But when you focus on the follow up first, I think it forces you to reverse engineer your process. So as you're meeting with as a sales team before the show and you're saying, hey, this is what we want to do. This is what we want to say. This is our pitch. Right? Welcome to the Smarter Building Materials Marketing Podcast, helping you find better ways to grow leads, sales, and outperform your competition. All right, everybody, welcome to Smarter Building Materials Marketing, where we believe your online presence should be your best salesperson. I'm Beth Popnikolov, and in the house with me today, I have Steve Coffey. He is our director of growth and spends maybe more time at trade shows than at least a lot of us, if not even your average manufacturer. And with getting back into the swing of trade shows in real life in 2022, and we've got AIA coming up, which is one of the bigger ones in the summer, we thought it'd be a great time to let's just take a pause and talk about what's a solid trade show strategy? What should you be doing there? Should you even be there? We're going to get into all of it, but first and foremost, Steve, thanks for your time. Hey, Beth, great to be on the show with you. And as always, pleasure and an honor. Excited. Yeah. I'm excited. You're basically a trade show expert. We should really add that to your job. So I was talking to someone the other day actually about how the term road warrior means something different nowadays than it used to, because people used to spend a lot more time on the road at trade shows than they do, but I still spend a lot of time there. Yeah, you do. Okay, so first, let's talk about, I mean, this is really our first trade show season in two years. We tried it virtual. It wasn't great. We're just going to skip right over that guy. And it had like a little bit of a lackluster come back at the end of last year, but IBS in January, we did an episode about that actually on location together, and it was back in a big way. I think I remember 30,000 attendees were total, maybe 30,000 between exhibitors and attendees. That's big. Yeah. For a post-pandemic-ish world, that was a lot of humans in a single space. So talk to us before we dive into AIA and strategy, how have trade shows changed this year? So that's a great question. I can remember the first time I went to AIA. It was actually my first trade show in the building space, and I walked in and it was massive. It was at the Vegas Convention Center, and I just stood back and took it all in, and it was so much energy there. It was a really positive show. So I'm excited about it. I think also, to your point, the way that trade shows have changed has impacted the way that people research, the way that people in their manufacturers' audiences approach the booth, what they're looking for, what they're looking to get out of it. AIA being such an incredible show, heavy on continuing education and things like that. But I still think audiences want to see manufacturers, they want to engage with them, they want to walk in the booth, they want to talk to somebody, they want to experience it, they want to have it in their hand, outside of the samples that they have in their office. And that desire, I think, is still alive and well. I get excited going, right, in flying, getting on the plane, making my dinner reservations and going. It's still kind of exciting. So I think that excitement needs to be taken advantage of. I think companies should approach AIA this year in 2022 with a strategy, right? I think there should be a definite strategy. There's more than there would already be, just naturally, that we would just kind of go through the process of going at it with a trade show. This year, the reason I say that, is that this year, the economy is different, right? It's on the minds of the audiences that manufacturers are selling to, you know, the architect and builder, they're concerned about things that perhaps they weren't so concerned about in 2018, 2019, and as we're moving back into some level of normal, right, back in the trade shows, you know, the economy has changed. The hourly wage growth is moderate, output has declined in Q1, real disposable income has dipped for a lot of consumers, payroll continues to be an issue, you know, inflation continues to be an issue, there's all kinds of issues we can go down through the different points of things that are on people's minds. So that being the case, I think it's paramount that as companies look at AIA this year, they look at it and say, how can we take advantage of it, what's the best way that we can walk away with this show having something for us, but then also something for our customers to take away? So, I look at it as a lot of excitement, but I look at it as a huge opportunity as well.  So an example, I had, I was talking to a builder actually at IBS, and he said that he would go into a booth and he would not tell the company that he was a builder because he didn't want the generic sales pitch, right? He was worrying about availability, he was worried about pricing and labor and all of these different things. But he wanted the truth. He wanted the truth, right? And he just didn't even want to bother. And so I thought, man, what a shame that a builder couldn't, he didn't feel comfortable enough to go into manufacturer's booths who have spent so much investment in time to, you know, allow their audience to perceive them well, and he didn't even feel comfortable to do that. So, you know, I think that's where the opportunity lies and kind of making that happen. So, yeah. Don't give them the pitch, give them the real deal. Exactly. Yeah, nobody likes being sold to, right, Steve? Yep. Nope, they don't. They don't. So what advice would you give a manufacturer that is maybe they're exhibiting at AIA or they know that they're exhibiting at a trade show this year? Good question. So I think some companies are, you know, I mean, some companies are downsizing depending on the complexity that they may have around COVID. Some companies may be even bowing out and, you know, you'll walk by big open areas. Big empty spaces. Yeah. There are a lot of those at the builder's show. Yeah. Walk by one. And there was, there was not even a phone number, it was just a sign that said this manufacturer was supposed to be here and that was it. So, you know, I think companies are changing. Sometimes they're even downsizing booth size. Yep. The investment in the booth reps. We all know that the crowds aren't back to pre-COVID levels yet. AIA has a very large and healthy membership. I have a lot of optimism about the attendance rate this year. I think it'll be really good. But having a plan is so important. And I think there are a few things that are specifically important that the plan needs to consist of outside of just the normal, right? I would say, and let me start from the front to the back, or the back to the front. So I think most