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OpEd On Volume Regulation by John Swendrowski 4/30/02 -- I have reviewed and considered the Implications of John Decas’s Op-Ed on Volume Regulations. I am in agreement with Mr. Decas on the following issues: 1. Concern over the impact of foreign fruit upon the U.S. grower. 2. Concerns over a policy that results in no marketing order in one year followed by a big order the following year. Long term we need to address the issue of unrestricted foreign fruit. Asking U.S. growers to be restricted under a marketing order while foreign fruit is unrestricted is simply not an equitable long-term solution. We must either require compulsory restrictions on foreign fruit with the cooperation of foreign governments or invoke a significant tariff on foreign fruit in years of a marketing order. Or get independent handles to follow Ocean Spray policy. In order to accomplish this task we will need friends in Congress to advocate and legislate our needs. I totally agree with Mr. Decas that a roller coaster program of no order followed by a year with a large order would be terrible policy. From an agricultural standpoint it is extremely difficult to manage a bog on this type of program. Unfortunately I also disagree with several of the opinions presented by Mr. Decas. The Cranberry Marketing Order like all other Agricultural Marketing Orders is intended to stabilize markets for producers of farm commodities. It is not designed nor is its’ legislative intent to stabilize the individual business plans of handlers. The entire purpose of the CMO is to allow growers to legally join together to reduce supply in order to increase price. It is not a regulation designed to guarantee that each and every entity that chooses to be a handler is entitled to receive exactly the number of barrels the handler wants at exactly the price the handler wants to pay. The CMO and all other Marketing Orders are designed to control the TOTAL supply of the particular commodity. The economic basis for all marketing orders is quite simple, reduce the supply to match the demand in order to stabilize the market and the price to the grower. It is virtually impossible to implement a MO to control the total supply and to serve the desires of every one that chooses to be a handler. I have said it before and I will say it again. We need to implement an order that stabilizes the supply at a price that is fair and that is equitable to all growers. Every grower regardless of handler needs to acknowledge that we have a common supply problem and we can only solve the problem if we join together as growers. Growers choose to be growers, Handlers chose to be Handlers. Growers must enact policy that is good for the growers. The handlers must then choose if they want to continue under that policy or pursue a different business. We cannot structure an Agricultural Marketing Order based upon the desires of people that chose to be handlers and expect it to benefit growers. Under current industry structure we basically have 5 handlers. One handler is the management of a large co-operative, two handlers are not growers and only buy a percentage of their business needs directly from the growers. Two handlers grow fruit and purchase fruit from growers. No one forces any of us as handlers to be in the business of handling cranberries. One can only assume that all of us made that decision in order to make a profit or in the case of Ocean Spray management to collect a wage, bonus etc. versus working somewhere else. Handlers must adjust their business plans in response to available supply and the price of fruit. Handlers cannot continue to expect growers to adjust their business plan to accommodate Hander needs. As an industry we clearly have a powerful tool available to protect the grower from severely depressed prices due to oversupply. It is a very simple tool that allows us as growers to legally reduce supply in order to support the price per barrel. Unfortunately we cannot expect to utilize the CMO to solve the grower price problems AND meet every Handler’s list of what they want. For example, it is apparent that most Handlers including the Handler management side of Ocean Spray believe that selling more fruit at a low price is better than selling less fruit at a higher price. The Handers in turn present their position to their respective growers and solicit support for the business plan the Handler wants to implement. The “sell more for less” solution drives comments like “I can sell all my growers fruit” or “we need the fruit for new products” or “we cannot starve new markets”. Because some of the Handlers in our business only buy a part of the supply they need from growers, it leads to statements like “I need all of the fruit I buy from growers thus a MO is not fair to MY growers”. Growers have heard these statements for two years and we have implemented MO that have suited the “sell more for less” solution. We have two years of data that quantifies the results of that business plan. Growers now need to review that data and ask the following questions: 1. Have we sold more fruit without USDA purchases? 2. Will this business plan provide results fast enough for growers to survive? 3. Is the price increasing as fast as my Handler projected? 4. Can we afford to risk the implications of an unrestricted big crop? 5. Is there a better business plan for the grower? I believe that from a grower perspective the Handler Withholding provision of the CMO provides the best answer to our problem. I believe this because: 1. Handler Withholding is equitable to every grower.
