USDA fights brand innovation in beef

It’s not a good sign when a government agency fights brand innovation. Unfortunately, that seems to be the case as the US Department of Agriculture tries to block a US beef producer from bringing to market a higher quality brand of beef.

The headline of the AP story tells it like it is: US government fights to keep meatpackers from testing all slaughtered cattle for mad cow.

The Bush administration said Tuesday it will fight to keep meatpackers from testing all their animals for mad cow disease.

The Agriculture Department tests fewer than 1 percent of slaughtered cows for the disease, which can be fatal to humans who eat tainted beef. A beef producer in the western state of Kansas, Creekstone Farms Premium Beef, wants to test all of its cows.

In March a federal judge ruled that Creekstone had the right to perform additional mad cow testing, effective June 1. The Bush administration and the USDA have appealed that ruling, preventing Creekstone from doing the testing at this time.

Adding value to the brand

Yes, Creekstone Farms wants to add value to its brand by implementing a testing program to provide increased assurance to customers that its meat products are disease free. It would be the first meat producer in the US to do so.

Creekstone specializes in corn-fed, hormone-free Angus beef. Its proposed testing is consistent with the comprehensive quality programs that already underlie its brand approach. The terms “premium” and “quality” are a key part of the Creekstone brand. Creekstone’s actions indicate that it takes these terms seriously—that they’re much more than packaging fluff.

Building brand quality

Creekstone does not want to invent new tests for mad cow disease (technically known as bovine spongiform encephalopathy, or BSE). It simply wants to apply the current highly restricted federal tests for BSE to its lines of beef products, so it can brand its beef as tested.

Here is Creekstone’s reply to the USDA:

In refusing to allow Creekstone Farms to respond to its customers’ preference for beef from animals that have been tested for BSE, the USDA is doggedly pursuing a course that scientists, consumer groups, trade associations and business, and members of Congress regard as a bad policy. While Creekstone Farms has taken a lead role in this effort, it is not alone in believing that the government should not prevent private companies from voluntarily testing cattle for BSE.

Raising the brand bar

Creekstone’s battle with the USDA is part of a larger struggle of innovative brands to create new markets by raising the brand bar. Often pitted against such brand innovation initiatives are larger corporations with a vested interest in the status quo, their lobbying groups, and federal agencies or parties influenced by those groups. Some deeper background on the Creekstone saga is here.

Raising the brand bar is one of the remaining innovation avenues open to US firms globally, enabling them to compete effectively in world markets through brand value delivered. This is a natural strength of US companies, arising in large part from an individualistic, entrepreneurial drive to pack more customer focus, value and quality into new products and services. Smaller companies such as Creekstone often lead in these initiatives.

Creekstone as a value-based brand

As a value-based brand, Creekstone has a sharp focus on quality. Here is a snippet from it’s full-page Quality Commitment:

What makes Creekstone Farms Premium Black Angus Beef superior? It’s our commitment to Quality. From the cattle we procure all the way through to our state of the art processing, we are committed to producing the highest quality beef in America.

  • USDA Certification
  • Verifiable Black Angus Genetics
  • Humane Animal Treatment
  • High Quality Corn-Based Feed
  • State Of The Art Processing
  • Two USDA Certified Beef Programs – Premium and Natural

Or lowering the brand bar

If the USDA (as currently directed by the Bush administration) is successful in lowering the brand bar in agricultural products, what’s to prevent similar government actions from legislating mediocrity in other business sectors, from automobiles to aircraft to computers? What discriminating customer (or foreign country) would want American products then?

When America loses brand leadership, what’s left?


4 Responses to “USDA fights brand innovation in beef”

  1. BD Says:

    Your post “USDA fights brand innovation in beef,” misses the mark.

    The US beef industry has a good reason for not testing every slaughtered animal – there’s no scientific benefit. Creakstone’s testing of all animals would not elevate their brand, it would only reinforce the fallacy that all animals should be tested. If that practice became law for all producers, the cost of producing beef in the US would rise dramatically and there would be yet another US industry flailing.

    Instead, Creekstone could do wonders promoting ALL of their process and their success in producing healthy, disease-free product – all diseases. Latching on to the latest headline hysteria is not building a brand.

    Each industry has its own complexities. When marketers fail to understand their clients, they get generic strategy applied with a broad brush. That can do a lot more harm than good.

  2. Brian Phipps Says:

    The real issue here, as indicated in the post title, is the USDA’s legal intervention to block the brand innovation of a private company in a free market economy. Lower courts have consistently ruled in Creekstone’s favor that it is totally within its rights to perform additional mad cow testing, using the USDA’s own test kits and procedures. This extra testing and attendant responsibilities are an extension of Creekstone’s existing premium quality brand, which is at the top end of beef producers. Creekstone’s beef will cost more because of its additional testing and certification. Consumers can decide if they want to pay extra for it.

    As I see it, this is really not that different from having “organic” produce next to “regular” produce in the supermarket. Some people will pay twice as much for a bunch of organic carrots even though the regular bunch can be just as nutritious and just as “safe”. It all comes down to consumer preference, and brands that deliver what consumers want.

  3. BD Says:

    The USDA’s place is an extremely important issue, but it’s not what I interpreted as the theme of of the post.

    Whether Creekstone has the right to test above and beyond USDA regs seems clear, as you point out. But that doesn’t necessarily make it a good business decision.

    And the USDA’s goals certainly have nothing to do with ‘legislating mediocrity,’ unless you swallow whole every bit of alarmist and scientifically negligent news about BSE. The USDA isn’t attempting to block brand innovation, it’s trying to keep an industry viable by establishing standards. It’s the same thing trade associations have done for decades – protect an entire industry from itself.

    In practical application (I know, that’s no fun), Creekstone or any other producer is simply ill-equipped to conduct the testing it claims rights to perform. But the struggle is getting them great headlines and good will with a certain market segment.

  4. Brian Phipps Says:

    Thanks for the feedback. This is an interesting brand issue, because I can see where beef brands can differentiate themselves on processing technologies, apart from beef breeds and nutrition.

    My understanding is that when a trade association sets standards, it’s usually to provide a quality floor, or minimum standards, that all members must meet. I’ve never heard of an industry group that sets limits on quality or innovation. That would be non-competitive, and probably illegal. (We both know that the USDA is not a trade association, in any case.)

    I would agree with the courts that it’s Creekstone’s right to innovate and make its brand as “premium” as it wishes. That’s just like Ford or Chevy having the option to provide super air bags good enough to save car passengers from a fall over a cliff. Most of us would not want to pay the extra dollars for such protection, but if a customer wants to pay for the added benefit, then there will be a market. We would not want the auto industry to be telling Ford or Chevy that they need industry permission before they try to make their products serve new markets.

    In Creekstone’s case, their mad-cow tested beef will no doubt be very expensive—too expensive for 99.9% of shoppers. But, if they can create a market, then other beef producers can use Creekstone’s example to enter that market if they choose, and the industry can profit. No one is forcing other beef producers to follow Creekstone’s example.