Food processors offer perspective on consumer trends

Jan Shepel

Madison — For many large food companies, demands for sustainability and animal welfare are increasing concerns as they process meat, make milk into dairy products or make any number of other food products.
Kim Stackhouse-Lawson, PhD, is Director of Sustainability with JBS, which she called the “largest protein company in the world.” Her company is the world’s largest processor of beef and leather and is behind only Nestle and PepsiCo in size as a food processor.
She was part of a panel convened by the Professional Dairy Producers of Wisconsin (PDPW) recently to talk about issues shaping the food industry. Many of them revolve around how customers of these large processors and the end-use consumer view the systems and processes that created the food.
Stackhouse-Lawson said her company has nine facilities in the United States (including one in Green Bay) and five of those facilities process dairy cows. In all, the company processes 28,000 head of cattle per day along with 125,000 head of pigs per day.
Increasingly the company’s customers are asking where those animals came from, if they were handled in a respectful way and if there was responsible management of land and water resources on the farms where they were produced. Sometimes labor issues are also factored in by customers.
The company is highly integrated, she said, as they feed 2 million cattle per year in their Five Rivers Division. For those animals, she finds it an easy task to tell customers how animals are fed and handled. But for the other 75 percent of the animals handled by the company’s processing plants, it’s a little more difficult to provide those answers.
“Our customers look at us and say what do you mean you don’t own the animals? When that cow gets to us she may be 48 hours away from your culling decision. Even a person buying beef for a retail market doesn’t have a lot of experience in this space,” she told the audience of dairy farmers.
“What works the best is to connect our customers with you,” she added. “Animal welfare is a huge risk for us, especially on the dairy side.”
JBS USA Holding, Inc, is a wholly owned subsidiary of JBS S.A. a Brazilian company that is the world’s largest processor of beef and pork. JBS USA is also a majority shareholder in Pilgrim’s Pride Corporation, the second-largest poultry company in the United States.
The company doesn’t have its own brand, like for example Tyson Foods would, in the grocery store.
Stackhouse-Lawson, who previously worked as the National Cattlemen’s Beef Association’s director of Sustainability Research, said younger consumers have less trust in food processors and purveyors than their parents.
If JBS were to have a bad day and it gets out, it will impact 15,000 other beef producers as well as the Five Rivers Division of the company she said.

Professional Dairy Producers of Wisconsin

BST questions

Goedhart Westers, vice president of Business Development with Grassland Dairy Products, Inc., was on the panel because his company has recently decided to ask all its producers to quit using Posilac – the recombinant bovine somatotropin used on cows to produce more milk.
He told the dairy farmer group that the company has been arguing with its customers for 10 to 15 years about the value of rbST to dairy farmers. “We have told them that this is a tool that is needed.”
It is an important decision to the 850 patrons who send milk to Grassland’s butter plants. (The company also buys milk from other plants.)
“This is not an argument with Posilac,” he said. “It’s not up to me. It works for a lot of farmers.” But he admitted that there have been consumer issues with the injectable recombinant cattle hormone since it was introduced to the dairy industry.
For Grassland it is more a question of competition. Large processors in Wisconsin have declared their products rbST-free and that created competitive issues for the butter processor. “It used to be an issue in Class I and II,” he said, but now it is also an issue in whey that goes into very high-value products like pharmaceuticals. “It’s no longer an issue that goes into one or two product categories.”
Increasingly, as whey goes into products that cater to international customers, there has been a clamor for rbST-free products.
Westers said that in addition to pressure from end users, there has also been pressure on the supply side. As the European Union removed its milk production quotas, a glut of milk from that region came on the market – and all of it is rbST-free, since use of the product is banned there.
“If you want to bid on business, it has to be rbST-free. That’s what put pressure on the bST conversation.”

Built on dairy

Deb Arcoleo, director of Product Transparency with the Hershey Company in Hershey PA, said Milton Hershey consciously sited his business in dairy country in Pennsylvania, building his business and then building the town around it.
She said it is one of the last large-scale chocolate factories that uses fresh milk and the company has “deep, generations-long relationships with dairy farmers.” But as time goes on, the demands of the buying public have changed.
 “There is a fundamental shift going on in Big Food,” she said and the company doesn’t take it lightly. “There are fundamental shifts in what people expect and it’s coming at us very fast. We have to move or we aren’t competitive.”
 The company “doesn’t take the opinion of four women in a focus group” but spends from “six figures into the millions of dollars” on consumer research on what people want. “The truth is that the facts don’t really matter that much. If someone decides they don’t want to feed that to their kids it’s really the bottom line.”
Hershey has done a consumer trust survey with the Center for Food Integrity and 57 percent responded that they felt that big food companies put their own interests ahead of consumers. For small start-up food companies the survey found the rating was better – only 29 percent of consumers felt that way.
Arcoleo said that the survey revealed some distrust of large farms and holds companies like hers responsible for things like animal welfare and labor rights. “When we get pressure on us, it trickles down,” she said.
The Hershey Company’s CEO set out on a passion project of transparency in 2014, she said, intended to tell people what they want to know about their food. Arcoleo led the “project looking glass” which is now launching a smart label with 13 companies who will all present a “consistent set of information” on their products.
She called it a “great first step” but admitted “we are getting hammered by the ‘just label it’ activists.”
The QR codes – those little square of white and black that can be scanned with a smart phone to get further information – are “infinitely scalable” Arcoleo said and are a good step toward “telling a transparent story.”

Dean Foods

Dr. Jennifer Walker, DVM, PhD is director of Dairy Stewardship for Dean Foods, a dairy company with 30 regional brands and “TruMoo” which she called the only nationally branded chocolate milk.
Dean unloads a tanker of milk every 80 seconds at its 65 dairy plants. Walker said she’s happy to take Dean customers to dairy farms, but there’s no perfect dairy farm, and she’s not sure if that exercise achieved the necessary goals.
As a practicing dairy veterinarian for many years, she knows that de-horning is one of the issues that is on consumers’ radar, as far as animal welfare.
She also noted that there’s a lot of social science research that shows people “want something and won’t pay for it.”
In states that have passed “animal welfare” oriented legislation they are generally based on the principle of “you have to be nice to animals” but they are usually poorly written and often don’t help animals, she added.
Asked about how the company responds to a situation like animal abuse allegations or under-cover videos, Walker said that “if a company like hers just cuts and runs, then the cows are not going to be any better off.” In some of instances of under-cover video, there was immediate pressure for the milk buyer to cut off that farm.
Stackhouse-Lawson said that their company policy is to follow-up with audits at the farm and third-party verification to determine if it was a disgruntled worker situation and if conditions were remedied.
She said customers don’t “expect a perfect story” but want to see processors working toward goals.
The panelists agreed that they are looking for a balance between science and passing public scrutiny but noted that the United States is a country rooted in consumer choice.
It doesn’t always make sense but every company really tries to find that balance, they said. If nobody buys their products, not a lot has been accomplished.
Asked about the hot topic of genetically modified (GMO) ingredients, Arcoleo said that most consumers don’t understand the issues or what it means.
Grassland’s Westers said “people have opinions and people make decisions,” adding that the whole GMO debate worries him. “It gets back to how you run your farm.”
The panelists agreed that “telling the story all the way back to the source” and traceability are two key things that are on their radar screens for the future.