6/26/01 -- The USDA has now determined that 4.6 million and a fresh fruit exemption will be the official marketing order for the 2001 crop. Significant discussion and comments have been expressed over the last six months as the industry voiced its opinions on this matter. Obviously I do not believe that the USDA order for 2001 will provide the growers with the financial benefit that they need. I also believe that the growers will continue to receive less than $15 per barrel for the next two years as a result of this marketing order.

As a grower, I hope that I am wrong and the value of fruit exceeds the cost of production because, in the words of Ocean Spray, we need all of this fruit to "not starve new markets." I hope that Ocean Spray grower owners will hold management to perform on their projected returns and the need for all of this fruit.

After spending six months working with the CMC and the USDA, I am currently of the opinion that we should abolish the CMC and simply allow the market place to eliminate supply due to price. It is obvious that Ocean Spray management and political lobbyists control the entire process. The current order will give Ocean Spray management just enough fruit to continue to attempt to "clobber the competition" at the expense of all growers. Unfortunately, the industry spin-doctors were able to turn the marketing order into a "my handler vs. your handler" debate rather than a grower issue. As growers we missed the opportunity to unite as an industry and guarantee that we would all benefit. It appears that long standing issues about the "other handler" will make it impossible for growers to unite for the benefit of all.

I tried to find a common ground that would unite us as growers but I could not overcome the inter-handler hatred within the industry. I tried to listen to individual handler issues and address them with a solution. I offered compromises with reserve pools or a dual producer allotment, handler-withholding system that addressed every handler objection and protected the grower. Management at Ocean Spray refused to consider anything except their plan.

Once again I hope I am wrong, but I believe history will show that Ocean Spray management won and all the growers lost. Long-term we either need to correct the flaws in the CMC structure to guarantee fairness to all growers or we need to abolish it for the hoax that it has become.

For example, last year the "Sales History" was 6,400,000 barrels. After all the changes to calculating Sales History were applied, the Sales History is now 7,100,000 barrels. Thus after a year in which we delivered 5,500,000 barrels, the Sales History increased 700,000 barrels or 11% and this year’s theoretical 35% allotment is really only 24% vs. 15% last year. If anyone thinks that an additional 9% reduction (while Canada and Chile are delivering more fruit) will significantly change the grower price, I think they will be greatly disappointed.

I find it amazing that the CMC and the USDA made the following changes under "informal" rule making but insist that establishing a reserve pool or utilizing both approved methods in one year require a lengthy formal rule change.

Informal Decisions

1. Changes Sales History by 700,000 barrels.
2. Changes appeal process.
3. Adds deadline for transfers.
4. Changes use of excess cranberries.
5. Withdraws June 1^st allotment notification.
6. Changes fresh fruit definition.
7. Changes definition of commercial quantity.
8. Requires preference distribution of over allotments to fresh fruit growers.
9. Changed the number of years used in calculating Sales History.

Obviously the CMC and the USDA can write any regulation they choose. The final order for 2001 is materially different than the marketing order that was voted on by the growers when the order was established and thus appears to be nothing more than a farce.

Northland will not challenge the order for 2001. We will run our business and compete within the guidelines established. I find my failed attempts to unite the growers so frustrating that I must deal with the realities of the blind support growers are willing to give to their handlers. The willingness of the growers to simply follow the directions of their handlers leaves me no choice but to advocate the long-term revocation of the Marketing Order.

Northland has reformulated its entire line of juice to contain 27% cranberry. The industry leader has responded by announcing a white cranberry product that appears to contain less than 17% cranberry. Every current Cranberry Cocktail buyer that switches to the new "white" product will reduce demand for grower fruit. Management at Ocean Spray continues to attempt to create the illusion that several of their drinks with less than 10% cranberry juice are "cranberry healthy." The consumer will in fact eventually discover that they need to drink as much as five glasses to get the health benefits of one glass of 27% cranberry. The consumer will also eventually realize that there is no such thing as "white cranberry" and they are simply being offered unripe green fruit with more sugar added to provide a less tart taste.

Introducing new products that contain small amounts of cranberry will do very little to resolve the oversupply of fruit from growers. Those new products will increase revenues and provide marketing dollars to spend for juice company executives ego’s but do little for the grower. When the industry leader decides to maximize market share instead of grower returns, the rest of the industry must follow in order to compete. Pure juice marketing entities such as Langer’s, Apple & Eve, Old Orchard, Knutson’s, Dole etc. have been the beneficiaries of the huge reduction in the price of grower fruit. The losers in this battle have been the owners of the cranberry farms. Unless the owners of Ocean Spray demand management to provide a reasonable return, the playing field will not change.

Northland will continue to have the burden of above market fruit for the fruit it grows combined with the benefit of the cheap fruit it buys at market. Northland will not thus reap the benefits of Ocean Spray management and other juice companies of cheap grower fruit as the only cost of goods. Like all other growers, we will attempt to reduce our growing costs and thus reduce our average cost of fruit in order to compete with other juice only companies.

I believe that as growers we missed a golden opportunity to unite and put historical differences aside for the benefit of all growers. The next two years will clearly define the industry for the long-term. I truly hope my analysis is wrong and the industry will again be grower profitable, only time will give us the answer. One thing is for certain, until supply and demand are back in balance, grower prices will not change significantly.