It Does Not Pay to Bad Mouth Farmers

Cause and effect is an easy thing to say but a difficult thing to prove.  For example, an extremely cold winter does not mean a new ice age is coming; or back to back droughts do not mean global warming is real; or because bees are dying that a particular pesticide is to blame.  Yet our government, the media, many scientists, and people in general are quick to jump to the assumption that because 2 things happen at the same time, one is causing the other.  Thus, what I am about to suggest may not have a cause and effect relationship — but, then again, it just might.

Two years ago the restaurant chain Chipotle Mexican Grill embarked on a marketing strategy to set themselves apart and drive business from the lucrative millennial generation. Their campaign was to claim their food was better, safer, and healthier because it came from local, organic, and humane sources. Furthermore, they portrayed food that came from other sources as bad. They used very creative and aggressive commercials to make their point. These commercial videos offended and outraged the traditional ag community. The protestations of ag bloggers and farm groups fell on deaf ears as Chipotle stock rose and sales increased.

The farmers that Chipotle was so quick to disparage may have the last laugh. Things are not going to well for Chipotle Mexican Grill.    Chipotle’s stock shares have fallen 7% to $495.92.  In addition, last  Thursday  77% of shareholders voted against the company’s executive pay plan. The result will prompt a full review of how much Chipotle pays its top executives and how its compensation packages are structured. Last year, Chipotle co-CEO Steve Ells’ total compensation was $25.1 million, while his counterpart, co-CEO Monty Moran, received $24.4 million. The company’s chief financial officer took in $9.9 million, and the chief marketing officer got $5.9 million.  Wall Street analysts say Chipotle’s top management earn 5 times more than top execs in other similar restaurant chains.

Another restaurant chain that has attempted to gain market share by bashing farmers is Panera Bread.  But here, too, the financial news has not been good. Panera Bread’s first-quarter results disappointed investors, especially when it announced that same-store sales rose only 0.1% systemwide. Panera has seen their shares fall almost 12% in the past year. If you remember, top Panera officials angered the ag community when they referred to farmers who use biotechnology as “lazy.”

One major food chain that has not bashed farmers but instead works with farmers and farm groups has seen significant growth and financial success. McDonald’s has seen its profits improve and its stock increase by over 7%. The company has also boosted its annual sales per share every year for the past 10 years. That is a very impressive track record. Dodge Ram truck, which swelled the heads of farmers with their “God Made A Farmer” ad, has also had good fortune, being named Motor Trend’s Truck of the Year in 2014.  Sales of Ram trucks in April were up 17% over a year ago. 

So, to sum up, brands that have negative messages about farmers find themselves in some financial difficulty, while those who work with and support farmers have success.  Cause and effect? Well, I can’t say. It is an interesting coincidence and one that top executives in the food industry might want to consider before they start bashing farmers. 

By Gary Truitt