importantly, think about the follow-up first. A lot of people will think about the follow-up after. Think about the follow-up first. What do you want your customer to walk away with, right? Now, I think it's important for a sales rep or a sales team that's on the trade show floor to think about what they want to walk away with, right? Is it leads? Do they want to craft the perception of their brand inside the individuals that they're talking to? Are they trying to, you know, position themselves in the market a little bit differently depending on the size of the company? If it's a smaller company, they may want to be making an impact, right, growing their awareness. If it's a larger company, they may just want to be pushing a specific product more than others or establishing, you know, based on competitors and things like that. So depending on what the company themselves wants to walk away with, the customer, you also want them to walk away with something as well. But when you focus on the follow-up first, I think it forces you to reverse engineer your process. So as you're meeting as a sales team before the show and you're saying, hey, this is what we want to do. This is what we want to say. This is our pitch, right? Thinking about the follow-up and saying, hey, this is what you can walk away with. When you have an effective follow-up strategy in place before you go, it makes your floor experience a little bit easier in my opinion because the sales reps are knowing, hey, this is what you are going to walk away with. So, hey, I'm going to follow up with you Monday or Tuesday next week to touch base.  So we can, I mean, Beth, we could probably talk all day about how the follow-up, you know, strategies and things like that and how the follow-up should go. Well, but to your point, you know, knowing that, hey, you know that an email is set, it's written, it's created, it's been QA'd, it's in your email platform and even a sequence of emails, hint, hint, all with valuable information, not just sales pitches, pitches, second hint, but like, you know that that's done because often what we see is people get a bunch of leads and then they come back and it's a dead scramble and inevitably in there some other fire drill happens and suddenly the email scramble is scrapped because it's no longer a priority and now you're not following up with anyone. So if you know that's done and set, you're just emailing your contact list of warm leads, not your hottest leads because those should get personal touches, but your warm leads are going to your marketing automation specialist to just hit send and it makes the post-show hangover so much easier to handle because you're wrecked when you walk out of a trade show. I mean, it is, it's eight, nine, 12-hour days of hyped up sales conversations, strategic thought processes and brainstorming and it's like, it's the most fun. Like, it's so fun. I also agree, I'm psyched when I'm getting on an airplane to go to a trade show. I low key love it even as a digital marketer, it's fun to be in a room with that many people that are excited about what we do. But you've got to have a plan going in for what you're going to do after or it just, it just doesn't get done. Absolutely. And the reason I say that is because I sign up for every, I let everybody scan my badge, I sign up for everything I take. Everybody's cards, I give out my cards to everybody. I want to see who does follow up, right? How many people follow up on average? I would say it's probably between 20 and 30 percent. And it breaks my heart. It breaks my heart. Yeah, I know. I mean, that's even, honestly, that's higher than I would have guessed. Because we, we do the same. Like I know one year, I think it was IBIS, IBS 20, it must be 2019. So right before the world went sideways, maybe 2018. We created a specific email and registered it and everything on a badge. And then we had that badge scanned by a hundred manufacturers for these specific research purposes of like, what does everybody's follow up cadence looks like? Do you know how, do you know how many follow ups we got? How many? One. Wow. And it was from Ford. Wow. Yep. See, there you go. I think every follow up at a minimum, right? Should consist of a solid campaign, cadence of emails. It should be a solid question as well that you're asking after the show. It should prompt discussion, right? Don't just say how I'm so and so we met at the show. Here's the information, right? Ask, ask questions. How did you, how did you feel about the show? Did you learn anything? Did you get any new products? How did your education go? Your CE classes, et cetera. And then I think it should also be and include an intriguing call to action, right? There needs to be some next step that you've already anticipated them taking and developed for them to go through, whether that would consist of a, you know, a specific landing page or something like that. At a minimum, that's what you need. And when you start, when you go into the show with that follow up already created, which you should be doing now because it's coming up. It's coming up. Yeah, then I think that enables your floor experience to be a little bit more effective. Your sales team is going to be that much more effective. Yeah. And importantly, you need to have measurements of success for that follow up, right? You need to be able to say for both your presence at the trade show and the follow up campaign, how are we measuring the success of this outside of we attended and we sent it? Exactly. Are you looking for a specific number of warm leads? Are you looking for a specific number of closed sales that you can tie back to it? Wouldn't trade show ROI just be a glorious thing?  Like what's the next step you want someone to take with you? We often say you can't measure it, you shouldn't do it. And that even applies or maybe especially applies to trade show attendance. Yeah. Well, I don't think the data has to be as elusive as oftentimes marketing teams can make it out to be. Yeah. If you have that strategy and plan already in place, and then it makes the data collection process a lot easier to track, hey, this is the conversations, either the follow ups that we had from that. And I think that leads me into the second point that I think is very important and that is, first of all, to talk to people and collect the information. I ask, oftentimes ask reps and teams in the booth. I'm saying how are you, what are you hearing, right? What are you talking to your audiences about? And it's oftentimes they don't have any way of collecting the information outside of just retaining it as sales teams. And that can often get loose or lost because, and I say this admittedly, sales teams are bad at inputting data into CRM. So all of that, all of that, I raised my hand. So that's a problem, right? You lose a lot of information that you're gaining. That's information that's... Well, you're so sure you're going to