07/21/1995

Catfish Producers Stand to Win Big in Industry Promotion Campaign

AUBURN, Ala. - Southern catfish producers could gain more than $25 million this year thanks to the catfish industry's recently launched 1995 national advertising campaign, said an Auburn University economist who studies generic commodity promotional programs.

The Catfish Institute, a Mississippi-based organization dedicated to promoting farm-raised catfish, is sponsoring a $1.96 million advertising campaign that includes television commercials and ads in major magazines scheduled to run from mid-July through November. Every $1 spent on catfish advertising generates about $13 in additional revenues for the industry, according to Henry Kinnucan, an AU agricultural economist and researcher in the Alabama Agricultural Experiment Station.

Kinnucan, who has studied generic industry-sponsored promotional programs for 15 years, has examined the effects of the farm-raised catfish promotional program since its inception in 1987.

"In its first year alone, the advertising campaign increased consumer awareness of farm-raised catfish by 15 percent, improved consumer attitudes toward catfish by 3-6 percent and increased at-home and restaurant purchases of catfish by 12-13 percent," he said. "Considering impacts on the price of catfish and the quantity sold, each dollar spent on advertising is estimated to generate about $13 in additional income for producers. Our research suggests the catfish advertising program has been successful, both in terms of increasing consumer demand for catfish and improving the income of catfish producers."

"Our 1995 media campaign will include a series of 30-second spots on the Cable News Network and the USA Network, along with one- or two-page ads in Better Homes and Gardens, People, Bon Appetit and other magazines," said Bill Allen, executive director of the Catfish Institute. "We anticipate that up to 73 million consumers in our target audience will see our ads at least once."

To fund The Catfish Institute's marketing efforts, 10 catfish feed mills in Alabama, Mississippi, Louisiana and Arkansas voluntarily pay $5 per ton of feed sold. In Alabama, member mills are Alabama Farmers Co-op in Decatur and Supersweet in Tuscaloosa. Other members, Goldkist of Atlanta and SF Services of North Little Rock, Ark., also are major feed suppliers to Alabama catfish producers.

The member mills expect to sell approximately 580,000 tons of feed this year, generating $2.9 million for catfish promotions, Allen said. In addition to the $1.96 million advertising strategy, other projects include catfish export promotions in Germany and a national public relations campaign, Allen said.

"Our studies have also shown that the advertising program is actually under-funded," Kinnucan said. "Increases in the budget could be justified on economic grounds. We found that an 18-99 percent increase in the advertising budget is warranted if the objective is to maximize producers returns.

"We singled out the catfish advertising program for special attention for several reasons," he added. "First, because farm-raised catfish is a relatively new commodity, the information-dissemination role of advertising is more important and increases the potential effectiveness of the generic campaign. Second, because of the relatively small budget for promotion, catfish offers an interesting case study for determining whether a limited budget can be used effectively to increase demand for a product."

When the first catfish marketing campaign was conducted in 1987, it focused primarily on print advertisements. Television commercials were first used in 1994. Kinnucan and other researchers are comparing the effectiveness of electronic media advertising to prints ads.

"Both have an effect," he explained. "The question is, what is the best allocation of a fixed budget? We want to identify the optimal allocation of the industry's promotional funds."

In 1994, when a processing company filed suit to end a producer-funded promotional campaign for almonds in California, the U.S. Department of Agriculture called Kinnucan to testify as an expert witness in support of the program. He used the catfish industry as an example of how well such programs can work. In addition to catfish, Kinnucan also studies beef, pork, dairy and cotton promotions.

According to U.S. Department of Agriculture statistics, Mississippi has about 95,000 acres of commercial catfish ponds; Arkansas, 19,500 acres; Alabama, 17,900; and Louisiana, 11,800. Together, these states are responsible for 94 percent of U.S. catfish production. Nine counties in West Alabama have 75 percent of the state's acreage; Hale County alone has a third of the total acreage. Catfish production is worth $60 million to Alabama farmers, and catfish processing is valued at $105 million to the state's processors.

Allen said the tonnage of feed each state buys is roughly proportional to its acreage in ponds. Thus, Mississippi makes about 66 percent of the feed purchases that support the promotional program, and Alabama buys approximately 12 percent.

-30-

News from:

Office of Ag Communications & Marketing

Auburn University College of Agriculture
Alabama Agricultural Experiment Station
3 Comer Hall, Auburn University
Auburn, AL 36849
334-844-4877 (PHONE) 334-844-5892 (FAX)

Contact Jamie Creamer, 334-844-2783 or jcreamer@auburn.edu
by Robyn Hearn

July 21, 1995