to Government whenever the farm private enterprise locomotive starts to run out of steam, or the farm marketing cart runs off the rails.
There is a role for Government in policy making and in domestic and international marketing, but it should be in terms of aiding, assisting and facilitating rather than encasing entire industries in legislative straitjackets, and creating dependence on the Government as a life support system.
One of the first principles of marketing is to know where you are going, to set objectives, to plan. The second, third and fourth principles of marketing are planning, planning and planning. It is a truism that we don’t plan to fail, we fail to plan.
What is the background to this emphasis on marketing?
My hypothesis is that it is a combination of factors which an be summed up in the statement that the cost-price squeeze has become a vice-like grip -and for some of us that’s a very sensitive part of our anatomy in the vice.
What has created this situation? Firstly, we have got low prices for grains, sugar, mutton and dairy products.
Secondly, we are major exporters of rural commodities and rarely in modern times have we witnessed the stagnancy of demand, the surplus of supplies and the intensity of international competitiveness in world agricultural trade for these products.
Thirdly, we have been hit by a tidal wave of cancerous cost increases, and now we are under threat from an avalanche of avaricious and commercially oppressive taxation liabilities.
Now, how have we tried to counter those problems? We have voted in elections, attended cost and taxation summits, appeared and appealed before countless inquiries, and we have attacked the unfair trading practices of our international competitors with wet tram tickets, blunt razors and a barrage of verbal abuse, poorly camouflaged as diplomatic language.
And where has it got us? Absolutely nowhere. In fact, the rural sector, had it not been for the recent plunge in the value of the Australian dollar, would now be accelerating backwards at a pace akin to that generated by the wool depression in the early 70s and the beef depression in the mid-70s, events which for most of you must still plague your memories.
The family farm is now perceived to be under threat - as evidenced by the unprecedented scenes in recent months in the streets of Perth, Adelaide, Melbourne and Canberra.
Never before in the 200 year history of this country have farmers, their families and their commercial cousins rallied in this way.
This is far from the traditional “cockies’ whinge” - this is an army of opposition being mobilised to defend something precious to all farmers -their livelihoods, and that of their families.
In those close-knit, dry-witted cavalcades, canvassing the contentious issues of the day in the extremely receptive and fertile backyards of urban Australia, we are really seeing the rebirth of rural :consciousness, and the formation of a solid, cohesive, powerful force which will force this and other Governments to come to establish an accord for everybody, a union of all people, and not just with the trade union movement.
In any discussion on marketing, we must not lose sight of the global perspective and the trends therein.
Product prices can now fluctuate more in a day than they did in a year. Prices have become more volatile and consequently farmers’ incomes and balance sheets have suffered the same affliction.
Market place volatility has an important side effect - the person least able to adjust ends up having the largest adjustment to make. That individual has been and continues to be the farmer.
Ray Goldberg at Harvard University makes the point that macro-economic policies that affect foreign exchange rates, interest rates, balance of payments, budget deficits and international debts have more impact on the farming and food systems than traditional farm policy and marketing programmes. I am inclined to agree.
Why is it that primary producers need to rethink in the market place? Why is it. that we market or perish beyond the farm gate?
Very crudely interpreted the answer is immediate and long-term survival.
Farmers in other countries have turned to the cooperative movement to guide them out of the marketing wilderness, but our record of success through this avenue in Australia could hardly be applauded, with some notable exceptions in the fertiliser, bulk handling, banana growing, artificial breeding, rice, beans, tobacco, wine, and the odd dairy cooperative - hardly a register of our major rural commodities.
Cooperatives are also in trouble elsewhere in the world, despite their higher profile and much better track record.
Cooperatives everywhere in the world - including Australia - only come into existence because existing proprietary institutions fail-to deliver an equitable and efficient operation as an input supplier or marketer.
But of course the same marketing problems which hit proprietary companies also create havoc with cooperatives. Supply irregularities, price volatility, the drying up of cash flows, and a declining number of farmers to service.
On top of this, cooperatives in Australia are prone to one other major impediment, the pathological desire by farmers to assume the role of marketing experts themselves and, more importantly, t~ regard with suspicion and often treat with disdain, anyone who dares masquerade as a marketer
without first having experience in producing the items concerned.
Anyone can market products in a growth environment, where demand is constantly running ahead of supply.
However, in a surplus situation and even when the numbers of suppliers is declining, it takes a different portfolio of skills.
It takes a new kind of leadership, a new professional management approach, and a broadening of the base of the background of the individuals responsible for the marketing effort.