remember it too. Like, it's such an intense conversation in that exact moment. You're like, oh, I'm never going to forget this guy. Exactly. And then you just do because you move on to the next exciting conversation. I mean, if you're crafting marketing plans, the information that you gain from individuals on a trade show floor is paramount. You have to be collecting and retaining that. But I think in order to get that information, it's important to collect it. There's many different ways that you can collect it. You can retain it. You can have notebooks, right? Or they can just take notes on their phones and then just have all the sales team or the reps submit that at the end of the day, the trade show, and then just collect that all into one document and then sift through it. And then you'll find, you'll bullet point the commonalities in all of the the conversations and things like that. And you'll typically get a really good pin on how people are feeling, right? But you should be asking as well if, you know, what are architects feeling? What are builders feeling? What are they asking about? What are they wanting to look at? What are the major points that they're considering? I've always heard it be really effective when you have an 80-20 rule. 80 percent should be listening and 20 percent should be talking. And most booze that you walk into, that's not the case, right? Because they're coming to ask questions, tell me about this product. You can tell them about the product, but 20 percent of it should be that you're discussing about the product because you should have a really robust digital presence where they can find all of that information that you can send them to, right? But you should be listening. You should be asking questions. What are you currently using? Right? What, you know, things like that. So I think that's important. I'm notoriously bad for when I walk up to a booth, I'll just walk right through it. I'll just slowly just walk right through the center of it. I want to see who comes up to me, engages me in conversation, right? What do they say? It's like walking into a department store, right? Can I help you? The common answer is no. Yes, I do need help, but I'm going to naturally say no. I want to see how reps interact with me, right? And that can oftentimes be really important. So be willing to talk to people who are in your booth. Don't just try to figure out, is this my target audience? And then just dismiss them if they're not. You can learn a lot of things from the amount of people and the amount of experience and the amount of professions that are in that room and for a company to take advantage of that and then input that and make sure that it comes through on the information is actually fed through the proper channels to impact marketing, to impact sales, to impact product. That's that's that's pivotal for a company to really get a pulse on the industry and how people are feeling. So I think that's a really important point. Yeah, I think you're saying something that's really important that if I'm if I'm honest, and even in our prep, we were talking about this. But if I'm honest, the conversations that I've had with certainly not all but a good amount of people within booths at trade shows over the years, they I've been really frustrated most of the time. Now, we're all friends here. I know that I read like not your target demographic. Yeah, so you're probably also I'm not getting your A effort. I I want to respect that, but I also just it annoys me. Yeah, but even still, I feel like I walk into booths. I'm pulling information out of you so often. And you're not asking me any qualifying questions. So you have no idea who I am. You've just kind of decided that I'm probably not a contractor, which in your defense, I'm definitely not.  So when I ask questions, it's interesting to me that it's not triggering in your mind, there might be something more that you would need to ask me about projects or solutions or experience that's going to help you qualify me.  Exactly. I'm also not trying to steal people from conversations. And if their booth is busy, I will very quickly volunteer, like, hey, I'm never going to buy from you. There's three people over there that look like builders. If we're at the builder show, you definitely should go talk to them. Like, I don't want you to spend your time with me. I want you to talk to prospects. But I mean, Steve, we were just saying I can walk through booths and I get I mean, I don't get a single person to stop and talk to me or I also was telling Steve at the builder show this year. I was in the siting manufacturers booth. They were very small. I didn't I honestly didn't recognize their name. And I but I asked them about their colorizing process for their products. And the guy looked at me like I had three heads.  But I know from the manufacturers we work with, their colorization process is really pivotal to what they do. And so in my mind, this is a very normal question. But just those types of things of you've got to be ready for important conversations and not making assumptions about what people are there for and what they're not for. But I think I like the 80 20, you know, what questions are you asking? Yeah. What are you learning? We want you want voice a customer survey. This is it, man. You are on the floor with your customer. What would be a win outside of a lead? Yeah. What if you learn that there's, you know, a huge multifamily development going up in an area that you're the rep for? What if you learned that as a takeaway or asked about something, you know, an issue that they're having with a competitor that you haven't heard before? There's so much opportunity in the questions that you can ask versus just being there to answer questions about products. Exactly. And I reiterate the importance of all of that information is so valuable, but it does no good if it just sits in salesman's heads, right? And that's a dangerous place for things to sit long term. So I think, again, focusing on collecting information, making sure that your team is talking to everyone, having valuable conversations, have a way to collect that information, pull it together and then sift through it, right? Go through it and then appropriate that data to the right teams, right? That can actually draw insight from it. So maybe even setting a few meetings after after the show to follow up on that piece specifically. Obviously, you're going to follow up on leads. You're going to go through all the different channels, but making sure that you're actually focusing on collecting that data and putting it. And I think, too, Beth, another important concept outside of that and just collecting information is making sure that you have you're thinking very carefully and companies do this, but thinking very carefully about how you want the audience to perceive your brand as they walk away from the show. Right.  