Monday, October 7, 2013

A&W Announcement a Win-Win for Agriculture?

The A&W Canada announcement came almost on the heels of Chipotle Mexican Grill's "The Scarecrow", while the Twitterverse was still reeling from Panera Bread's E-Z Chicken campaign this summer. But frankly, I was a little surprised with the backlash. Aside from the disappointment over not sourcing Canadian beef, in my opinion the announcement was straightforward and non consequential. My general dislike of A&W's food wasn't going to change now that I could buy a "free from" burger, and while I suspect I am not their target market, I struggle whether this value proposition will draw new customers through the orange door.
Nonetheless, I've been unable to shake this nagging feeling since hearing Dr. Lowell Cattlet speak of the '2 sisters of farming' last month. We are witnessing agriculture in Canada and the U.S. diverge in two, very opposing directions. While small-scale, niche farmers can co-exist with commercial ag producers, there appears to be a growing gap between the two. The former is moving closer to the end customer and the latter group, responsible for the vast majority of agriculture output in our economy, has found itself increasingly at odds with the messages seemingly crafted by the 'other side' (whoever that might be).

Our initial reaction is defense, because we are so accustomed to playing this role; then shock. We are still farmers and so passionate about what we do, we can not imagine anyone discounting this. We have inadvertently lost touch with our customers, as much as they have lost their connection to the farm. This is why we need to let our guard down and take notice. We are witnessing a shift in agriculture worth celebrating. 

People want to pay more for food. They are demanding "all natural" chicken burritos and hormone-free burgers, and we need not be scared to supply this demand. In fact, we should promote these channels. Afterall, increasing demand still causes prices to rise when supply is limited. This should be good for farmers, because like it or not, we supply the inputs for fast food chains. We also must not fear adjusting to meet this evolving demand, because although competition reduces prices, this is an opportunity of higher value than the "cheap commodities" we're producing today. The fast food giants purchase the majority of the world's food commodities, and as they adopt sustainable sourcing, demand will only grow further for these higher value inputs. A fair return for the producer will become non-negotiable as these multinationals realize they can not sustain success long-term without healthy, profitable suppliers.

Now, back to A&W for a moment. There are two potential outcomes. First, their customers love this differentiation, and A&W sales grow, requiring more beef. Today, they do not have sufficient supplies, in their mind, of Canadian beef, however I suspect with ongoing pressure they will be looking to work with producers to change this. To me, that is only an opportunity for Canadian beef producers to further differentiate their product. The other alternative is, A&W customers do not really care about the origins of their Mama Burger, so there is very little impact, which means it's a non-event. This is undoubtedly a step to get ahead of the competition, and I think a bit of a mis-step by not working closer with producers, but I am positive there will be others move the same direction. Fast food chains know their customers better than we might imagine and they are the epitome of an optimized production process. A decision that adds cost is not done lightly, and yet I think this is not the last announcement of this type. Fast food giants are going to shift the industry, either because their customers demand it or they see it as the right more for their business.

Either way, producers who are well positioned to take advantage of these opportunities quickly will benefit the most. Indeed, there are many incredibly innovative farmers profitably producing high quality, sustainable crops and livestock already who realize "more for less" is not the answer. Particularly in a future where more land, water, and energy simply do not exist. In some ways, supply management actually helps this in Canada, but this is not a strategy our policymakers will pursue broadly, so we must drive this change ourselves. There are certainly risks, and that is why we must learn from companies like A&W and Chipotle on how to navigate the obstacles. We can not learn if we are not listening though, and if listening is half of communication then isn't it also half of agvocating? Without repeating Real Ag Debra's entire post (a must read), perhaps people really don't want nor need to know that much about where their food comes from. Rather, we need to listen more about what they're trying to tell us. I think a message is being sent and hope we are not so busy agvoating we don't hear it. 


  1. Great points Jen. Our initial reaction is defence, which I think finds it's roots deep in the pride we have for raising healthy livestock and healthy crops. I think you are right when you say that this could increase demand for beef produced without the use of added hormones, but I don't believe it increases demand for beef in general. It shifts a meat eater, to a different kind of meat eater. I think it transforms them into a wary meat eater, worried about what is contained in a burger. It's not a bad thing when someone asks questions, but it is a bad thing when they don't ask questions and assume one to be healthier or 'better' than the other without understanding all the pro and cons. I guess I'd like to see more facts enter into the debate, not just over A&W, but over all food production - instead of simply using buzzwords that people struggle to define.

  2. Andrew, they aren't wary of anything. Wary consumers don't consume. The 'nothing added' burger is just a line extension of the commodity burger.

  3. I tend to agree... if I'm concerned about the health of my food, I'm likely not going to visit A&W for dinner tonight, regardless of options. That said, I totally agree we can not let perceptions get in the way of science. Regulatory bodies must look to science to set the guidelines and 'rules' by which the industry plays. There is so much information avaialble today though it's a struggle to know what is fact and what is fiction about any sector or industry. The way we do something today however, may not be the best way to do it tomorrow, and we have to challenge ourselves to think this way in our farming businesses.