On why Northland could not support a marketing order

by John Swendrowski

February 29, 2000

Northland Cranberries, Inc. has been an advocate of invoking the Cranberry Marketing Order to effectively limit the size of the domestic 2000 crop. Today at the CMC meeting in Washington D.C. we could not support the proposal that was advanced by Ocean Spray.

The Cranberry Marketing Committee each year issues a "base quantity" certificate to every cranberry grower indicating the amount of cranberries they are "allocated" if discussions to invoke the order are commenced.

The current long-standing method of calculating the "base quantity" is basically as follows: 1) Existing growers are assigned a "base quantity" equal to the average of their historical largest four crops out of the last six years. 2) New growers that plant acres and enter the business are assigned the state average yield per acre planted. These guidelines are well documented and readily available to anyone analyzing the feasibility of planting cranberries.

Ocean Spray advocated a proposal to change the method of calculating the "base quantity" as a part of its proposal to invoke the order for the 2000 crop. They proposed increasing the "base quantity" for all growers that have planted acres by adding the state average yield to their base quantity, not just new growers. By including this revised calculation in their proposal, they effectively raised the total domestic "base quantity" by over 1,000,000 barrels from the currently calculated levels.

It is my understanding that they proposed a 25% reduction from the newly calculated base quantity as the proposed limit on the 2000 crop. If you utilized the current and long-standing method of calculating the "base quantity," it would only have required approximately a 10% adjustment to reach the same crop level that Ocean Spray proposed.

We could not, in good conscience, support their proposal for the following reasons:

1. Every grower, whether old or new, should have been aware of the business risks associated with planting cranberries that could come under control of the CMC if the order was invoked.
2. Significant, recent plantings by established growers is a major part of the industry oversupply problems.
3. By changing the system of calculating "base quantity" to the method proposed by Ocean Spray, growers that have not contributed to the supply problem are then required to share in the expense of others poor business decisions. (Dump 25% instead of 10%.)

In our opinion, the current system places the risk upon those that seek the reward. We believe the current system is fair and equitable and, if implemented, places the largest burden on those that "guessed" wrong when they choose to plant more acres.

We continue to believe that implementation of the order as it is currently designed is in the best interest of our growers. However, we do not believe that implementation of an order under guidelines that benefit the major contributors of the oversupply at the expense of others is better than no order at all.

Sincerely,

John Swendrowski