Your strategy may be to, you know, have a company say, hey, I've never used this brand, architects, builders and more willing to use brands that they've never used before and more willing to walk into a booth and say, hey, what is this about? Show me the innovation of this product. Why would I want to use this versus anybody else? They're willing to do that.  Your audience is right there. So you can you can engage them in conversations, but you should strategize and plan. How do I want this person to perceive my brand when they walk away from the booth?  You're willingness to actually engage someone in conversation as they're walking through the booth, making them feel special, asking them questions. That goes a long way into making them say, hey, these people care about me, right? They're interested in what I have to say. They're interested in my story. They followed up with me in a very well structured campaign. They care about me. That's a perception that they have of your brand, and you have the ability to craft that. If you are brushing people off, if you're not engaging them in conversation, you're not making them feel special and taking each individual that walks in your booth as a special opportunity, then that can negatively impact the perception of your brand. They're willingness to engage with you online. They're willingness to share. They're willingness to advocate word of mouth and things like that. So I think that that's really important. Concept is you need to think about right now before AIA. Think about how do I want our audience to actually perceive our brand? Are we trying to shift our market presence in any different direction? And I think that's really important. Yeah, I totally agree. That's great. One other concept that I think is important, that's kind of a no-brainer, but it's really, really important is you need to have a really good attention grabber. When I do walk up to someone in the booth, I can't tell you how many times I get a generic, a generic introduction. Hey, can I help you? What are you great at? Yeah. A customer service. Exactly. Or when I walk into the booth, they'll say, are you an architect? Are you a builder? And I'll say, no, I'm not. And immediately, it just kind of sets the conversation off and not a good path. So it's the department store problem, right? Can I help you? No, you can't. I'll just browse here, right? Or yeah. So I think the attention grabber is really important and similar to how you would approach a digital messaging strategy, right? Of saying the right thing, approaching the right thing. You as a sales team or use a company, you need to make sure that the attention grabber is consistent, whether they're right in front of you or they visit the site or they visit the landing page from the campaign that you've crafted in the follow-up. Is there conversation with you consistent? That should start with the attention grabber. The attention grabber can consist of a lot of different things saying, hey, thanks for stopping by the booth. It's nice to meet you. If you are you an architect? Have you used some of the tools on our site? Because I'll show you some of the information on our products here right here. But have you been on our site and used this tool, right? Even a question and saying, have you used this or have you done this? You're positioning yourself as being willing to have a back and forth conversation and listen to them. That's so important.  It's really poorly done. That affects the conversation and their willingness to open up. When you say attention grabber, Steve, I typically think of something that's going to get them to step in the booth, but you're really talking about something that's going to get them to engage more deeply in a conversation with your team. Is that right? Oh, absolutely. So you're right. We can talk about the messaging on the banner and things like that. That's equally as important. I'm actually talking about their conversation with the individuals in the booth. I think that's really important. Like it's one thing. Yeah, we need to drive the traffic. But then once they're there, you've got to do something with that. I just think it's such an important piece that I wanted to highlight of the foot traffic is often like, oh, our booth was packed. Yeah, but let's talk about the conversation. How did your team lead that conversation? So I think what you're saying is just really, really important there about bringing them deeper in and asking them those open-ended questions. Absolutely. I think architects and builders, they are there for the purpose of educating themselves and learning about brands, learning about new products. They may have worked with a brand there that they're in the booth for 20 years. They're very familiar with it. They want to talk to the people. They want to engage. They want to have a conversation that goes back to crafting your perception of your brand with this audience. This person may have used your product for 20 years. If you don't treat them with respect when they walk in your booth, that may be the first time that they've interacted with someone in person for two years. If they go to another booth, a smaller brand that's up and coming, and they treat them well, they act like they care about them, I don't think ever before the willingness for a builder or an architect to engage new products and brands has been prevalent. So that's an important thing that companies need to take advantage of. Manufacturers need to take advantage of. And that starts with the attention and grabber with the individual that you're talking to when you walk into the booth. That's boots on the ground stuff. I love that. Steve, if you could give a manufacturer one piece of advice for how to have these incredibly impactful conversations that are gonna leave their leads with an excellent perception of their brand, set them up for a follow-up. I mean, this is a tall order. It's basic stuff, but it's a tall order if it's something you haven't done. What would your one piece of advice be? Have more snacks and espresso bar in your booth. I have a rating system for manufacturers and the snacks that they have. I look for that. So I would start there. Perhaps the second thing that I would focus on is refer to the conversation. Think about when they walk away, when the show is over, everything is back to normal. What do they have to interact with? Start there. Is it a landing page? Is it a digital engagement? Is it a conversation? Is it a sample that they walked away with? Whatever that is, focus there. Reverse engineer it up to the attention grabber. When they first walk into the booth and then in obviously booth design. Most companies have their booth design already established and built, if not on its way. So you've got an opportunity to really work with your sales team and focus on that, but also think about that digital component and that follow-up after reverse engineer it. That's probably the one thing that I would say. Also make your dinner reservations.  