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Op-Ed

Why did the independents propose a 4.0 million barrel marketable quantity

by Russ Lawton

3/13/01 -- The independent growers on the subcommittee intended only to reduce the marketable quantity for 2001 to a number that could return at least cost of production to growers, to eliminate the surplus so that we can go on with our business. Most growers realize that independent handlers, for their part, want 100% of their growers’ fruit. It boils down to the difference between needs and wants. What did we get? - to sell 68% of our fruit at less than the cost of production and a possible carry over that will ensure a surplus for at least another year! That is a good deal for handlers, and a bad one for growers. The work done by the Buyback Sub–committee was intended to benefit all growers and not to hurt any handler. The independent handlers will need to buy fruit whether the allotment is 32% or 46%; their best option was to vote for no allotment.

Critics have said that the subcommittee had no idea what they were doing and were reckless in their pursuit of price relief. That is not the case at all. The committee met for two days and interviewed all handlers as to their needs and desires for fruit, including future plans and new product development The sub-committee then went to work analyzing all the information with the intent to raise the growers return to cover cost of production. There were several assumptions made, which I will list below.

Assumption #1

Ocean Spray will not sell, or close the 2000 pool, until July 1, 2002, therefore needing fruit from the 2001 pool to cover the period from July 1, 2002 thru December 31, 2002. The 2002 crop would be available in late 2002.

Assumption #2

Ocean Spray would have enough fruit available to supply 350,000 barrels to the independents over and above what they already sell to the industrial market.

Assumption #3

The Government will purchase 1,000,000 barrels of inventory fruit. This number now appears to be somewhat lower, leaving more fruit in inventory than projected.

Assumption #4

Cleaning up the surplus in one year was the desire of most growers, if it returned price levels to cover the cost of production.

Breakdown numbers of 4.0 million barrels of marketable quantity

(or why 4.0 provides all the fruit needed for 2001)

4,000,000 BBL Total U.S. Marketable Quantities

2,800,000 Ocean Spray (O.S.) at 70% share of market quantity [ 4,000,000 x 70% ]

...500,000 O.S. share from Canadian growers’

3,300,000 Total available to O.S. for marketing

- 210,000 O.S. share of industry shrinkage [ 300,000 x 70% ]

- 350,000 O.S. new sales to independent handlers

2,740,000 Total available to O.S. to sell

-2,050,000 O.S. sales needs for 6 months [ 4,100,000 x 50% ]

7/1/2002-12/31/2002

690,000 O.S. excess of needs even with government purchase of 1,000,000 barrels

(Remember: Ocean Spray will not sell, or close the 2000 pool, until July 1, 2002)

Why so many Ocean Spray numbers? Quite simply, because they have the largest surplus and I felt that by eliminating O.S. surplus it would eliminate the industry surplus. With the major reduction in surplus in one year, growers would be able to better plan for the future. With the present plan, I believe we are looking at several years of uncertainty, higher volume regulation and prices below the cost of production.

One final comment. The C.M.C. is very fortunate to have Ed Jesse on the committee and I hope he stays. His background is very beneficial to growers and he is not afraid to discuss the issues with handlers. He was beaten this time by wish lists and unsound economic reasoning. The growers owe him a great deal of thanks, whether you agree with him or not.

Growers. it is your choice now. You can complain to each other in the coffee shops, or you can take control of your destiny.

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