If possession is nine-tenths of the law, then perception is nine-tenths of reality.
The perception of participants in the U.S. Pork-value chain is that there are plenty of communication gaps within the system.
That’s a boiled-down assessment of the findings from a survey conducted by the Philip Morris Management Corp. and the Vance Food Systems Group, which includes Pork magazine.
While there has been much talk about the industry’s need and desire to communicate throughout the pork chain, many segments have felt a void. The survey set out to identify and quantify those communication gaps.
It started with 3,200 surveys sent last June and July to producers, packers/processors, distributors/wholesalers, foodservice operators and grocery retailers. The response rate was 30 percent – excellent in polling terms. More significant, among those responding you will find:
- Pork producers – 10 of the top 50 commercial producers, 40 producers marketing more than 50,000 hogs a year.
- Packers/processors – eight of the top 10 pork slaughterers, eight of the top 20 meat processors.
- Distributors/wholesalers – 20 of the 50 leading wholesalers, including seven of the top 10.
- Foodservice operators – 67 retail foodservice operators, 247 institutional foodservice operators.
- Grocery retailers – eight of the 50 leading retailers, 11 percent of respondents had more than 100 stores.
“Our ultimate goal, and one that exists across the value-chain segments is to ensure that pork maximizes its market potential,” says Katherine Trent, Philip Morris Management Corp.’s manager of ag relations. Philip Morris’ interest in the pork-value chain stems from its many and varied food companies, including Oscar Mayer and Kraft Foods.
Knowledge can be a reflection of communication successes and failures, and the survey found a general lack of understanding about each other’s businesses across the pork-chain segments. For example, 10 percent of retailers say they are knowledgeable about pork production, and 5 percent say they understand something about swine genetics. Whether those figures are high or low is up for interpretation. It’s likely those margins have improved during the past couple of years.
Naturally, each segment knows the most about its own business area. Also, participants have some understanding of the segments that they work most closely with, but after that their knowledge base drops off dramatically. Areas that pork-chain participants uniformly say they know the least about are swine genetics and pork production.
Communication may mean different things to different people, and the survey did not define the term. Therefore, the responses are based on the individual’s perception.
A packer may say – “I communicate with producers all the time” which to him might mean the weekly conversation about delivering pigs.
A producer may say – “I still don’t have a clear idea of what my packer wants” which might mean he/she wants to have more dialogue about things like pork quality, and how to design his/her pigs to meet long-term market demands.
Survey participants did give the overall pork chain relatively high marks for communication.
Still, 23 percent to 46 percent of participants across all segments rate communication as fair to poor, which means there’s plenty of room for improvement.
Would they like to increase communication with others in the chain in terms of business operations and opportunities? The response was a resounding “yes”.
“If each sector better understands each other’s contribution, the improvements will multiply throughout the chain,” says Gary Ledger, a pork producer from Washington, Iowa. “Open communication will lead to greater coordination and chain-enhancement solutions.”
The key then is to evaluate who wants to communicate more and with whom. “As a whole, participants are not looking to communicate back through the chain,” says David Meisinger, assistant vice president of pork quality for the National Pork Board, “that’s a missed opportunity.” That also is how communication disconnects begin.
For example, 58 percent of producers want to build more dialogue with packers/processors, but only 24 percent of packers/processors polled return the sentiment.
In contrast, 45 percent of packers/processors say they want to step up communication with the foodservice sector, but only 25 percent of foodservice respondents agree.
As one of the early links in the pork-value chain, it is little surprise that producers are the most interested in increasing dialogue throughout the chain. “Producers greatest fear is that they won’t receive reliable enough information to properly position their businesses for adequate long-term profitability,” says Ledger. (See graph)
While the number of respondents from other segments who want to talk with producers more seems low, remember there’s no way to know what that status was even five years ago – perhaps much lower. This survey provides a baseline, from which future progress can be measured. “Our communication with producers and customers is much better than it was five years ago, and it continues to improve,” says Scott Eilert with Excel Corp.
Excel is one packer who’s taken an active role to increase communication throughout the pork chain. “We have conducted seminars with broad pork-chain audiences to address technical issues and develop communication plans,” says Eilert. “There’s no secret, it just takes discipline and commitment.”
Despite differences in who wants to communicate with each other, one common thread surfaces. “The consumer is the most important link in the pork chain,” says Al Kober, with Clemens Meats. Everyone wants to increase communication with and about consumers. “The consumer will continue to put pressure to communicate through the chain, especially on issues like food safety and quality,” says Joe Leathers, a meat-merchandising consultant.
Improving communication can be a complicated and elusive thing. By a dramatic percentage (76 percent to 86 percent) all participants, regardless of their place in the pork chain, acknowledge that obstacles exist when it comes to sharing information. Lack of time is certainly a chronic obstacle for everyone everywhere. (See graph)
But the fact that “No one asks for information” and “Don’t know what others need from me” scored so high illustrates the severity of the communication breakdown. Lack of relationships, which ranked fourth, is why that information exchange is not occurring. “But that presents an opportunity,” says Leathers.
The way a business is structured also can create challenges in bridging communication gaps.
Perhaps most significant is the fact that 91 percent of all respondents think there’s something to be gained by improving dialogue. “There is an understanding that there’s a cost of not communicating,” says Ledger.
Some of what’s to be gained is a more satisfied consumer, and the potential to expand markets. Certainly the pork-value chain is leaving potential profits on the table by not improving communications.
“The case-ready product movement has and will continue to be the reason there needs to be more communication within the chain,” says Kober.
Some other industries have addressed their communication challenges by becoming vertically integrated. The pork-value chain still has the opportunity to reap the same benefits through sharing information and vertical coordination.
Where there are gaps, there are opportunities. “The first step in problem solving is identifying the problem,”says Meisinger. “This study did just that.” Now it’s important to communicate this to all members of the pork-value chain.
Directing the Survey
A steering committee representing a cross-section of the pork-value chain helped guide the survey and analyze the results. Those participating include:
- Scott Eilert, research director, Excel Corp.
- Al Kober, director of meat sales and merchandising, Clemens Meats
- Gary Ledger, pork producer, Premier Swine Breeding Systems
- Joe Leathers, meat-merchandising consultant
- David Meisinger, assistant vice president of pork quality, National Pork Board
- Marlys Miller, editor of Pork magazine
- Ken Parnell, vice president, meat/seafood for Wal-Mart SuperCenters
- Mike Van Ess, senior director of sourcing and meat procurement, Oscar Mayer