CONTENTS

Effects of Supply Response on Returns to Catfish Promotion

Effectiveness of Almond Export Promotion Programs in Pacific Rim Markets

Manager's Viewpoint

Editor's Notes

Director’s Corner

Selected Reading

Next Meeting

Manager's Viewpoint

by Jeff Manning, Executive Director
California Milk Processor Board

This is at once an important and interesting question. Its importance stems from the fact that commodity boards--whether they be national or local, large or small, food or fiber--are the only way that American agriculture can effectively and efficiently impact demand for its crops. Therefore, the people who run them have enormous fiscal (as in billions of dollars) and social (as in millions of families) responsibilities.

It’s an interesting question; unlike the private sector, where sales, profits, and stock price are clearly visible measures of performance, a commodity board’s success (or failure) is frequently abstract, shifting, and difficult to quantify. It is also of interest because the CEO operates within a paradox--enormous autonomy offset by committee decision making.

Given this brief backdrop, here is one man’s admittedly biased point-of-view regarding what a commodity board CEO’s job is (or should be) all about.

Leadership, Leadership & More Leadership

I know this seems incredibly self-evident. But, over the past 20 years of working with commodity boards, there has been a huge void in the type of leadership we expect from private sector CEOs. By this I mean the leadership characterized by vision, courage, accountability, creativity, and a relentless dedication to hard business results.

Why? Simple. Commodity board CEOs are often so concerned with keeping their constituencies happy that they veer away from the healthy, productive confrontation that drives a private sector leader. As Churchill implied, being a “prod” is not always the easiest, most popular route to success. Further, because boards often lack tough, concrete annual goals (and because the programs often lack “horizons”), there is a strong tendency to consider the position as a lifetime job. Bad idea. This breeds complacency and risk avoidance--two routes that run directly counter to potent leadership.

Objectives, Objectives & More Objectives

In the absence of sales and profit goals, it is absolutely crucial for the CEO to set objectives. They can take any form so long as they are relevant, legal, and measurable. Increasing consumption is always a good starting point. But, objectives may be expressed in terms of crop values, share of shelf, exports, etc. My least favorites are advertising awareness and consumer attitudes. The reason is that, while these may indicate that something is happening in the marketplace, they aren’t legitimate ends unto themselves. Ultimately, producers and processors can’t take awareness or attitude scores to the bank.

Results, Results & More Results

Another area where a CEO must lead a commodity board is on the research and evaluation front. Clearly, this subject strikes closest to the hearts of the folks reading the NICPRE Quarterly. It is crucial that all research and evaluation relate directly to the objectives set by the board. It’s amazing just how much time, effort, and money is spent measuring “stuff” that has little or nothing to do with achievement of a board’s stated mission and goals. For example, a board’s primary objective may be to increase per capita consumption of beef, milk, or potatoes. However, the board may spend hundreds of thousands (even millions) of dollars researching new products or processes that may have 10- or even 20-year horizons and whose chance of impacting consumption are, at best, marginal.

It is the CEO’s job to avoid these tangents and drive tough, objective, and annual measurement of a program. There is substantial risk in taking this approach, (i.e., it has a way of spotlighting failures as well as successes). So be it. Just as a private sector CEO must deal with upturns and downturns in distribution, sales, and profits, so must a commodity board CEO be willing to ride the measurement roller coaster.

Excellence, Excellence, & More Excellence

This is one of the most difficult areas of performance to evaluate. What exactly is “excellence ?” As a long-time friend once said, “It is like trying to wrap your arms around 100 pounds of JELL-O.” However, despite its evasive nature, excellence remains crucial to a CEO and his or her board. The reason is that most boards compete head-to-head with the largest, most heavily-funded companies in the marketing world--Beef vs. Purdue; Potatoes vs. Quaker/Rice-A-Roni; Butter vs. Mazola and Wesson; Milk vs. Coke, Pepsi, Snapple, et al. Unless a commodity board CEO drives his/her organization to higher and higher heights of excellence, the chances of ever achieving his or her lofty objectives are slim indeed.

So, that’s my take on what commodity board CEOs should be doing with their time. Certainly research, and very possibly economic modeling, is pivotal to the job. The challenge is using research with the precision of a surgeon and tying every research project --no matter how small--back to a fundamental business objective. Since we opened with a presidential quote, let’s close with yet another.

"Wisdom consists not so much in knowing what to do in the ultimate as knowing what to do next."
--Herbert Hoover