Branding for Success
Trademark law, product certifications important to many cooperatives
By Bruce J. Reynolds, Ag Economist
USDA Rural Development
bruce.reynolds@usda.gov
randing is a way for businesses to
differentiate their products and services and
establish a reputation that will build
customer loyalty. In 1990, 93 fruit and
vegetable cooperatives owned 482 brands,
with 443 as registered trademarks. The Patent and
Trademark Office (PTO) currently has 255 active trademarks
for fruit and vegetable products owned by businesses with the
term “cooperative” in their corporate name.
So, even without the benefit of a branding survey more
recent than the one USDA undertook in 1990, a very limited
Internet search at the PTO Web site suggests many
cooperative brands are actively being used in agriculture.
Brands vary as to the type of information conveyed and
the audiences targeted. For example, some brands are used by
grower associations in the wholesale trade, while others are
widely advertised and prominently used in consumer markets.
Not every branding program needs to aim for national or
global fame. The resources required to establish famous
trademarks, such as Sunkist, are out of reach for many groups
of growers. Yet, branding can be accomplished with a smaller,
but still, useful scope, involving relatively low-cost steps that
capture value for farm products.
Of course, several factors about a particular product will
influence branding feasibility or type of brand to develop. For
example, with some commodities that cooperatives sell in bulk
form, branding can be developed as an identity-preserved
program. Many co-ops brand services in addition to products,
which are often licensed to other cooperatives or businesses.
AMS Certifications
A good starting point for differentiating products is to
consider some of the inspection and certification
programs offered by USDA’s Agricultural Marketing
Service (AMS).
AMS marketing agreements provide inspections and
certification for agricultural product distributors who are
voluntary signatories of an agreement. By contrast, other
AMS inspection programs are compulsory, such as those in
marketing orders. Certified product attributes in a marketing
agreement may offer more opportunity for branded
differentiation to the extent that they are not mandatory for
all similar products in a specific market.
Differentiating a product as “organic” is a significant
attribute. Consumer demand for organic food has rapidly
expanded, with AMS certification playing a critical role in
this expansion. Certification under the National Organic
Program is mandatory for products offered or advertised as
organic. In contrast to verifications of end-product standards,
the National Organic Program involves certifying adherence
to a specific set of production practices.
AMS provides auditing in its Identity Preservation
Program, which producers and handlers can use to assure
customers of product origin. Identity preservation is useful
for many row and tree crops and livestock products. In the
fruit and vegetable sector, AMS provides Good Agricultural
Practices and Good Handling Practices Audit Verification
(GAP & GHP).
AMS auditing and certifying programs are a way for
growers to differentiate their products, and when combined
with cooperative marketing, members achieve critical mass
for gaining better market access. A brand can be linked to
certified quality attributes by applying either small stick-on
labels or stamp printing on bulk produce or printed on
packaged products.
Trademarks
In the United States, trademarks are created by adoption
and use in connection with products and services. Federal
government registration of a trademark can assist an owner’s
effort to prevent others from using brands and logo designs
that are likely to create consumer confusion about which
companies are the source of particular products.
A trademark also gives a business more control in how
others may use its brand. While a brand can be developed
without registering it as a federal trademark, registration
protects its value and helps grow the goodwill of the business
associated with its brand. A registered trademark may
develop into a significant asset of the cooperative.
To obtain a federal trademark, a brand must be used in
interstate commerce. However, a trademark used only in a
single state can also develop rights that apply in that
particular state. When a brand is only used in a relatively
small market area or is of interest to a select type of buyer,
such as a wholesale distributor, the likelihood of its being
copied or used without permission may seem remote. The
major concern in situations such as these, however, is not
unauthorized use, but rather the possibility of being
prevented from using the brand to enter new markets after
spending years building a strong reputation in a single market
area.
How could this happen? Common law only offers some
rights for brand owners in their traditional operating
markets. A competing brand with a similar name and design
used for related products may hold a federal trademark that
might be a basis for a ruling that could confine the
unregistered brand to its traditional market area.
Furthermore, the dividing lines between industries and the
types of products or services offered in consumer markets
changes rapidly.
What seems at one time to be unrelated products or
services, or geographically separate
markets, may gradually become
integrated. For example, many farm
supply cooperatives are increasingly
serving the lawn and garden needs
of non-farm customers in remote suburbs of large cities,
which may bring them into competition with new and
different businesses. A plausible future scenario is new
competitors with service marks that could conflict with the
brands of a cooperative that would not have been in the same
market in an earlier period of time.
Service Marks
The term “trademark” frequently refers to the brand
name of a product, but it is also a general term for other
types of branding. Trademark law includes branding of
services and product certifications that involve different
rights and regulations. These other types of trademarks also
relate to different business applications used by cooperatives.
Branding a service is often similar to the naming of a
business, and many service marks are also the trade name of a
company or cooperative. Typically, when referring to a trade
name, the indicator of organizational form — such as Inc.,
Ltd., or LLC — distinguishes it from a service mark when
the same name is used. For example, a cooperative has the
trade name GROWMARK Inc., and GROWMARK is its
trademark for products and its service mark for “agricultural
cooperative services, namely, cooperative advertising and
marketing services and retail distributorships of agricultural
products.”
Service marks are frequently used by federated
organizations. They can function as a collective membership
mark for members to use to indicate their membership in the
federation. In addition, a federation may develop a program
of services for its local members and have it registered under
a service mark to maintain control over its contents for the
membership.
