Enjoying DC views

Enjoying the view

Session 4 Journal - Our visit to Indianapolis

Our group arrived Thursday afternoon in the city of Indianapolis.  The city appeared to be full of trees, green grasses, and small rivers and canal.  We dined at Tavern on South near the football stadium and what appeared to be a working coal processing facility.  We were greeted by Matt Perkins, Dr. Mark Armfelt and Amanda Miller.  Matt Perkins official title is ‘Marketing Consultant’ in the US Food Industry & Consumer Affairs division of Elanco.  Dr. Mark Armfelt is Elanco’s ‘Dairy Technical Consultant’ and Amanda Miller is Elanco’s ‘Director of Marketing.’  At dinner we had a brief introduction to Elanco and their fight against world hunger.  We learned Amanda grew up on a dairy farm and is still active in her family business.

Friday morning we took a Ford Econoline to Greenfield to the Elanco headquarters.  The drive was about a good half hour.  We were able to witness first hand the impact of the drought on the corn fields as we drove to Greenfield.  We were all given guest badges with our name, group, and date of the visit upon arrival at the headquarters.  We were then shown a brief video on Elanco’s mission, global perspective and goals.  Behind us was an outline of the history of the company. 

We met in the ‘Elanco Trusted Solutions Board Room.’  John Metzger, the ‘Director’ of the Global Food Industry & Consumer Affairs division welcomed us.  Before John worked for Elanco, he worked for the DFA for 20 years and his fun fact was that he grew up playing baseball with Ken Griffin Jr, but blew out his arm in baseball.  John outlined the goals of our session with Elanco. 

The goals were:

1)      Share Elanco’s global industry insights & perspectives specific to the dairy industry

2)      Learn from Western United Dairy Leaders issues and challenges in the dairy industry for the next 5 years

3)      Collectively develop a plan to begin addressing those industry areas most important to us.

John played a video about Elanco.  Elanco was established in 1954.  Elanco is a world leader in developing animal health products and services which enhance animal health, wellness, and performance.  Elanco has more than 2,300 employees and offices in more than 40 countries while conducting business in over 70 different countries.  The vision of Elanco is simple, it’s ‘Food and Companionship Enriching Life.’  Their mission is to ‘Make life sciences work better for people by transforming animal protein production and companion animal care.’  Elanco’s food animal division focuses on helping to contribute to a safe, affordable, and abundant food supply through disease treatment and management, production efficiency, and food safety.  Their companion animal division focuses on strengthening the human-pet bond through products for parasite control and separation anxiety. 

About four years ago Elanco acquired Ivy Animal Health which is now Elanco Knowledge Solutions (EKS).  EKS takes producer data and transfers over to processors to calculate overall output.  This helps measure the efficiency of technology, develops science based control and helps maximize proficiency.  The Food Safety division is currently focusing more on poultry, pork, and beef.  This division is working on improving the handling of foods just before consumption.

John and Matt pointed out the issues Elanco sees in the dairy industry.  They listed them as:

• Cap on Supply
• Need for Efficiency
• Environmental & Regulations
• Shortage on Demand in CA, Need to Export
• Consumer Knowledge

Elanco’s Global Food Industry Team focuses on:

• Safety – Human & Animals
• Consumer
• Economics & Efficiency
• Sustainability
• Policy & Trade
• Food Safety

Leadership and collaboration are very important in order to make any of this work.  Retailers must be comfortable with all food inputs and play a large roll in the supply chain.  It is estimated that there are only 500 people who determine what’s in stores.  Those people are the CEO’s and owners of retailers.

During our dinner meeting the night before, Amanda brought up the numbers 50-100-70.  When we arrived at Elanco and watched the first two video’s we saw that number again.  Basically it means that in the year 2050, we will need to produce 100% more food than we (humans) have ever produced in the history of man-kind.  In order to achieve that goal, we must depend on 70% of our food coming from efficiency-improving technology.  There is a large emerging middle class throughout developing countries.  As the middle class grows, the demand for protein from eggs and meat grows.  Elanco estimates the demand for dairy products will exceed global supply in the next 5 years.  As the number one milk producing state, we should utilize all technologies and innovations available to us to meet that demand. 

Matt passed out a POP quiz to all of us dairy leaders.  The questions included:

1)      If you have two options to present to a customer, which should you present first – the more costly or the less costly?

a.       The right answer is to choose the more costly first.  Start with the larger request (Ex: Would you pledge $50 to our cause? If you can’t do that, would you purchase a couple candy bars at a $1 each?) 