The kind of individuals required to assume the marketing role are people with the ability to change national marketing structures; broaden the base of financial resources; trigger and implement rationalisation of an industry; be an expert in product differentiation and adding value to products; willing to become an instant expert in biotechnology; a capable advocate for encouraging Governments to provide minimum safety nets to underpin an industry; the business acumen and reputation to trade with Governments as well as cooperatives and proprietary companies both in Australia and overseas; and finally a multi-national presence and stature capable of breaking down the enormous political barriers that have been erected between nations.
If you fancy yourself as a marketer, as a potential director of an existing or new cooperative or as a replacement for someone you regard as a dodo on one of our statutory marketing authorities, and you cannot pass muster on the list of criteria just mentioned, then forget about interfering and becoming involved in the marketing process - it is clearly not your scene.
And at the same time, get off the backs of those who can lay some claims to being proficient in these activities.
The worst marketing critic of the lot is one who has had a pinhead of experience in some runt-size section of a maggot of an industry, and professes to know everything and to demand that those currently in control of marketing functions should be subject to his or her accountability.
Who is kidding whom? How many producer representatives on marketing boards or cooperatives have these kind of qualifications? How many of them also have all-round skills and experience in product planning, pricing, product branding, channels of distribution, personal selling, advertising, promotion, packaging, display, servicing, physical handling, and fact finding and analysis?
How many can work as a team when their own expertise must interact with someone else’s, and when an integrated approach is needed to combat a particular marketing problem?
How many are only doing the marketing job part-time anyway? How on earth, and why, do we tolerate the appointment of part-time chairmen to major rural industries earning billions of dollars annually in domestic and export income?
Why is it that we insist on nominating and going through the farce of electing members to commodity marketing boards who we know do not have the experience to undertake the task, and who we know find it difficult to comprehend the intricacies of modern management and international marketing?
I note that wheat growers all over the country have been campaigning for grower dominance of the Australian Wheat Board, and John Kerin has agreed to include 7 growers amongst 11 Board nominees. I think it is absurd. It is a bit like having Lebanese Shi-ites as your travel agents - BLOODY DANGEROUS!!!
Why is it that the Australian Meat and Livestock Corporation, the Wool Corporation, the Wheat Board and the Dairy Corporation spend millions of dollars annually trying to placate criticism in the bush, to inform and educate their shareholders and constituents, and to mount huge expensive public relations and awareness programmes?
That is not their major function or even their principal objective. Their jobs respectively are to increase or maintain the consumption of meat, wool, wheat and dairy products.
Every dollar that is diverted to communicating with growers or producers, every hour that is deflected from their product marketing role is a dollar and an hour and a resource which cannot be used in achieving their prime objective.
Keep that in mind the next time you see someone jumping on the accountability bandwagon, someone screaming for more information, and someone lobbying for those big, expensive, elaborate but often useless window-dressing exercises like two-day annual general meetings.
Take a leaf out of industry’s books. Buy some shares in BHP, Bell Resources, Adsteam or Elders and compare their annual meetings with those of your own grower organisations and your own commodity marketing board.
When we attend our respective grower or commodity board annual conferences we often come away marvelling at the theatre, entertainment and education of it all, but when we see how the professionals do it, we might look back on what we achieve as a joke.
Can you imagine how a big Australian industrial concern would function if it had to put up with politically engineered board appointments, pseudo experts, and people who sometimes spent more time knocking progress and kicking the industry in the guts than in leading it on the path to prosperity?
Ask and answer yourself a few more questions about our attitude to and our ability for marketing rural products.
Why is it, for example, that despite the millions of dollars invested by State Departments of Agriculture on research and extension, only a pittance is devoted to marketing? Why is it that we have a plethora of production research farms dotted around the nation but. no marketing research establishments?
Why is it that our agricultural education institutions treat agricultural marketing as a leper subject? Why is it that we have short courses and home study courses in horse husbandry and hoof maintenance, but little available on marketing? I would have thought that trimming marketing costs would be as important as trimming horses’ hooves.
Many of you and your counterparts have been arguing for a fair go for agriculture, for deregulation of markets, and for free market forces to operate - whatever that means.
At a time of high Budget deficits, record real interest rates, and a rigid inflexible wage fixing system, the fulfilment of these desires would probably be catastrophic.
What is happening in the real world is that the farming industries are being forced to rely more and more on Government assistance, not less.
Governments have got us into this mess and Governments have got to help us out.
We supply a world market which means we must be price competitive - not only now but in the future as well.
Australian agriculture is almost entirely dependent on trade which means our skills as world marketers are paramount.
Our wool, beef, wheat, dairy and sugar industries would be decimated and would not exist if it were not for exports.
And Australia surely needs its exports. About 23% of total exports are now needed to service our national debt compared to only 2% in 1950.
