5/24/00 -- The collapse of cranberry fruit prices over the past two years has dropped many farmers from prosperity to losses and altered our emotional states from giddy overconfidence to terrifying prospects of ruin and despair. Lifetime careers and generations of commitment to a highly tradition-bound way of life are evaporating. It doesn't have to be this way.

When it first became evident that the warnings of "malcontents," "outsiders" and "troublemakers" were coming true, the reactions were disbelief, denial and resistance. People who said that Ocean Spray would not be able to compete successfully against grocery companies and food marketers attaining economies of scale by consolidating on a global scale were vilified as "disloyal" rather than listened to. People in all segments of the cranberry industry who warned that production was outstripping sales and a surplus was imminent were dismissed as pessimists. Yet the collapse has been so rapid, the gap between supply and sales has become so immense and the light at the end of the tunnel so distant, it seems in retrospect that the warnings were too mild. The "gloom-and-doomers" have been shown to be foresighted and largely correct, but they are still outcasts from the inner circles of power, both inside and outside Ocean Spray.

But what of structure? How likely is it that this catastrophic situation has developed not only because of individual screw-ups, but because of weaknesses in the industry's structure? Do incentives for many of the individuals and institutions point the industry in the wrong direction? Did the wrong people get into the wrong jobs because the structure creates the wrong incentives?

How seriously, really, have we looked at structure, of Ocean Spray -- the "big kid on the block" that the others fear, emulate or revile -- and also the structure of the smaller companies in the cranberry industry? How seriously have we looked at the structure of the juice business, and of the grocery business in which we are trying to succeed? Are we only a "juice business" or are we confined to that category by our small size? Could cranberries be more of a food, with more widespread uses?

The fact is: cranberry growers are producing more fruit than the marketing structure can sell. If we were producing rice, sugar or butter -- commodities that have been well-known and distributed worldwide for centuries -- and we were growing half again what the world could eat, you would get little argument that "the surplus" was the main problem. If we were growing bananas or wine grapes, you might say look at the problem the same way. But we are operating in a global economy where four fifths of the people in the world have never heard of cranberries. Total worldwide production of cranberries is less than 5% of major fruits like apples, oranges, bananas and grapes, and cranberries' particular health-giving qualities are superior in many respects. Looking at the problem this way -- structurally, in a "big picture" context -- do we really have surplus production? Or do we labor under a marketing structure that's too small?

If a five story building were on fire and the fire department were trying to stop the blaze with a 17^th century "bucket brigade" would we blame the individual water carriers for failing to save the building? Or would we conclude that the fire department had an inadequate structure?

In rural settings, buildings are so widely spaced that it is rare for more than one at a time to burn down. But when cities began their explosive growth in earnest in the 19^th century, civil engineers were unprepared for the danger of fire spreading from building to building and destroying entire districts. Cities were plagued by huge fires that wiped out thousands of buildings at a time, causing hundreds of deaths and sudden homelessness on a vast scale. Among many, Boston in 1835 and Chicago in 1871 were devastated. Did humanity decide that building cities was too risky and we should return to an agrarian past? Did people try to tackle the same large-scale problem by repeating the same small-scale mistakes over and over again? No. Civic leaders eventually realized that the old-fashioned methods that worked in rural districts were no longer sufficient. Masonry construction, pressurized water systems, high-tech hoses, extendable ladders, high-speed fire trucks and well-trained professional firefighters were developed. In short, the structures for controlling fires were vastly improved. One happy result is that the job of fireman consistently scores "most respected" in opinion polls of the reputation of various professions. But the most important result is that city dwellers suffer no greater danger of fire than anybody else. Civilization can advance without that primitive danger. Farmers can enjoy burgeoning markets for their produce.

In my view, the Ocean Spray faction trying to reconstruct the old monopoly by destroying the competition is backward thinking. It seems equally backward to suppose the industry as a whole can recover by driving a large fraction of the acreage out of production in order to shrink supply to the size of domestic sales. Without structural change, supply restrictions leading to a price recovery will trigger another burst of production, another surplus, another price collapse and another wave of failures -- the old "commodity whipsaw." It's even more backward to keep blaming each other, as individuals, for failures that are structural in nature, not personal. The marketing coop has many responsibilities but is structured so the votes are wielded by farmers whose main interest is raising fruit. The result is that Ocean Spray has had a Board of Directors more proficient as growers than as marketers. Growing fruit "efficiently" without marketing it profitably created a surplus which wastes money, land and generations of effort at building the business. Is it "efficient" to wipe out thousands of acres that took decades to build? To close plants, lose markets, shred local economies, obliterate other jobs and businesses, then try to rebuild those things a few years from now?

The cranberry industry is not too large; it is too small -- farmers fighting each other and several relatively tiny companies fighting for domestic market share like scorpions fighting inside a jar. Cranberries should be marketed worldwide by giant food companies, the way orange juice, chocolate bars and breakfast cereal are marketed. Farmers would benefit most if all the fruit were sold. We could seek the most profit in growing and handling by competing as coops or independents at the production level.

Ocean Spray cannot carry the marketing ball for the whole industry, pay its growers less than everybody else, blame the free riders for trying to survive, and expect to survive itself. Ocean Spray is trying to juggle the production ball, the processing ball, the marketing ball and the surviving-consolidation-in-the-grocery-trade ball all at the same time -- and trying to prevent the "free riders" from taking their little pieces of the action. All this with a capital base that's tiny in comparison with most other consumer packaged goods companies. It's an impossible assignment -- like trying to juggle five flaming torches at your first juggling lesson, instead of learning first with two lemons.

You can't shrink your way to success. The cranberry industry shouldn't try to, either. Ocean Spray is still stubbornly insisting that it's the best "home" for growers even though it pays less for fruit and vilifies growers who mention this. It's in the process of bankrupting hundreds of its own members, and is trying to bankrupt other handlers who pay more. If that's the best "home" for fruit, what would a prison be like? Ocean Spray is still only tinkering with personnel and operations, ignoring structure and trying to reconstruct the past. It won't work. The other companies are blaming Ocean Spray for all the industry's travails, even though they were happy enough when everybody was making money. Now, no party within the existing structure has the power to set things right. Nobody can "go it alone."

The current trajectory for the industry is to starve out all growers who don't have $millions in financial reserves to survive several years of mammoth losses. The "survivors" are likely to be only a few dozen extremely wealthy diehards, who will be more vulnerable to the next shakeout, or the next replacement product which could put the kibosh on the industry once and for all. To favor such a scenario, you might as well be suggesting that depopulating cities is a better fire prevention strategy than building water systems. If we don't modernize the industry, somebody else will but only after more unnecessary carnage. We should stop resisting change. Change is part of growth. Growth, not shrinkage, is the path to success.