2)      Is it better to tell a customer what they stand to gain by moving in your direction or what they stand to lose if they don’t?

a.       The right answer is to stress what they’ll lose if they don’t

3)      If you have a new piece of information, when should you mention that it is new – before or after you present it to the customer?

a.       The right answer is before, when the news is fresh

4)      If you have a product, service or idea that has both strengths and weaknesses, when should you present the weaknesses, early or late in your presentation?

a.       The right answer is early to help establish trust.

After the POP quiz Matt showed us a video on the 6 Principles of Persuasion.

1)      Law of Reciprocity (Obligation): Give away or do something of perceived value to or for someone, and they will feel compelled to do likewise. (Ex: Don’t worry you’d do the same for me!  They invited me to their party, so I have to invite them.  Ask for a large favor and then offer a small request after getting rejected)

2)      Law of Scarcity: The majority of people will do far more to avoid losing something they already have than they will to get something they don’t have (People want more of what they can’t have).  Fear of loss is a much greater motivator to most than the possibility of gain.  When faced with too many choices, most people can become paralyzed and do nothing at all.  (Ex: Limited supply, one-of-a-kind offers, window of opportunity, exclusivity of information)

3)      Law of Authority: the more expert a person is in a given area, the more features (not benefits) that person needs information about to make a decision.  Credibility is one of the common denominators of success at influencing others. (Credibility = Expertise + Trustworthiness)

4)      Law of Consistency: Once people have taken a public stand on an issue it is increasingly more difficult to get them to change their minds.  To change an attitude or opinion, first change the behavior.  In short, you have to get people to do something if you want them to say “yes!” (Get the other person to write something down and participate in the discussion)  If you want to change your own or someone else’s behavior, the first thing you can often do is change the environment.  When one is exposed to a new environment, the brain has to change; it enters into a state of flux and typically becomes more suggestible.  NEVER ask a question that will pin the other person down to a permanent “no” response relative to your request.  Once most people choose something, write something down, or say something, whether it makes any sense or not, whether it is in their best interest or not, they tend to stick with that decision regardless of how that decision was made.

5)      Law of Consensus: The more people there are in a group the more likely that the vast majority of the group will comply with whatever the leader is proposing.  Nothing binds two people, groups, or nations like a common enemy.

6)      Law of Liking:  People feel most comfortable when others seem to be like them in appearance, beliefs, or values.  (People want to be comfortable)  People like to talk about what the love and what they know about! (Ask questions to demonstrate interest in them.  Talk about yourself only to the extent necessary to point out areas of mutual interests or similarities.)

After Matt’s presentation on the principles of persuasion, we went over a US retailer milk & yogurt study.  The study included about 6,500 participants.  Consumers chose their products based on 1) Freshness and 2) Pricing.  About 10% of the participants said they seek out Organic or Hormone Free.  1 in 3 consumers stated that they read the label; however less than 1 in 10 aren’t influenced by what they buy.  The most popular label in stores is “Natural.”  The best selling label is “Guaranteed Fresh.”  Labels including Antibiotic Free and rBST free only really matter to Organic consumers.  Most consumers do not know what rBST is and don’t pay attention to it.  Consumers automatically believe there are hormones and antibiotics in their products when their products aren’t labeled but others are labeled antibiotic and hormone free.

We then broke for lunch and met with Garret head of innovation.  He uses input from consumers such as ourselves to drive innovation in four areas (nutrition, production, reproduction, and disease).  Since there is a combination of Organic and Conventional dairy farmers in our group, he asked each of us what are some of the issues we face on the dairy and wish we had solutions for.  Garret told us it takes about ten years for a new molecular entity (product).

Organic:

• Pneumonia Calves
• Scours
• Worms/flies/parasites (Organic producers are able to use ivermectin and cydectin)
• Low production due to hay/pasture quality

Conventional

• Transition Cows – Anionic slats not palatable
• Milk quality (prevention)
• Fertility increase production
• Mastitis
• Fresh cow – immunity
• Sexed Semen bulls (angus)
• No WX tetracycline
• Salmonella SPP => Endovac
• Wet DDG reduces components
• Naxcel – Make less expensive
• Generic Polyflex
• Feed efficiency – Probios (no heat stress) handled ration changes better, but is hard to feed
• Pink Eye Treatments
• Myco – cull cows & calves
• #1 issue is Employees! – Employee Training

Dr Mark Armfelt presented us on some of Elanco’s products.  The first product he presented was Posilac (rBST).  bST is short for Bovine Somatotropin which is a naturally occurring protein hormone produced in the pituitary gland of dairy cows.  BST helps direct nutrients to the mammary gland for increased milk production.  There are four variants of BST (190 or 191 amino acids).  Cows with high bST levels including those treated with rBST will produce calves with naturally higher bST levels.