If we accept the view that marketing and trade is the key to our future, and that we must be price competitive to survive, then it follows that we have no alternative but to increase productivity and cut costs. One of the major determinants of farm costs is the price of land, and it is here that we face one of our greatest dilemmas in the future.
In America there has been a precipitous decline in land values, sharply reducing the borrowing capacity of even those farmers with light debt loads, and placing the rest under severe financial stress.
However, those that have survived this trauma, and those new entrants to farming who have capitalised on the misfortunes of the bankrupt, have a lower costs structure and are therefore better able to compete.
It is interesting that while Australian farmers are clamouring for less Government involvement, their beleaguered American counterparts are voting for more Government involvement in the development, management and stimulation of export sales.
A great deal of attention is being paid by some marketing authorities to promotion and marketing of products based on demographic studies.
While these studies are valuable in understanding which consumers purchase what food, what demographic studies in Australia really tell us is how complex our consumers and their consumption habits are.
They tell us we have people who eat food to survive, for snacks, people who are gourmet oriented, diet conscious, fast food eaters, family food eaters, people who experiment with food, and people who are health conscious in their approach to food.
And these studies have also uncovered a myriad of sub-groups of consumers -small and large households, one, two and three income earners in the household, more ethnic people, more older people, yet more younger people doing the shopping and everybody spending less time both shopping and cooking. Complex isn’t it?
Not all our problems are going to be solved by demographic studies - essential though they are - and I must applaud the recent work of David McKinna in the meat industry in this field. And let’s just stay with beef for a moment.
Australia is about to celebrate its Bicentenary yet we still have restrictions on retail trading hours for red meat, but no restriction on trading poultry and pork.
What is wrong with our priorities? We produce about 600,000 tonnes annually of pork and poultry meat combined and nearly 1.8 million tonnes of beef, mutton and lamb, in other words nearly three times the quantity of red meat to white meats - then, we actually inhibit consumers from buying the product that we produce in abundance!
Is it any wonder that consumers are now eating slightly more pork per head than lamb, and three times more pork than mutton?
Is it any wonder that poultry consumption is rising at 6% per annum and will hold nearly one quarter of total meat consumption by the end of the decade, when for every kilogram of beef we eat, we will also be eating half a kilo of poultry meat?
Is it any wonder that in the past 25 years poultry consumption has increased by more than 90% while consumption of red meats has declined by around 25%?
And to say that beef consumption is in decline because of “competition from poultry” is equally absurd because we don’t allow beef to compete.
Incidentally, I have never been able to understand why beef, lamb and mutton promotion has never capitalised on the inferior image of poultry in microwave cooking where it is said to be dry, lacking in taste and hard to brown. It must be the only area where the red meats have a marketing advantage yet we have failed to press red meat’s claims. Pity.
The poultry industry has ‘outpackaged, outprocessed, outmarketed and outsmarted’ the beef industry and it is time for action rather than reaction.
Do not be deluded into thinking that because you are dissatisfied with the performance of your favourite marketing board, or cheesed off with the cut that middlemen are taking, that this automatically means you can do better as an individual, as a group, as a cooperative or as an association of primary producers.
The problem is that the skeleton of the alternative we develop often looks great, but when you start trying to add the flesh you end up with a marketing monster.
Cattle producers have been complaining about the performance of the AMLO and its predecessor board for over 10 years.
During that time, the AMLC has gone through millions of dollars, a massive continuing reorganisation, changes in staff, a recycling and replacement of board members, and is currently on its third chairman for the decade. But are things really any better today than they were 10 years ago? Or have we only been treating the symptom rather than the cause?
Let us not get mesmerised by the thought that we know best and that we can do better, particularly in the meat industry.
There are literally scores of meat processors and traders who have either gone out of business, been declared bankrupt or commercially slaughtered trying to make ends meet in meat marketing, and none of the new international traders seems likely to greatly improve that image.
I think the moral here, and the message, is for us to analyse carefully why current marketing participants and policies have appeared to fail and to weigh very carefully the pros and cons of optional action.
And when we consider those options we must clearly differentiate the roles of Government and the private sector.
As the Minister for Trade, Mr Dawkins, said recently:- Government can only assist primary product exporters in six basic ways: by managing the economy efficiently, aiding reconstruction; aggressively representing our interests abroad; identifying markets; facilitating the reliability of supply; and nurture public awareness of the importance of exports.
Making sales, as always, depends on us or our commercial representatives, and our imagination, ability and business sense.
Whenever you feel a warm inner glow from a do-it-yourself marketing idea, just remember that as a farmer you do have the power to determine what crop or pasture to plant or what livestock to produce, how to use your land, how to market those products off the farm, how much debt you are prepared to carry, and what profit margin to accept, but except for some very isolated cases, you have little individual power over the prices you receive.