Ahead of time. Yeah, that's true.  I've got one bonus tip for you. So we've talked a lot and basically you could boil a lot of this down to brand consistency. What they see in the booth, what they hear in the booth, what they find online, what they get in your follow-up emails. All of those things need to be beating the same drum. They need brand consistency. I am friends with a purchaser at a builder that's based in the Midwest. And I ran into him at the builder show and walked the show floor with him. It's one of my very favorite things to do because it's the opposite of being a marketer at a trade show because it's like walking through a concert with Mick Jagger. Like he's an absolute celebrity. It's very cool because people know that he has purchased power. In the homes that they build, one of the elements in their bathrooms, they were looking for an alternative product for it. Brought me up to the small booth and he was like, hey, I just want to tell you about this really cool. You know, like their booth was not stellar, but their product was really cool. He ended up having a great conversation. So all of the things that exactly Steve said, previously the product they used was from a pretty big brand. They weren't impressed. So they ended up going to this much smaller manufacturer. Okay, so a month later, I get an email from him that he's like, listen to this. So this small bathroom product manufacturer, they actually were owned by a completely separate company. And he only figured that out because he was like, okay, it's time for me to make my purchase. I'm going to go back through the cards that I was given. I know the name of this manufacturer. I'm going to look for it in the cards and I'm going to reach out to them. The brand on their cards was different than the brand in their booth. This is like an eight figure sale that they almost lost out on. And it's only because my friend is extremely persistent. Like I think most purchase agents would have just been like, screw this. I'm going to go to the next 75 people that are desperate for my business. And I was like, I want to write this person an email, like change everything, do whatever it takes. So that's your bonus is make sure that what's on your booth is also on your business cards. Please. Please. Please, that's your PSA. Awesome. Okay. Well, Steve, thank you so much for spending time with us. I'm pumped to hear back from you after AIA and get all the insight on why it went well and what didn't. And for our listeners, if you want more great insight like this, head to benvio.com slash podcast and subscribe. Thanks everyone. We'll see you soon.


Hello, and welcome to another episode of the Minor Issues Podcast. I'm Mark Thornton at the Mises Institute. As a leftover from last week's commentary, I want to focus today on energy and energy prices. The price of gas has fallen, and energy prices have fallen generally, and this has been a big help in cooling price inflation in the economy. Clean delivery surcharges have come down or been eliminated in recent time. Now, of course, we're all interested as both consumers and producers in terms of energy prices almost on a day-to-day basis. How much is it going to cost me to fill up my tank of gasoline? But oil prices and energy prices are also a good indicator of where we are on the business cycle. The biggest example is oil prices spiking right before or in the early stages of a recession. And then that is quickly followed by oil prices bottoming during or slightly after the recession is over. So the price of oil goes up and down with the overall economy and the business cycle. It's not surprising if we reflect on the fact that energy is a master ingredient in economic activity both on the production and the consumption side and certainly in terms of the distribution of economic goods. It's an input of goods, for example, plastics. It's energy to make the goods. For example, the price of electricity that goes into the production of everything. And then, of course, finally, energy powers the movement and just distribution, the transportation of goods throughout the economy. So it's not surprising that energy prices go up and down with the overall economy. And what brings that to the forefront is the fact that the supply of energy is relatively inelastic in that the quantity supplied doesn't adjust rapidly to changes in the price of energy products. So that if the price is to rise, you're going to get a very slow reaction on the supply side as a result of changes in the overall economy. And of course, oil prices are indirectly linked to the prices of coal, nuclear power, uranium, natural gas, solar and wind power in all forms of energy tend to rise and fall on a daily basis. You can see it in the futures market every day. So if we take a look at a little history, back in the spring of 2020, we saw a big change in the movement of oil prices. Oil prices had previously peaked at $60 a barrel. And in the spring of 2020, they fell to $20 a barrel. And then more recently in the COVID Fed inspired bubble, we saw those prices rise from the trough of $20 in March of 2020 on up to $115 a barrel on a monthly close. And then we've seen prices most recently fall down into the $60 range. And I think this week it's going up close to about $70 a barrel. But more generally, we've seen almost a 50% drop in oil prices from the peak. And that really has what has fed into helping us with price inflation. Heating oil prices are down by about a half during the same time period. And natural gas prices, which is increasingly important, is selling for about $2 a unit, which is almost a theoretical zero price because any price lower than that suppliers will simply shut off the supply from their property. So when we look at the energy market, of course, we can't see past today. And so the question is, should we view these recent developments as an impact from recessionary forces? In other words, are we turning down towards a recession in the economy because energy prices have gone down by so much? And I would say yes. I'd say the weakening economy is a big part in lower energy prices. But we also have to wonder about, is this just a prelude to more price inflation? And in this case, I would say probably yes. The fed's inflation, after all, does take time, and then it sloshes around in the economy before re-establishing any type of equilibrium, and that really can take years. For example, during the housing bubble of 2008, oil prices were peaking in the $130 a barrel range in May of 2008. And by the end of that year, the trough in oil prices on a monthly close was $44 a barrel. And then after hitting that trough, we then experienced five years of higher and higher oil prices. So we can look at today's recent peak, we can look at the trough and its plausible ramifications, but we don't really know what's happening next.