Unhealthy cows are unable to absorb rBST effectively.  Inadequate nutrition & poor management will produce lower production levels even though bST levels may be higher.  It has been observed that cows with higher levels of BST have a higher pregnancy rate.   

The human body is unable to absorb bST because it is a protein hormone and not a steroid.  Proteins are species limited, don’t accumulate, are not stored in fat, are digested, and break down quickly. 

The benefits of rBST is obvious: more milk per cow.  With more milk per cow, less land is needed which in turn has a lower environmental impact.  If one million cows produced 10 more pounds of milk daily, the environmental impact would be reduced by 9% annually (334,000 fewer animals required to meet demand, 2.5 million fewer tons of feed, 540,000 acres less cropland, 3 million fewer tons of manure, and the carbon footprint would be reduced by 1.85 million metric tons).

Ms. Gail Neuwirth came to speak to us next regarding the corporate responsibility and food security programs for Elanco.  Since hunger is Elanco’s cause they are determined to make Indianapolis a hunger free city by 2015 and to lift 100,000 families out of poverty & hunger by 2025.  Indianapolis Hunger Network was formed to align all the organizations which deal with hunger.  They work with schools and nutritionists and have created a 211 number which anyone can call to find food.  They created the ‘Backsack’ program which gives children food to take home over the weekend in a backpack.  Their nutrition program teaches healthy eating.  Elanco provides employees with paid time off to volunteer.  They also have one global day of service.  Elanco works with ‘Heifer International’ which helps provide community development, animals and education.  They currently have three different project areas and are helping over 8,300 families.  Jared is the only one in our group who has actually participated in the program before.  His class helped a family get a goat.

After Gails presentation, Amanda came to speak to us about the challenges to making safe, affordable, and abundant food.  Some consumers, but not all, have the disposable income for choice which Elanco calls the 3 Rights: Food, Choice, and Sustainability.  Hunger is currently the number one health problem in the world.  There are over 25,000 deaths a day due to hunger.  ‘Hidden Hunger’ is an imbalaMexico only 60% of people can afford meat one time a week.  nce of calories (soda & chips, school lunch programs).  Globally, we need affordable protein (eggs & dairy).  In

Technology includes practices, products & genetics.  Genetics equates to just under 200lbs of milk.  In order to feed China, we need 36 million cows with the current production levels.

The significance of the egg – The United Kingdom (UK) currently has an egg shortage which was due to increased prices due to cage laws.  The laws/regulations eliminated consumers choice to buy eggs.  Currently the average American eats 174 eggs a year which equates to 6.5 billion hens.  In order to satisfy demand, chickens will need to produce more eggs (current trend 17.7 billion by 2050).

Even though we have increased production levels in dairy we’re behind 25% from 10 years ago.

Choice is a consumer right.  About 95% of consumers just want affordable abundant food.  4% of consumers are considered ‘Lifestyle’ which buy luxury/gourmet foods, Organic, and/or have gardens.  1% of consumers are considered the ‘Fringe’ group.  These consumers tend to be the most vocal and powerful.  They are the ones who impose food bans, restrictions, and propositions. They are also most likely not to purchase dairy or meat products.

We have 9 billion people to feed in 2050, but have very limited resources.  Today, both beef and dairy utilizes less land and water and produces less manure.  We need to understand the global impact of our decisions both socially and economically. 

After Amanda’s session, we were given a tour of the headquarters by Nancy Wethington.  Nancy took us through both buildings and into the customer service call center.  She said the only complaints they get regarding their products is usually the packaging.  The entire building is filled with photos of people from all over the world and of agricultural operations.  The buildings themselves are made of mostly recycled material and are what us Californians would consider very ‘green.’ 

Overall it was a great experience for us dairy leaders.  Elanco’s staff was very friendly and welcoming to us.  We learned a lot about the relationship between agriculture, retailers, and consumers on a global level.  In California, we come in contact with more people in the ‘fringe’ group.  We are fighting them every day to produce quality milk which helps feed families all around.  We respect everyone’s choice to eat or drink what they like even though it may include tofu and soy or almond beverages.  Our role as dairy leaders is to continue educating everyone including both consumers, retailers, processors, and dairy farmers on our good dairy husbandry, quality milk products, and to always think globally.