Michigan Farm News September 15, 2007

Truth in BST marketing?Image is everything

By Paul W. Jackson

The use of rBST may soon be a thing of the past in Michigan since MMPA
decided that it will only supply so-called "BST-Free" milk to retailers.

An aging and balding tennis star once hawked cameras with a catchy,
though unsettling tagline.

"Image," he said as his long locks flowed in a fan-produced breeze, "is

Knowing what we know in today's digital camera age about the ease with
which images can be manipulated, falsified and coerced, many people
become disillusioned and lose faith when they discover that, in the
light of truth, image is, in fact, nothing. But often, that discovery
comes too late, whether in products or politics.

Image - in some cases in defiance of reality - has worked time and again
in the marketing world. Politicians know it and public relations people
know it.

Many consumers, however, apparently don't know truth from image when it
comes to farm and food products, and their confusion has brought us to
the doorstep of marketing, where manipulation of facts, images and truth
has become commonplace.

For example, said John Dilland, general manager of the Michigan Milk
Producers Association (MMPA), milk can now be found in many stores with
a sign that promotes a certain brand because it claims to have "no
pesticides, no antibiotics and no added hormones."

Is that truth or image?

The truth is, not a single drop of milk allowed on the consumer market
today contains pesticides or antibiotics; and while using rBST is
considered in some circles an "added" hormone, there's no way to test
for the product, because rBST is something cows produce naturally, and
in varying amounts, so proof is hard to discern.

But as long as consumers have choice, anti-BST activists say, things
will be OK, as if confusion is solved by more choices.

Choice, in fact, is a phrase bandied about by all sides of the fluid
milk marketing industry. Monsanto, producer of recombinant bovine
somatotropin, which some consumer groups demonize with the hissing
acronym rBST, insists that milk producers need to have rBST as a
management choice. Anti-rBST advocates insist that consumers deserve a
choice between milk produced with and without rBST.

But in Michigan, the argument is all but over. MMPA, the state's largest
milk supplier to retail markets, has decided to ban rBST use by its
dairy farmers as of Feb. 1, 2008.

"While the (MMPA) board thoroughly understands that there remains no
difference in milk from cows treated with the artificial bovine growth
hormone rBST versus cows not treated with rBST, we must remain
responsive to our customer demands," MMPA officials said in the co-op's
September periodical.

MMPA's customers, in this case, are national retail grocery chains,
which insist that consumers are demanding milk free of rBST use, even if
they don't know what it is, what it does or the fact that they've likely
been drinking it for nearly 20 years.

Monsanto said the claim that this is a consumer-driven trend is not

"This is an activist-led trend, not a consumer-led trend," said Michael
Doane, director of public affairs with Monsanto. "We track consumer
attitudes all across the country, and this isn't even on the radar
screen. Consumers buy milk based on price, fat content and expiration
date. Those three factors never change. But certain retailers, for their
own gain, have positioned a product called "BST-Free" in the milk aisle.
It implies a difference in milk. But the consumer is the one who loses
in this decision by MMPA. Consumers will no longer have a choice."

Consumers also had little choice in the late 1980s, when BST was first
marketed to farmers - for drug company gains - despite the fact that the
public didn't want it and the milk market was oversupplied. And when
Monsanto captured the entire BST market with its Posilac brand product,
there was little to stop its sales monopoly, especially when farmers
were beginning to enjoy extra milk production with the same number of
cows as before its introduction.

And then the public forgot about it.

During the nearly 20 years of public apathy, dairymen learned to use BST
to great advantage. The national dairy herd shrunk, at least in part
because of Posilac, and the milk supply didn't suffer a bit.

Individual farmers learned that open cows could produce milk longer than
they could before, and cows that would have been culled because they
were open could stay in the milk line longer. Herd averages went up,
which was pleasant even for extreme environmentalists, who don't like
larger farms.

They won't be happy about the consequences of BST bans, either, if they
honor truth and disdain image, because without BST, more cows will be
needed, Doane said.

"Our data shows that for every million cows that are taken off Posilac,
we need to add 280,000 cows to make up for the lost production, he said.
"That means more water used, more manure and more investment in waste
treatment systems, and more land use. That's why we believe that Posilac
is an environmentally sustainable technology."