Okay. Well, thank you very much. Thank you, Gian Rango, for the presentations. It is great to be in this classroom. Again, I presented this paper, Not only this paper, a different paper, in this exact same classroom About five years ago. It was a different topic. But anyways, today I'll be presenting some work with Jose Martinez. The title of the paper is Community Price Shocks on Child Mortality, Evidence from Anti-Coca Policies in Peru. So the objective of this paper is twofold. The first objective is to identify a causal relationship Between agricultural commodity price shocks and child mortality. And the second objective is to be able to set some light on The pathways, the mechanisms that are behind this. The big motivation for doing this is that income, aggregate Income, is more volatile in agricultural settings. And it's also the case that most of the poor live in agricultural Settings. And given the prevalence of Cranes constraints and market imperfections, we worry that The poor will not be able to weather an aggregate income Shock. And therefore, some of the Welfare dimensions such as child health may be at risk. Now, we started this paper because there is a literature On aggregate income shocks and child mortality. However, the evidence for the developing countries is quite Mixed. Sometimes we find that mortality Increases, sometimes we find that it does not. So what we wanted to do with this paper was to get a clear Natural experiment and be able to identify what are the Channels at play and then set some light on potentially Why are we getting these mixed results in the literature. So to fix ideas, let's think a little bit about a Theoretical framework. So let's assume that the Production of child health depends on two goods. We can have health promoting goods, think about medicines. And time. Time intensive health investments. Think about going to fetch clean water, hygiene, and many Other things that do matter for the health of a child, but Do not necessarily represent a monetary cost. And now let's assume that wages drop, say, because of some Commodity price drop. And the question is, well, what Happens with child health? And the problem is that the Effect, in fact, is theoretically ambiguous. Expenditures in the presence of marketing imperfections may Go down, so households may not be able to wear the shock. Therefore, they may reduce their consumption and they may Reduce their consumption of some nutritious foods, also the Health cut from promoting goods. But then what is not very clear Is what happens with the supply of labor of the primary Caregiver, right? So if we think about maternal labor Supply, when wages are lower, what should be happening with A regular supply curve is that you should be working less If they are paying you less. But in developing country Settings, what we sometimes see is that, in fact, people supply More labor to compensate for the income shock. So we have these two opposite directions and then we do not Really get a clear prediction there. We also face a challenge, which is an identification Challenge. We're really trying to get to the Gospel effects and we may be seeing selective migration or We may be seeing selective fertility in response or in Anticipation to the shocks and therefore it gets a bit tricky. So what we will try to do in this paper is try to get this Right, the identification challenge right and be able to put Signs, what is positive and negative here and then Conclude what is happening here in this particular setting. So what we do is we exploit a natural experiment, the Peruvian coca industry. As you know, probably coca is The main input for the production of cocaine. And what we do is we're exploiting an abrupt price Change, a price drop that came because of some foreign policy That i will explain later. It represented about a 50% Drop in the price for the producers of the coca leaf. So from one year to the next there were 50% less on farm Prices. And as i will explain later we Will use variation across the space on the cultivation of Coca and the variation over time of this abrupt decline in the Price and several data sets to be able to pin down what is Happening with child mortality and behavioral responses of the household. I will give you a preview of the results now and then i Will go into some of the highlights of the paper. So what we find is that the 50% price drop is equivalent to A 5 to 9% increase in child mortality. That is an important effect. And we're also to pin down where Are these life losses happening. We see there are losses in Inutero, then we see that the babies that survive in Inutero are smaller at birth and then we also see increased Mortality during the first years of life. When we look at the mechanisms we see the households do Reduce their total expenditures so they are not able to Totally cope with the shock and they reduce health Expenditures in about 30%. In addition we see that mothers Increase their labor supply when prices drop. They try to get additional paid income. And we have evidence that they are reducing their time at home And additional evidence of investments in health. So we see for instance there are fewer prenatal checks being Done, there are higher risk deliverers being done at Home instead of at a hospital or a health post. So we find evidence that there are investments in the production Function of health that are diminishing and then we are Consistent with the increase in mortality. We're also able to look at some of these effects and see The differences of what is happening with some districts In Peru, districts are the smallest administrative unit. So if we look at the wealthier districts, these are still Poor but wealthier districts, then we see that there is no Increase in mortality. We find they are able to Smooth their consumption and mothers react differently. They work less, in fact, which is consistent with what we See in the literature in developed country settings. So what we find here also tries to put the science to the Mechanisms i was mentioning but then we are also able to predict Differently the impact in mortality based on the baseline Characteristics of wealth of the districts with this shock. Okay. Now let me have a few words on the Setting and then i will go into the identification and the Main results. Coca as you may know is the main input for the production Of cocaine is only produced in three countries in the world Bolivia, peru and colombia and at the time of this, the Period of analysis for this study peru was the most Important producer in the world. 