Service marks are also applied to many other business
structures or situations. Consider a co-op that wants to offer
its service program in a new market where much of the
customer base is non-member. The co-op may want to
contract with other businesses or co-ops for carrying out its
service program in the new locations. As part of such a
contract, it would need a registered mark to license the
service program to others.
Certification Marks
Trademarks are also used for certification. Candidates for
this type of certification in agriculture are defined growing
regions and product attributes created by following specific
agricultural methods that are not routine or standard practice
for an industry. The owner of a certification mark may
function as the certifier, who specifies the criteria for
products that can be labeled with the mark. The French have
a long history of using this type of marketing strategy, such as
Roquefort cheese or Champagne as examples.
Many U.S. agricultural groups have obtained federal
certifications, such as the mark for Vidalia onions. Recently,
the Peanut Growers Marketing Association has been granted
a certification mark for peanuts grown in the tri-state area of
Virginia, North Carolina and South Carolina.
As an example of an agricultural practice, the California
Certified Organic Growers obtained a certification mark for
organic farming methods in 1990, which were related to
standards set by the California Organic Food Act of 1978. As
demand for organic foods expanded, there was a public policy
need for a single standard in the U.S. market. In 2002, the
National Organic Program established the only standard for
organic product certification in the United States.
Certification marks are often used for an exceptional or
special type of agricultural or food handling practice. AMS
inspections and certifications usually apply to standard
industry practices, as in the case of the development of an
industry standard for organic production procedures.
Financing brand development
Growers can participate in AMS certification programs
that would distinguish their products from those supplied to
the market by non-participants. If dealers have a preference
for products with a particular certification, growers can take
advantage of such opportunity by identifying their products
with a brand.
Gaining a reputation with consumers usually involves
supporting a brand with advertising and promotion. There
are some federal and state government programs offering
assistance with promotion for special conditions, such as
export marketing. Also, USDA Rural Development’s Value-
Added Grant Program would be applicable for a marketing
program of adding value by improving quality and branding
the products (www.rurdev.usda.gov/rbs/coops/vadg.htm).
Co-branding is an effective way to gain access to the
distribution system of large food processing and packaging
firms. Many firms want to use products from farmer
cooperatives or from those that can certify a quality attribute.
The related article (left) about the peanut certification
describes a co-branding opportunity.
A program for branding agricultural products can be
implemented in several ways and with different objectives.
Aiming for an internationally famous brand is not the only
worthwhile objective. For many commodities branding is
often not a cost-effective strategy except when there are
opportunities for identity preservation or some form of
certification. Even if you only market products to wholesale
dealers or other distributors, branding may help build your
product’s reputation.
The value added to a business by branding products and
services often increases over time. As consumer markets
evolve, and possibly move in the direction of customers
seeking more attributes that cooperatives can supply and
guarantee, branding will likely increase.
Certifying a reputation:
Virginia-Carolinas growers
brand their peanuts
Peanut growers in Virginia and North and South Carolina
recently obtained a certification mark for peanuts
grown in the tri-state area, which have a high-quality reputation
for taste and size. The logo for this certification
can be affixed to any package of peanuts or a product
with peanut ingredients grown in the tri-state region. Use
of the logo is handled by a licensing agreement with the
owner of the mark: the Peanut Growers Cooperative Marketing
Association, headquartered in Franklin, Va.
Peanut cooperatives have emphasized marketing since
the change in 2002 from USDA’s quota system to the commodity-
loan program. Under the quota system, peanut
producers were guaranteed a price that could not be
readily increased by promotion and other marketing
strategies. The commodity loan program offers much less
support for peanut prices. Since 2002, peanut acres have
declined, especially in Virginia.
Dell Cotton, the manager of the peanut cooperative,
noted that Virginia-Carolinas have long had a reputation
for growing great-tasting peanuts, but the impetus to distinguish
the product with a certification mark was influenced
by the recent emphasis on marketing.
History of identifying qualities
In the early history of agricultural markets, farmers
delivered to local exchanges where merchants would
estimate the average quality of an individual’s lot. But they
would pay what was often called a “hog-round” price that
made no payment differentiation for qualities. The grading
of commodities was done for wholesale markets, but not
for farmers. Cooperatives were pioneers in implementing
commodity grading for farmers and promoting quality
recognition for member products.
The federal government assumed a prominent role in
grading farm commodities in connection with the New
Deal Farm Programs in the 1930s. While cooperatives continued
to promote payments for quality products, much of
their marketing programs were built around government
stabilization policies and coordinated
with USDA implementation to help
reduce the costs of commodity programs.
Peanut and other cooperatives continue
to play a role in administering the current
commodity loan programs while also exploring
new ways to promote member products.
Creating opportunity
Management and members of the Peanut Growers
Cooperative Marketing Association had anticipated that a
certification mark would be welcomed by local peanut
companies. The benefits of the mark caught on quickly
when one of the first calls came from Kellogg about using
the logo on its Nutri-Grain bar. Their new product has the
Virginia-Carolinas peanut logo on the packaging and displayed
in Kellogg’s advertising campaigns.
Co-branding is an example of a “win-win” situation. In
this case, Kellogg will inform consumers that its source of
peanut ingredients is a region with a reputation for excellent
peanuts. For peanut growers in the tri-state region, cobranding
with Kellogg will reinforce their quality reputation
and, quite likely, lead to new marketing opportunities.
Bruce J. Reynolds, USDA Ag Economist
