Milling & Baking News - April 23, 2019 - 17

Industry Activities

Checkoff program takes center
stage at A.B.A. annual meeting
Continued from Page 1

that would support the category as
a whole," she said.
To pursue this objective, the G.F.F.
has spent more than a year consulting with leaders of the baking and
milling industries, communicating
with executives of companies large
and small, Ms. Cochran said. The
decision to pursue a checkoff emanated from these discussions and the
recognition that such a program represents the best option for the challenges facing the industry today.
"Why (a checkoff program)?" she
asked. "It's a mandatory program
that allows the industry to address
a shared problem at scale."
The current structure of the G.F.F.
does not allow for such a large program or have mechanisms to ensure an equally shared burden, she
said. Based on a review of 20 other
checkoff programs, Ms. Cochran
and an industry steering committee
concluded a checkoff program has
the potential to enhance the industry's reputation and "give consumers permission to eat our products
again."
Delving into details of the proposed program, Ms. Cochran said
an annual budget of $15 million is
planned, of which 85% will be paid
by bakers and 15% by millers. The
program size is smaller than the
$23 million the G.F.F. tentatively
put forward as its target earlier
this year. To raise $15 million, 16c
per cwt of wheat flour used to bake
breadbasket products will be paid
into the program. Bakers will collect
the millers' contributions.
Breadbasket products are defined
under the proposal as fresh and frozen sliced bread and unsliced bread,
rolls, buns, bagels, naan, pita and
other flatbread, English muffins and
biscuits.
Products bought frozen by a supermarket or restaurant operator
and baked off are included. Excluded
products include baked foods sold
in the frozen section of the grocery
store, such as frozen Texas Toast.
Also excluded are organic products.
Ms. Cochran said this exclusion is by
law - bakers of organic bread may
opt in but may not be mandated to
participate. Certain small businesses
also must be excluded.
In Ms. Cochran's remarks and in
bakingbusiness.com / world-grain.com

the town hall discussion afterward,
the threshold for inclusion emerged
as a point of concern.
"The vision was to rally a focused
group of bakers and millers," she
said. "We defined that as about 80%
of the market. We weren't quite sure
what that was going to be, but we
thought that was the right band."
The steering committee estimated
80% of the market would be covered

we expect our return to be based on
historical averages."
As an example of a successful
checkoff initiative, Ms. Cochran cited
the mustache campaign of the milk
program or the "It's what's for dinner" campaign of the beef program.
"These campaign initiatives really changed consumer perceptions,"
she said.
For breadbasket products, decisions will need to be made on whether investments should be focused on
changing consumer perceptions, retail programs, food service programs

Source: Grain Foods Foundation

if companies that purchase 1 million
cwts of flour for bread participated.
When she began soliciting feedback
on the million-cwt figure from bakers, Ms. Cochran was told that the
figure was too high.
To arrive at a new threshold, the
U.S.D.A. told the committee to conduct an economic study that would
help find what the Department calls
a "natural break."
"Knowing we needed to go lower
from an industry perspective, and
knowing that U.S.D.A. wanted a
strong justification, we commissioned research, and this (750,000
cwts) we believe is the natural break
in the industry," she said.
For their spend on the checkoff
program, millers and bakers should
expect a return on investment of
between 5 times and 15 times, Ms.
Cochran said.
"The more mature the program is,
the lower that number tends to be,"
she said. "The dairy program tends
to be about $5 (per dollar invested).
The younger programs tend to be
higher. Somewhere in there is where

or scientific and nutrition research.
Or a mix of these options.
Updating the bakers on the timetable, Ms. Cochran said the steering
committee is finalizing documents
to be submitted to the U.S.D.A.
These will be reviewed by the Department and then published for
a 60-day comment period. Subject to the comments and possible
changes to the program, the Department will determine whether the
program should be launched for
what is planned to be a three-year
trial period, ahead of an industry
referendum.
"At every step, we as an industry are engaged," Ms. Cochran said.
"We can make modifications. We are
in control of how this will be crafted. Then we launch the program.
"This isn't the dairy program
that's $100 million. This is a program
that we're going to put out there for
$15 million. We think it's targeted
and will produce results quickly. We
think we can produce results on unit
sales and consumer perception in
that window of time." MBN
Milling & Baking News

April 23, 2019 / 17

http://www.bakingbusiness.com http://www.world-grain.com

Milling & Baking News - April 23, 2019

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