Wednesday, August 03, 2005

It's about control

Let's get down to the brass tacks today. I don't ever know what I'm going to write about until I stand out in the driveway in the morning looking out over our field on the edge of Dallas. It's quiet here, with no neighbors within ear shot. So today is what bubbled to the surface in a flood was what drives the distribution of production and marketing. And that's control of the product for marketing purposes.

I'll repeat what I've written before, information that's down in the Archives. I know there are only a couple of people reading the archives, because my traffic report gives me how long a particular viewer is on line. I can see too, that there are four of you reading my blog at the moment. Word of mouth, which is how you are finding out about my blog in Alaska, says that a real buzz is starting up. Besides I get e-mails from appreciative viewers and they are from some real movers and shakers.

Except for the loyal viewers in Sweden, Australia, the East Coast, and now out to Westward who are probably searching Blogger for blogs with key words they are interested in, which are in my Profile. I'm just sorry I don't have time right now to make blogs on some of the other things that beg attention like restructuring in the seafood industry does, because a lot of viewers just go on their way without reading.

Back to the point, "taking back control" was the thesis of the talk by John St. John who spoke on restructuring in the Florida citrus industry. They had the same problem, a lot of product, and wasn't getting to the consumer in a form they wanted it in. The canned orange juice was retorted and had a burnt taste. It was the same as up in Alaska, and probably all over the world where the secondary production and marketing is decided by people other than the primary producers.

These decisions are crucial to the financial health of the primary producers, but there is no working relationship, and there can't be by the nature of the arrangement. In the case of Florida Citrus Mutual, they got a state grant to start an Association (which was in the millions of dollars) and it was the Association that invented the product forms (frozen concentrate), processing techniques (shippingwhole oranges in ethelyle gas), and marketing strategies that we all experience today. It wasn't the processors who had the incentive to do this, and they weren't going to do it FOR the growers.

Another good example of successful restructuring is the formation of the Blue Diamond brand growers Association. Ray Wadsworth was the one who told me about them to start with. These nut tree growers were getting just a couple cents a pound for their almonds until they got together and formed an Association. They then had the resources to come up with a better extraction process and ended up getting 35 cents a pound. Again their business partners, the processing plants, didn't have the incentive to make any breakthroughs.

If you are serious about restructuring, sending kids to college, upgrading your equipment, getting out of debt or any other goal that requires a decent return on investment, go to this Blue Diamond site and poke around. There are lots of services for the producers, payment arrangements, ways to communicate with the Association management, etc. You'll be tremendously encouraged about the potential of the Regional Seafood Development Associations that are now in the works in Alaska.

The risk now, is that the Regionals in Alaska won't develop professional business plans that reflect the best of the Lower 48 models, and the fishermen will think they are hokey and not going anywhere. The great Alaskans who wrote the Alaska state Constitution had many models to look at and they did, adopting the best of them all. Alaskans won the fight for independence from the big canning companies in Washington D.C. in 1959, but they never won the battle in Juneau.

I don't want to kick into high gear yet on this, because the fishermen are still out fishing. But look at one more example, Tree Top brand apples. They are an Association of 1700 apple growers. They must have had excess production too, because they were able to fill an order for 57 million dollars worth of apples a year, for McDonalds. We've been told by ASMI that we couldn't sell to McDonalds or any fast food chain because such a market would suck up more fish than we could produce.

Well, a $57 million order is something the seafood industry could easily fill. Salmon or any other species isn't going to replace hamburgers any time soon. Salmon patty sales was the comparison that was used to shoot down work in that direction. It would probably be something like smoked salmon flakes in a green salad or something. Who wants to eat a salmon patty anyway? I never do. Salmon patties is the only thing that will utilize Alaska's predominant secondary product form in any quantity. There are even fewer people that want to eat salmon patties than the canned salmon they are made from.

But if the Seattle canning companies can get Juneau to buy into just promoting traditional product forms by default, by advertising "wild," then nobody can break into processing, because retorts and canning equipment are too expensive, and yields a low margin. Even though the margins are low, the Seattle packing companies do manage to keep control so they keep their jobs. And what jobs they are. They are well into the six figures, everything taken into account.

The point is, with the absence of any other large-scale marketing organizations for seafood in Alaska, this is the sorry state of affairs you end up with. More fishermen will have a chance to vote on what state of affairs they would choose, low fish prices and no say in marketing, or all the say in the world in marketing and good prices.


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