Whether that is truth or image remains to be seen, but, at least in
Michigan, it's not worth debating, because with MMPA's decision, BST
injections will practically be extinct in Michigan after Feb.1, the date
on which MMPA will become rBST-free. Dairy Farmers of America (DFA), the
second-largest Michigan milk bottler, plans to supply to both BST-free
and traditional markets.

Monsanto's not really worried about Michigan's potential market,
however. Doane said.

"I can't speak for Michigan specifically, but in the last three years,
our Posilac sales have been the strongest they've ever been," he said.
"And when you look at the price of retail milk for all dairy production,
the financial return on the technology has never been higher."

That's one reason MMPA's decision was monumental, and difficult, said
Velmer Green, a dairy farmer and MMPA board member.

"I think it was the hardest decision I ever made on the board," he said.
"But we didn't have a choice based on the fact that Kroger wants an
rBST-free supply of milk. We've always been upfront in the marketplace,
and we had told Kroger that if we offer rBST free milk to one retailer,
we were going to offer all buyers that supply. I don't think the
consumer is demanding this, and I don't know why this is an issue
raising its head now, but it could have been avoided. I don't think my
15 cents (per hundredweight) going into the milk checkoff has been used
effectively, and I think Monsanto is to blame as well. Monsanto didn't
work in the right place, and the checkoff should have had people out
there educating the public. The Dairy Marketing Institute (DMI) really
dropped the ball, but it's too late now. They should have been working
behind the scenes as soon as they saw this coming from the West Coast."

Of course, the rBST-free image isn't all from the West Coast. In
Michigan, New Era's Country Dairy has been marketing rBST-free milk for
13 years, ever since Posilac made a market impression, said Paul Arkema,
one of Country Dairy's owners.

"We label our milk as coming from cows that were not injected with rBST,
and the rest of the industry is finally starting to realize what we
realized 13 years ago," he said, "and that is that people don't want
BST, and given the choice, they will choose a product without it."

If, after rBST is gone for all practical purposes in Michigan, Arkema
said his company, which produces milk only from its own herd, will still
have a market niche.

"Our product stands out from the rest because of our isolated control
over the supply, and because we focus on quality," he said. "We will
continue to advocate our story that our milk is a lot different from
most milk."

While the image of Country Dairy's milk may have to change, Arkema made
it clear that his company's product will not. It may just have to market
it differently. But it's clear that when it comes to rBST-free milk, the
competition within that niche is about to become bigger and stronger.

Logistics demand that MMPA will not put out any more rBST milk, which
certainly expands the market for rBST-free, and it appears there is a
limited market for milk produced using BST.

"We had discussed segregating BST milk from non-BST milk, but we
couldn't do it," Dilland said. "We didn't think we could segregate the
milk, break up our routes and do all the other things that would have
been required. Besides, when Kroger and Meijer run milk specials all in
the same week, we can have a 55 to 70 percent increase in volume,
besides the milk we send south."

How are producers responding?

"I think they're all frustrated," Dilland said. "Farmers who've never
used BST think it's a good thing, but those who do believe it's a proven
technology and they've been forced to give up a management tool that has
been beneficial for them."

MMPA will offer producers a premium from the Class I milk pool that
Green said will amount to about 30 cents a hundredweight, but it is only
guaranteed for a year.

"I don't think the premium they get will be large enough to compensate
them for the production loss," Dilland said.

The bottom line of all this image-based marketing, Dilland said, is the
bottom line.

"Call it caving in if you want, but the truth is that if we don't serve
the market, someone else will," he said. "We need the Class I sales to
qualify for the blend price, and this is the only way we could do it to
minimize cost."

Market realities aside, there's still the issue of image being
everything to the consumer, but the idea of marketing to consumer
ignorance, as Dilland said, may end up being a good thing, Green said.

"This will probably cause a shortage of milk, which may drive prices
up," he said. "And if we need more cows to make up for it, the price of
heifers may go up."

And that has nothing to do with image.



Vicki Morrone

Organic Vegetable and Crop Outreach Specialist

Michigan State University

C.S. Mott Sustainable Food Systems

303 Natural Resources Bldg.

East Lansing, MI 48824


517-282-3557 (cell)

517-353-3834 (fax)

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