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DAVID KRUSE

By Staff | Jan 8, 2016

McDonald’s is going to be trouble. It is going down the path of Chipotle which means it will dictate more and more the protocols that ag producers must adopt to sell to its supply chain.

McDonald’s suppliers are going to have to have cage-free chickens, forgo antibiotics for livestock, keep sows in pens instead of in stalls, and they are going to source verifiable sustainable beef (whatever that is).

Foodie-type restaurant chains like Chipotle Mexican Grill got all of this started. They set politically correct protocols for suppliers as a marketing strategy with which to brand themselves.

Seeing the competition, McDonalds decided to compete by joining them and therefore if all the restaurant supply chains are doing the same thing it dilutes the brand impact that Chipotle, Panera and others are pursuing.

This means that in order to differentiate their brands they may turn up the heat demanding more and more from suppliers.

They are now telling producers how to load hogs. They balk however, at volunteering to compensate producers for added costs resulting from the demands being made of them in order to access the market of these restaurant supply chains.

There are large poultry, egg and livestock producers that are going along with it because they have to. This is their market, they need access to it and when told how high to jump they do.

There is a lot of market power rolling down the hill on ag producers. It will eventually drag grain producers into the arena as well as they are told the politically correct way to produce if they do not want to be denied access to a market.

Every once in a while I read something that I wish that I had written. That happened when reading an article by Henry Miller in Forbes titled, “Chipotle: The Long Defeat of Doing Nothing Well.”

This article reads, “Let’s be clear: The source of the company’s woes is a marketing-driven propensity to exploit current food fads, even if it diverts the corporate focus away from what should always be job one – safety.

“Instead of buying from the most technologically advanced farms, Chipotle instead makes a point of sourcing as many ingredients as possible from nearby farms so it can tout ingredients as locally grown.

“But this locavorism misses some of the important lessons of economics 101 – namely, the benefits of specialization and comparative advantage. It’s no coincidence that the cultivation of crops such as corn, wheat, potatoes, and wine grapes is clustered in certain parts of the country best suited to them.

“And in spite of what one might intuit, chances are that buying local isn’t any more environmentally friendly. Chipotle eschews high-tech pesticides and genetically modified seeds in favor of rice and beans bearing an organic designation, as if that were an indication of a superior product. It’s not.

“Contrary to popular wisdom, organic produce is not pesticide-free. Instead, it’s grown with primitive pesticides that can be significantly more hazardous to humans and to the environment.

“Organic agriculture also lacks the benefits of the many crops genetically improved with modern molecular techniques, like Bt corn, which reduces the population of insects that allow toxic molds to infest corn. (Organic corn has higher levels of the toxins produced by these molds.)

“Chipotle rejects modern synthetic fertilizers in favor of suppliers who use manure on their crops. This approach may be all natural and organic and make some customers feel warm and fuzzy, but it should not come as a surprise that applying stool, feces and excrement to growing fruits and vegetables significantly raises the risk of spreading disease.

“Bruce M. Chassy, food science professor emeritus at the University of Illinois at Champaign-Urbana, scoured U.S. Food and Drug Administration data to conclude that organic food is four to eight times more likely to be recalled over safety concerns than conventionally grown products.”

It’s all about branding. My first and last visit to a Red Robin occurred when I noted, “non-GMO ingredients” were used on the menu. Red Robin must be a Chipotle want-to-be. If it’s so dumb not to know that GMO food ingredients provide benefits, then that is no place that I would trust to eat.

Chipotle showed that the level of misguided political correctness is directly related to the ineptitude of its ability to perform food safety.

Beef Magazine noted, “The lawsuit – which has been filed on behalf of all California consumers who purchased Chipotle after April 27, 2015 – further alleges that Chipotle’s menu has never been completely GMO-free.

“The suit argues that Chipotle is deceiving customers with its claims, manipulating these health and environment conscious consumers out of their hard-earned money by aligning their claims with the demands of their ethical eating choices.”

I think that someone should test claims of Red Robin and other foodie brands who are attempting to use these claims when the odds heavily favor they are deceptions.

Such claims should be third-party verified. The irony is that these foodie restaurant chains want to audit their suppliers without being audited themselves.

As Henry Miller wrote, this is all about exploiting food fads with no actual value resulting from it, a reduction in animal welfare and higher costs for consumers.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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