60% of the production in The world came from peru and bolivia and colombia were Producing the remaining 20% percent. Most of the production goes to the legal market. There's a legal market, too, but most of the production goes Into the legal market. You know, the way this market is arranged is not very Vertically integrated, especially back then. We will have a small scale farmers, usually producing About an hectare of coca, which will then Sundry the coca leaves, sell them to some middleman. This middleman will either sell it to someone else or By himself, he had the technology, will transform Big amounts, big volumes of coca leaves into coca paste, Which is an intermediate product. About an hectare of coca leaves will make one kilo of coca Paste, so that volume is definitely shrinked. And then it will be smuggled through different roads in The amazon jungles and at the time small airplanes will Ferry coca paste from the jungles in peru into colombia And then in colombia, the process will be refined from Coca paste into cocaine and then finally exported to North american markets. What we see here is the map of peru and as you can see There's almost a perfect diagonal line in the country. The districts, the smallest of units that were saying red Are the producers of the coca leaf. And the reason why they are grouped here is because of The agricultural suitability needed to produce the coca Leaf. So what we have here are the andeans mountain and to the Right, the amazons. And it's exactly in those slopes and sunlight and all that That these leaves are able to grow. If you look at the maps of bolivia and colombia, you Will also see a special concentration there. So what we exploit is the shift of the policy from Central american countries to the focus of the Interdictions to the so-called source countries, bolivia, peru And colombia. And in particular a policy called the air bridge denial Which was a policy promoted by foreign governments and That colombia and peru did by forcing the landing of these Small airplanes that were ferrying coca from the Amazon jungles into the colombian jungle. The policy was enacted in the end of 1994 and started in 1995. What we see here is the real price of the coca leaf. And what happened right after 1994 when it's enacted in 1995 is a 50% drop in the price of coca. The anecdotal evidence of the implementation and the Strangency of the policy follows quite nicely in fact the Pattern that we see in the prices. From the point of view of the producer of coca, from the Farmers, this is a negative demand shock. They don't have anyone else to sell their coca to. Their coca leaves to. And in fact this period here is known as the crisis of Coca, the crisis of coca. There are some evidence of farmers leaving their lands And their crops to try to find temporarily better jobs Because the prices were so low, we don't know really, But the prices were so low that they were not covering The costs of producing coca. So what we do for identifying the impacts of this price Shock on mortality is we will be comparing cohorts of Children born in the very first year of the Implementation of the policy, this is in 1995. These are children that would have been or were born in 1995, conceived the year before. We are comparing them to the cohorts immediately before Them, the 1994 and the 1993 cohorts. And we are going to do this comparison continuously across The map of Peru. So basically we are building a difference in Difference strategy comparing cohorts of children over time And across the space depending on how much coca there was Being grown in each district at baseline. So before the implementation of the policy. Now i have to say a few things about how we measure Mortality. But first let me tell you the Main exploratory variable is going to be a measure of the Potential coca revenues in each district. So for each district we will have a measure of how much Coca there was being planted before the policy. And then we will interact that with the price. The price at the national level for each year. And to measure mortality things get a bit trickier. Because as you may imagine there are no really good Admin records for these areas. We shouldn't be expecting to have very good admin records In most developing countries i would say. But then we could use for instance something like the Moravic and health service. The DHS data and try to relocate children back in Time exactly to where they were born. Unfortunately DHS data does not show us where people Were born they just show us the year of birth. So what we do is we look at census data and we are going To use a missing children approach as our preferred Estimation and we are also going to be using the DHS data As i will show you later. But what we do is we use a We will be using a population census that took place 13 Years after the policy in 2007. And with that census we are going to relocate people To the place where they were born at the district level and the Year that they were born. And with that we are going to Create counts of people. We are going to create Cohort sizes at that district year cell. So in 1995 in district x ten people were born there. In this other place nine people were born there. And we are going to infer how much mortality or excess Mortality there was in relationship to this shock by Knowing how many people were missing. So the idea is that if we see that there is a systematic Relationship between the price drop and lower counts of People, lower counts of survivors, then we can Classify that as excess mortality. That also has a couple of advantages and is that Cohort sizes will also give us an idea of Losses which is something we wouldn't see just by Comparing children that were actually born and if they Died later. And it also picks up on Mortality taking place later in life. So dhs data, for instance, will ask for mortality of Children under five. Here we will get mortality Of children even at further point in time if that were To happen. Okay. Well, we include a bunch of controls. As i was saying at the beginning, a key on our Innovation is we're going to be looking at this very narrow Window trying to get away of any variation that happens later. In 1996, a year after the policy, we would think, Okay, families are already doing something. They are averting more pregnancies and so on. Now let me walk through the main tables.  They look quite similar. We have the main dependent Variable here. I'll be telling you which Are the samples that we're using here. And here we have the coefficient of that main Explanatory variable. And we're going to be focusing On the implied effects. The implied effects are the Effects for the median, sorry, for the mean coca district. And given the 50% price drop that took place in 1995. The first two columns here are focusing on the Cohorts 1993 to 1995. So this is the first cohort Sposed in the two previous ones. And this is a robust check Only at the very narrow window of 1994, 1995. What we see is that cohorts are reduced with the price Drops. So there is excess mortality increasing. The cohorts are 0.4 to 0.5% smaller. This translates, in fact, to a lot of additional mortality If we were to attribute it, for instance, to mortality After birth. So this is about 5 to 9% For the baseline level of child mortality in this setting. We also use the demographic and health surveys. Again, this is not our preferred estimation method because Of the district of birth. It's not available there. But we're able to show some evidence that there are Inuter losses taking place. We do that by adapting This cohort strategy to the probability of seeing a Live birth. We are also able to see that Children after being born alive are also more likely to die in The first couple years of life. We take identification very Seriously.  