Op-Ed

Free Market vs. Volume Regulation

Who will make this decision?

By Doanne Andresen

2/24/01 - We have a surplus. What should the industry do? Are you involved in the decision-making process?

1. We can choose to do nothing and let the free market forces solve the problem. Businesses will go under. Both large and small, growers and handlers, will be at risk. I have heard estimates that 30%-40% of the growers may not survive. But the theory is that it will be a fair fight. Smaller, more flexible businesses may be able to out-maneuver larger businesses. Businesses with more capital may outlast businesses with less capital. Vultures will buy-up the scraps in the end and new businesses will emerge.

2. We can enact a volume control regulation through the Cranberry Marketing Order. This regulation can work for or against the grower. The intent of the Order is to help stabilize the price and return profitability to the grower. But because the surplus is so large it is necessary to implement a large restriction to return the price to above cost of production. A small restriction will only get rid of part of the surplus. The surplus may continue every year and be used as a weapon to protect market share. The price of berries will be the weapon. And growers may continue to receive below cost of production to help their handler protect market share.

3. The goal of the marketing order is to stabilize the price and return profitability to the grower. To protect handler market share is not the goal. But in truth, it may be impacted. The handlers continue to express their concern that they will be supplied with enough berries to protect their market share.

Three years ago, some handlers asked growers to release them from an $80 contract so that they wouldn’t lose market share. The concern expressed was that if your handler went out of business, you wouldn’t be able to sell your berries. Growers were not told that the handlers would then proceed to drop the price to below cost of production to protect their market share. Now you aren’t selling your berries. You are giving them away.

Again, growers are being asked to make a choice. If you want the price to stabilize, then I believe that we need to get rid of the surplus. If we get rid of the surplus, you may be concerned that your handler will lose market share.

This is a difficult choice. But it should be your choice. You need to be involved in making this choice. It will impact your future.

If you have not returned the survey to CCCGA or WCCGA, return it quickly.

If you have not called your CMC representative, call him.

If you would like to contact the USDA, use the address below.

Mr. Robert Keeney

USDA-AMS

2400 Independence Avenue, SW

Room 2077, South Building

Washington, DC 20250

Phone 202-720-4722

Fax 202-720-0016

e-mail: [email protected] 

 

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