As you read this, you will hopefully have completed the readings from last week’s first letters and articles in our new Consumer Corner, a concept I love. For too long, the consumer has been put in the corner as a bit of an afterthought, at least by some here in the Midwest. Sometimes we have even thought consumers have gotten in the way of agriculture. Phrases like, “She doesn’t understand us,” and “Doesn’t he know that without us, his family would starve (or at least run out of toilet paper),” have been mumbled, sometimes even shouted, in the board rooms and marketing offices of many agribusiness firms. Maybe we should be a little more humble. Maybe we don’t understand her all that well either, and maybe the supply chain that brings food to his market is dependent on someone besides just farmers.
Consumers are coming out of the corner now more than ever. Consumer–stated preferences for “farm to table” and “buy local” have expanded into food safety fears, $10/pound chuck roast and signs limiting buyers to one chicken, carton of eggs or jug of milk. With these limitations, the appreciation, or at least awareness, for where food comes from has never been higher. Everyone from raw materials producers to post-consumer processors have become aware that there’s an entire system at play. It’s no longer just about us.
Twenty years ago, our Center changed its name from the Center for Agricultural Business to the Center for Food and Agricultural Business (we still refer to ourselves by the acronym of CAB in case you were wondering). Consolidation was changing the system that produces food in the U.S. and around the world, and we imagined there would be fewer people and fewer organizations involved in efficient production. Land and livestock would be concentrated in fewer hands which would allow specialization and capital investments driven by efficiency. There would be more precision and more automation. Impediments to the process of bringing food to consumers would eventually be overcome with the result of food and agriculture being more closely related. There would even be some integration between growers, packers, shippers and maybe even retailers. Some of those changes have come more quickly than we thought, and some take longer. As we look ahead though, we MUST understand our consumer customers better if we’re going to survive and thrive in this system.
That being said, consumers are customers. What they buy or don’t buy and why they do or don’t do this ultimately triggers an entire system that is put in place to serve them. This isn’t new; we know this. But what IS new is that understanding consumers isn’t optional.
Maybe I’m a little biased. You see, I work in a department of forty or so agricultural economists, but with my PhD in consumer behavior, I’ve always been intrigued by what makes buyers behave the way they do. The one takeaway I would provide after nearly 20 years of studying behavior is that human beings are not rational. This means we can’t understand why people do things by thinking only rationally. We can’t ask people what they think and expect their actions to align with what they say. All we can do is look at how they behave, study the humanness that defines all of our irrationality and try to keep improving.
The last I checked, every one of us is a consumer. No one puts Consumer in the corner.
ConsumerCorner.2020.Letter.06