2. Handler Withholding is Flexible
3. Handler Withholding provides a “Reserve Pool” to meet Handler needs:
4. Handler Withholding Could Control Foreign Fruit.
5. Handler Withholding reduces Compliance Supervision to a few Handlers instead of all individual growers.
6. Provides a pool of available fruit for a new idea or new market.
The only downside to the Hander Withholding as defined under the current order language is that we would be forced to cover the cost of disposal. I cannot make that cost go away but I can analyze the cost. If it cost $6 per barrel and we needed to destroy 1,000,000 excess barrels the cost would be $6,000,000. If the unrestricted barrels were 6,000,000 the cost would be $1.00 per barrel. I believe that is a small cost to pay for the increase we can expect on the price per barrel for the 6,000,000 barrel of unrestricted fruit. Would you trade $60,000,000 of income for $6,000,000 in expense? The Real Dilemma with the CMC The CMC is designed to be a grower decision making body. The purpose is to allow growers to control supply in order to stabilize and support the price. Under the current structure the CMC is not run by growers. It is run by the Handler management of Ocean Spray. Ocean Spray management handpicks the representatives to the CMC and even includes an ex-officer non-grower as one of its choices. Since no actions can be approved without at least two of the four Ocean Spray votes, control of the CMC is firmly in the control of a Handler not the Ocean Spray grower. I have absolutely no problem with Ocean Spray’s right to control 50% of the voting seats on the CMC. The Ocean Spray growers control over 50% of the crop and should be duly represented. I have a serious problem with Ocean Spray growers being denied their right to elect their own grower representatives. I fully intend to support Steve Lacey’s amendment to allow Ocean Spray growers the democratic right to elect their representatives. We need to acknowledge that Ocean Spray management is a Handler only. They do not own cranberry property and according to Ocean Spray guidelines cannot own bogs. Why do we allow that group to control the destiny of every grower? The current system fails to have the checks and balances of a democracy and thus functions as a dictatorship. Northland, Cliffstar, Decas, and Pappas need to explain their various opinions on a CMO to the growers that supply them fruit. We must provide factual data to the independently elected member of the CMC to gain their support. Ocean Spray’s management simply dictates its desire to the Ocean Spray CMC representatives. Ocean Spray growers know that it would do very little good to voice their opinion to their Ocean Spray representatives because they will simply vote the way they are told by the Handler management team. I you have attended the CMC meetings over the last few years it is obvious that no Ocean Spray CMC member will vote until instructed by management. I have no quarrel with the individual Ocean Spray grower representatives. I think they are totally capable of studying and evaluating CMC issues and acting in the best interest of growers. Under the current system they are not ACCOUNTABLE to the growers they represent. They are accountable to Ocean Spray management only. They are not free to advocate any of their own educated opinions or the opinions of the growers they represent. As long as they vote as directed by management their position on the CMC is guaranteed. Everyone would have a lot less issue with the voting position of Ocean Spray members of the CMC if they were truly representatives elected by the majority of the Ocean Spray growers instead of political appointee’s of management. Until the system allows Ocean Spray growers to elect their representatives we will face the dilemma of all grower supply side controls being decided by Handler Ocean Spray management NOT Cooperative Ocean Spray Growers. We will be faced with the dilemma of believing that the USDA will in fact evaluate other outside information in determining a need for a CMO. I urge you to support a Handler Withholding for 2002 that is based on the CMC estimates for carry in and the 2002 crop. I urge you to support Steve Lacy’s amendment to allow Ocean Spray GROWERS the right to elect their representatives. As always, I will gladly discuss any of my opinions and be willing to listen to any other ideas that can avoid another $10 per barrel year.
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