In my industry and marketing talks, I refer to the trap of commodity marketing as one of the drivers behind many of the changes we’ve seen in our industry. By definition, in a commodity market, prices over time will hover in and around breakeven. And unless you’re a low-cost producer with a business model that eliminates any significant risk, that is not an appealing proposition.
In a commodity market, mid-sized producers will continually be eliminated as economies of scale and or superior management continues to raise the bar. It’s no accident that someone says their cattle are walking more pounds off their ranch than ever before but yet aren't making any more money than grandpa did. That’s the essence of a commodity market; only the most efficient prosper, and the definition of "efficient" gets more stringent with each passing marketing cycle.
This is why the low-cost mantra may keep you in production, but unless coupled with growing the top line, a person will never break through the commodity trap of high risk, low margins and capital intensive.
However, that is not the type of commoditization I want to talk about today. Sociologists are talking about a trend they call “perspective commodification,” which is defined as the progression of thought, whereby the commodities we consume are seen in abstraction from their origins. In laymen's terms that means people don't know where there food comes from or how it is produced.
I believe it’s this trend that has created a vast majority of the problems our industry is experiencing on the animal welfare and environmental fronts. It also explains why we could essentially slow down domestic exploration and production of energy, and then be surprised when eventually told we are too dependent on foreign sources of oil.
Jill Carattini says, "In a culture dominated by consumption, commodification is becoming more and more of an unconscious worldview, and one that is shaping our habits of interpretation across the board." She talks of how religion is being seen more like a commodity as well, letting people pick and choose portions they may like and disregard others, even though they may be linked together.
It allows people to isolate and compartmentalize issues in a way never done before, allowing the contradictory to be reconciled.
That’s why our presidential candidates can promise to cut everyone's taxes, raise spending and yet balance the budget while growing the economy. That’s why people will look at an individual picture of a rancher and farmer and assume they love the land and their animals, but still believe the industry they represent is full of abuse to the land and animals.
Our challenge as an industry is not only to confront the micro issues constantly being advanced, but to understand and proactively address these broader issues. That’s because it is these disconnects that allow people to develop positions that have the effect of just making us shake our head in disbelief.
Perhaps the best thing we can do is to help people reconnect to the story of agriculture, and that is probably the greatest benefit of the growing localized food trend. We have to build a bridge between agriculture and the consumer, something that wasn't needed 20 years ago.