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Editorial Ocean Spray management supporters gamble with their own future 2/26/02 Revised 1:30PM: Supporters of Ocean Spray may think they are on a roll. They supported gambling half of Ocean Spray's advertising budget on white cranberry juice, and beat the odds against new product introductions succeeding by what is being proclaimed as a big win. Now, by not supporting a marketing regulation, they're gambling on the weather and other forces of nature cooperating so they won't grow more than the 500-600,000 additional barrels that Ocean Spray spokesperson Jack Crooks said the company can handle over the predicted crop. Currently they don't gamble the company's money; instead they play the odds with their own livelihoods. If the bets are wrong and the surplus increases too much, and the upward trend of prices reverses, banks will begin to call in growers' loans. Even debt free growers don't know how low the prices may go again, and whether their own business plans will hold up. Early in his tenure as CEO of Ocean Spray, Robert Hawthorne predicted that a quarter or more Ocean Spray growers would go out of business before the cranberry crisis was over. His business plan was predicated on the fact that the Board, and enough shareholders to block any dissident proxy challenges, accepted this number of casualties. No doubt each of his supporters believed that they would not be among the fallen. Hawthorne would turn the company around, less efficient growers would be weeded out, leaving each of the remaining growers more control of the company. Two years later, with very few growers having been forced out of business, and with prices finally inching their way back up, it looks like if the trend continues most growers will survive as long as the supply doesn't begin to far exceed the demand. Ocean Spray wants to be able to set the price for all their growers' 2002 cranberries as they grow a full crop. They do not want a restricted pool to be controlled by the Cranberry Marketing Committee. They are willing to chance a bumper crop and risk the loss of the twenty-five percent of their growers that were considered expendable two years ago. We shouldn't be surprised. They were not just willing to risk the loss of these growers two years ago, they were predicting it. Their business plan's anticipation of grower casualties was supported by the majority of shareholders, as evidenced by votes at two last annual meetings where management essentially won votes of confidence. With a consistent 37% dissident vote at annual meetings, it appears that the remaining 63% of the shareholders assume they will be among those who will be part of the cooperative's future. A handler withholding would act as insurance against a bumper crop by assuring that cranberries grown in excess of what are needed are destroyed. Giving up its control of their full crop is too big a price for Ocean Spray to pay for insurance to protect the growers they've already written off. Nothing has changed.
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