We ask questions, for instance, Okay, who will be more likely to avert mortality? Do we see any characteristics of mothers, for instance? Are welfare mothers better to avert births? So it's not an impact of the shock. It's an impact of the Behavioral anticipation. We do not find anything like that. We find, for instance, that it's poorer women who are Experienced in most of the losses, which is what one would Predict. We find evidence of the Survival of the advantage of males are more likely to die Both in uterine and alive. We are able to predict that. We do not pick up any pre-trends and the results are Also robust to a bunch of controls. Now let me walk you through the mechanisms. What we have here in the dependent variable is log real Expenditure per capita. Again, we have the Implied effect here. What this is showing us is That total expenditures are falling about 7%, but then Expenditures in food, which are important, and health Expenditures are decreasing quite a bit in about 20% So we know that the first mechanism we were thinking About, the health-promoting goods, are probably decreasing Here. Then we use additional data from Before and after the shock, different household surveys. We look at what is happening on the labor market. We see that first, if we look at only females, Females are more likely to start working for, sorry, To have a paid job in three percentage points Based on, sorry, 54% They're working more hours and they're also more Likely to spend less time on household chores. Of course, we don't see in the survey how much time Are you actually putting to your children, but we do Have a question on household chores. For males, we do not see changes in the extensive margin. We do not see they're more likely to work, but most Of them in this age group were already working. They are not more likely to be working more hours or to change Their household chores. There are also papers on this Shock on child labor and we see those margins also being Moved. And it's that people who were Not working as much for paid work before are usually the Margins that work as insurance here. They're going to be starting to work more to make some More income. If we look at mothers, Mothers of children 0 to 5, relative to other women, it is The case that mothers are also working more. So it is not the childless women. It is mothers in general. They're working more hours And they are having less time on household chores. Finally, we try to look at the health investments. And this is the result probably of the combination of these Two mechanisms, right? Households have less money to Work and they are spending less in health. And household primary caregivers also have less time now Because they are working more for a pay. What we see is that children 0 to 5 years or age are not Necessarily more likely to be sick, but they are much less Likely to be taken to a doctor when they are sick. We also see that pregnancies, when women are pregnant, They are less likely to have at least one prenatal care Appointment. The number of prenatal care Appointments decreases. There is a higher Likeliness of observing a delivery at home, which is Also a higher risk type of delivery for this type of Settings and therefore lower probability of the birth Being assisted by a medical professional. Now to finish, let me show you the tergeneus effect. What i mentioned at the beginning of different predictions Depending on the baseline income of these districts. So here we will classify districts into very high Poverty and very low poverty. First i'm showing you the labor market outcomes of women. Then the real expenditure per capita, so the two main Mechanisms here and then what is happening to the cohort Size, our measure of excess mortality. We see that for the high poverty districts, women are Working more, more hours, less time on household chores. For lower poverty districts, women are working less. That's the prediction of a regular slope of the supply Of labor. We don't find a statistical Effect here, but it is telling that the design is Positive on the household chores. For expenditure, higher poverty districts, we see the Decrease in expenditures overall and also in health. We do not see that for the lower poverty districts, the Sign is negative, they are probably not able to smooth Consumption completely but much better than the high Poverty ones. And then overall, we see the Decreasing cohort size, so the increase in mortality for The high poverty districts and we do not see an Increasing mortality in the low poverty districts, if Anything, the rates of mortality may be decreasing, which Is what we find in countries like the u.s., for instance, when with the fluctuation of unemployment. Okay, so thank you very much. I will conclude there just By saying that what we try to do in this paper is Exploit a careful natural experiment in Peru and we Try to pin down what are the mechanisms at play That explain why our cultural commodity price shock may Result in the increase of child mortality. Thank you very much.


Neighborhoods around the city of Bemidji will be getting a little brighter. Otter Tail Power Company will begin upgrading all Otter Tail-owned outdoor lighting to LED. City streets and alleyways will be some of the first to be upgraded and all 1,850 lights will be switched to LED. A little more than half of those lights are municipal accounts with the remainder being private accounts. Bemidji is one of the first Otter Tail-powered cities to get this upgrade. This project will cover every Otter Tail-owned outdoor light in Bemidji. The project as a whole for Otter Tail Power is to upgrade all of our Minnesota towns over the next five years. So Bemidji is one of the first towns to get this upgrade here and is one of three towns that's currently scheduled for 2018 and then in subsequent years the remainder of our towns in Minnesota will get this the same upgrade. Otter Tail says the project will take at least three months to complete and should begin later this spring. If you enjoyed this segment of Lakeland News, please consider making a tax-deductible contribution to Lakeland PBS.