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US Agriculture: Farmers Woo Big Chains Hoping For Menu Placement

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CHAMPAIGN, Ill. — Ted Higginbottom was happy to see a dish heavy on peanuts this week on the menu at an Asian chain restaurant, but he said the Mandarin Kung Pao didn't land there by chance.

The 60-year-old Texas peanut farmer said his industry has pushed hard to get peanuts onto menus at restaurants like Pei Wei – a national, 163-location chain owned by P.F. Chang's. Whether its peanuts, cranberries, oats or other products, producers have found that successfully marketing to national outlets can pay off with big sales.

"If not for organizations like the (National) Peanut Board, there would not be as many peanut farmers in the U.S.," Higginbottom said. "Some of them wouldn't be in business."

Some note that successfully wooing big chains can lead to pressure to reduce prices, but Higgenbottom said that wasn't a concern for the peanut board. The organization started as a decades-old quota system that set peanut farmers' production levels and prices was about to end in 2000, throwing growers for the first time into a free market.

The board needed buyers – any buyers – and fast.

"All the sudden it became very important to that farmer to market his peanuts," said Higginbottom, who farms near the West Texas town of Seminole and was a past chairman of the board.

The board raised fees from farmers, then began spending several million dollars a year promoting cooking with peanuts or derivatives such as peanut flour. The result is the number of top 500 U.S. restaurant chains that have dishes with peanuts on their menus has increased by 39 percent in the past four years and peanut butter almost 50 percent, according to food industry data firm Technomic.

The organization also works with universities to get peanuts onto their campus menus, Bob Coyle, a marketing team leader with the board, said.

"It helps obviously to increase the use of peanuts, but it also helps us in not just education, but in feeding a consumer that is going to become a bigger consumer in their lives," he said.

Growers of some commodities, such as Canadian oats, don't have such a sophisticated marketing arm.

"It's something we need to get more involved with," said Manitoba oat farmer Bill Wilton, president of Prairie Oat Growers.

But Canada's oat farmers – who grow most oats sold in the United States – have benefited since the 1990s from research indicating that oats can help reduce the risk of heart disease. Canadian oat exports have more than doubled since the mid-1990s, according to the Canadian government.

"Basically when you realized that oats can lower cholesterol, that was really why oats jumped," said Randy Strychar of Oat Insight, a trade publication.

Oats' healthy reputation has won it spots on menus at restaurants such as Starbucks. Next year, it will likely snare farmers a giant new customer: McDonald's plans to add oatmeal to its menus across the United States.

McDonald's won't say how much oatmeal it hopes to sell, but Wade Thoma, the company's vice president of U.S. menu management, said it plans to buy a lot of oats. Sales in test markets have been good, and not just during wintry weather, he said.

"Despite having one of the hottest summers on record, we actually did really well continuing to sell oatmeal through the summer," he said.

With 14,000 U.S. locations, it's a big deal to farmers when McDonald's adds their product to its menu.

Almost 40 years ago, McDonald's helped transform the egg business, introducing the Egg McMuffin.

Since then, any number of chains have added their own breakfast menus, including Subway, which has started offering breakfast in all of its 24,000 stores, said Kevin Burkum, senior vice president of marketing at the Park Ridge, Ill.-based American Egg Board.

"What we see then is tremendous growth, more stores offering breakfast," Burkum said. "And we have seen hundreds of millions more eggs being sold as a result."

Egg farmer Jacques Klempf of the Dixie Egg Company in Jacksonville, Fla., said a simple formula will tell him what a new egg seller might mean to his industry. A 5,000-restaurant chain, for example, that sells 200 egg breakfast sandwiches a day at each location will need 365 million eggs a year. That's enough eggs to keep 1.3 million hens, or a couple of good-sized farms, busy.

Wisconsin cranberry farmer and processor Cheryl Urban agreed big buyers can be great news, but she warned of a downside.

Urban said trail-mix makers and companies that make private-label products for grocery chains have been especially good customers. She's leery, though, of the bigger, more glamorous potential buyers, such as restaurant chains that sometimes feature cranberry-flavored baked goods.

The prices they demand sometimes don't pay the bills, she said. And, if the big chains can't quickly sell a lot of the product, they sometimes abruptly stop trying.

Urban said she'd just talked to a buyer who was selling her cranberries to a company she wouldn't name.

"He was buying an awful lot of product from me to supply this brand," she said. "It didn't hit the sales numbers they wanted to, and they just discontinued it."

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