And you cannot overlook the international dimensions of marketing.
Australian agriculture must compete in the world food and fibre market. It must supply products which are price competitive.
The role of Government is really quite simple: it is to ensure that its rural, urban, national and international policies do nothing to impair or inhibit the competitiveness of Australia’s rural exports.
It is only fair, however, that if we demand that Governments keep out of our road and out of our pockets and to assist our international competitiveness, then as farmers we must do our bit to increase productivity and cut costs - a conclusion that applies to all industries, and not just agriculture.
I am not wishing to inject an air of pessimism, and I hope you do not leave this Conference in that frame of mind, but when you are planning to revive and resuscitate your production and marketing strategies, take into account the prospect that land values in Australia could decline rather than continue to expand.
A recent study by the Federal Reserve Bank of Kansas City concluded that continued high interest rates, weak commodity prices, and continued sluggish world economic growth must eventually cause a precipitous decline in land values.
Whether land values decline or not, and whether they decline by 50% or only 25%, is really immaterial in the long run. The most important point from a marketing point of view is to be competitive.
It gives me the tray bits everytime I see producer organisations and their representatives spewing out PR propaganda suggesting that Australian farmers can feed and clothe 16.5 million Australians and still produce 40% of export income, and that this demonstrates that we are amongst the most efficient farmers in the world.
What we do when we make such statements is confuse efficiency with productivity, and they are not the same.
The number of people each of us feeds and clothes may make us feel important but what really matters - in fact all that matters in the market place -is cost per kilo, per bushell, per bale, per acre, per hectare, etc.
The future marketing scenario is one of low per unit production costs that reduces the prices which farmers need to receive to make a profit.
In turn, these lower prices will not only stimulate demand, but also discourage uneconomic production.
I said earlier that there is no sure-fire recipe for success in marketing and no miracle ingredients, but there is one morsel of hope in that although the farmer’s share of the consumer s dollar is declining, there is nothing to stop farmers getting involved beyond the farm gate - but I suggest from an ownership or joint-ownership rather than a management point of view.
As they say, the big money in food isn’t in producing it, but in handling, processing, packaging and marketing it, but unless you are an expert in those fields, stay out of direct involvement in those arenas.
For decades farmers have been led into complacency by prognostications that a burgeoning world population will lead to strong demand and higher prices.
But a recent study by former US Undersecretary of Agriculture, Dale Hathaway, highlights the illogicality of this argument.
World population is expanding. We will add 510 million people in the next five years - equivalent to the entire population of the USA and the USSR, two of the world’s biggest countries.
Most of those new mouths, however, are going to be in the Third World, in Asia, Africa and South America.
Now the problem is that demand for grain and meat rises with income, not with population.
So the role of Government in the international scene, should be to increase the income-earning capacity of the Third World, and that means allowing foreign products to compete with domestic products on the Australian market.
There seems little sense in expanding production (e.g. world grain production took from the year dot to 1964 to reach 270m tonnes, but took only the next 20 years to double!) if we do not pay the same attention to expanding markets.
The conclusions I have drawn in relation to marketing may not be those you wished to hear, but I suggest that you ignore them at your peril.
We do have marketing problems in agriculture and one of the biggest is too much of the wrong kind of Government involvement.
Our second biggest problem is that we think we can solve those problems by more farmer involvement in marketing - but this only exacerbates the problem because not enough of us have the required skills.
Our third biggest problem is that we expect the marketing process to achieve too much. The Wool Corporation, the Wheat Board, the ANLC, the Dairy Corporation are never going to guarantee farm profitability, regardless of of which Government is in office or who is sitting in the driver’s seat.
Priority needs to be given to producing at the lowest possible cost to facilitate the marketing effort, rather than be continually tinkering with ad hoc, patched up marketing schemes designed to off load high-cost, un-competitive products.
Our fourth biggest problem is that we fail to comprehend the international perspective. We are global marketers yet we continue to act like price makers. We are a price maker in wool, but price takers for most other commodities.
Our fifth biggest problem is that our research priorities in Australian agriculture are disproportionately weighted against marketing projects.
Our sixth biggest problem is that we have encouraged and embraced policies which have stimulated uneconomic production and hindered our ability to compete.
And finally, we have a tendency to believe our own propaganda, to believe that we are the most efficient farmers in the world. When your costs are the lowest and you can still make a profit even at low prices, you might rightly be able to claim that title.
In conclusion, by all means rethink the place of the primary producer in the market place, but if you want to get involved in marketing beyond the farm gate, start acquiring or hiring some basic marketing skills.
You will perish if you rely on your farming skills to pull you through.