Evaluating the impact of a great idea
Editor’s note: Tammy Humm Donelson is the agency communications director at Osborn & Barr Communications, St. Louis.
Rising oil and gas prices affect every aspect of the United States economy as businesses, farming enterprises and households look for ways to reduce energy bills. Electricity, diesel and gasoline are the traditionally dominant fuel sources. However, propane is a safe and cost-effective alternative that has not yet achieved its full potential.
The Propane Education & Research Council (PERC) has made significant inroads to increase awareness of propane as an alternate resource. Recently, it has focused its efforts on the agricultural industry. This industry, which primarily uses electricity and diesel fuel, used 1.6 million gallons of propane in 2002, and that figure continues to grow as producer attitudes toward propane use improve.
These positive changes in market attitudes and increased propane usage are due to PERC’s ongoing development of new applications. PERC has a lot riding on its assessment of market potential, and providing funding for the right idea could turn the tide for propane the way the light bulb did for electricity. With hundreds of possible projects vying for limited funding, PERC’s challenge is to evaluate the impact of each project on the propane market, prioritize it and demonstrate its value to the propane producers funding the organization. It’s a process that requires great insight into market needs and motivators.
To help simplify the process and provide a solid basis for their investment decisions, PERC turned to St. Louis-based Osborn & Barr Communications. The agency developed a series of research projects that eventually helped PERC prioritize and fund new technologies that could change the nature of farming. A comprehensive, user-friendly research matrix now allows PERC to identify and quantify market potential for new agricultural technologies such as thermal agriculture, crop drying, engines, food safety, waste treatment and other agriculture production areas.
Knowing the market
In phase one, Osborn & Barr provided an initial evaluation of the attitudes of agricultural producers and propane retailers toward propane for agricultural applications. A total of 750 growers/producers reflecting the estimated universe of growers/producers were interviewed in January 2003 about their energy use and perceptions of various fuel sources. The study showed that producers/growers estimate they spend an average of $32,813 per year on energy resources for their operations. Propane and electricity were rated similarly for customer service, environmental friendliness and availability. However, propane was considered to be much/somewhat better than electricity in terms of cost and energy efficiency by 31 percent and 29 percent of the respondents, respectively. Growers/producers were also asked about their awareness of advertising and promotional messages for various fuel sources and their likelihood of using propane for specific energy applications.
Armed with information about grower/producer attitudes toward propane use in general, the next step was to be able to accurately evaluate the funding requests submitted to PERC. The PERC Agriculture Advisory Committee (AAC) needed decision-making tools and information across major agricultural commodities regarding the value, potential and impact of new propane-fueled applications on the propane industry. This meant in-depth knowledge of many different livestock operations, produce growers and specialty-crop growers was needed so the potential return on investment for agricultural commodities could be compared. Literally, they needed a way to compare apples to oranges.
Comparing apples to oranges: qualitative and quantitative research
Such an open-ended project was challenging from the beginning. At the first meeting with the client, Osborn & Barr was asked to get a proposal ready…due the next morning. The AAC was meeting in just a few days and not again for another six months. Osborn & Barr was happy to oblige and developed a proposal for a comprehensive research project that covered the top 33 commodities tracked by the United States Department of Agriculture. The goal of the research was to clearly define the size and scope of the total agricultural market from almond growers to wheat growers and beef producers to turkey producers.
The problem wasn’t too little data, but an unmanageable amount of data that needed to be consolidated into a usable format. Statistics on the overall numbers of each type of producer and grower, along with geographic region breakdowns, were collected. Interviews were conducted with individual producers, growers and key trade associations to ground the data with qualitative studies to find the meaning behind the numbers. The interviews uncovered a host of unmet agricultural needs as well as specific suggestions for future propane agriculture projects.
Commodities with similar production practices were organized around common themes and overarching findings. The research included detailed information regarding production operations, primary applications, major machines used and fuel usage. With this information, Osborn & Barr developed a production model assessing potential areas of investment. Related costs for each commodity, organic crop and livestock production were calculated.
Since organic producers represent an emerging market, a separate survey measured organic producers’ knowledge and awareness of propane agriculture applications. The operations and costs of traditional producers and growers were compared to the organic production process. Research assessed which production costs were highest across commodities and within organic production and which groups were spending the most on fuel and energy. In sum, Osborn & Barr created a robust information tool that could be categorized and viewed in numerous ways to reveal where the greatest opportunities lie.
“As we developed the structure of the report, we did not aim to tell PERC where they should invest, but instead wanted to provide them with the appropriate information to make the best decisions,” says Jeff Whetstine, account executive, Osborn & Barr. “The research provides an educational tool that will increase AAC’s overall knowledge and understanding of the commodities, their production processes and marketplace conditions. As a result, AAC now has a tool for assessing which agricultural commodities hold the greatest potential return on investment, as well as which commodities should and should not be targeted. This tool is designed to empower AAC to make strong decisions regarding potential investments.”
From idea to reality
The in-depth quantitative and qualitative research provided by Osborn & Barr puts PERC in a better position to evaluate the likelihood of success for new or improved propane agriculture technology. The research will be the foundation for assessing marketing potential and disbursing funding for new propane projects. The next investment could be anything in any sector of the agriculture industry. Eventually, these projects will benefit the agriculture industry through new, efficient products and the propane industry through higher demand.
PERC is already putting its new knowledge to use in evaluating the potential of a project for the cotton industry.
“I think PERC will refer to this research quite often. It gives PERC the information necessary to deliver on its promise to use member funds responsibly and effectively. It’s a great stepping stone for PERC’s future in agriculture, and focuses them on really meeting the needs of producers in many commodity categories. The most exciting thing is the Propane Education & Research Council can make these ideas become a reality,” Whetstine says.
To that end, PERC has just released a request for proposals to design the technology for propane-powered weed control, one of the most frequent requests cited in the research. The technology will burn weeds between rows of crops without harming the desirable plants. Since the technology replaces herbicides, it is of particular interest to organic growers. Production of the time- and labor-saving technology could be in place in two years.