7/24/01 -- The CMC is in the process of attempting to create another new tool under the Marketing Order that I believe will prove detrimental to all growers. A sub committee of the CMC is attempting to write guidelines to establish a "Handler Marketing Pool" under the control of the CMC and USDA.

I do not believe that the creation of a "Handler Marketing Pool" is in the best interest of the cranberry grower. The best market for the grower is a free market that requires handlers to source their needs directly from the grower, not from other handlers. The concept of a "Handler Marketing Pool" is in direct conflict with the intended purpose of the Marketing Order. Despite recent developments, I continue to believe that the intent of the Marketing Order is to control total supply in order to influence per unit price. It is a system that will work if it is properly utilized.

As an industry, we need to decide if we want to influence supply and raise the grower price or if we want to simply guarantee handlers fruit at below cost of production. The only way that fruit will go up in value is if handlers need fruit to run their business. If handlers are guaranteed access to cheap fruit from other handlers that have contracted for excess fruit, the price of fruit will not go up. In my opinion, Ocean Spray has signed contracts for far more fruit than they need in their business plan and Ocean Spray has allowed expansion of existing properties beyond their internal needs. The only solution to the Ocean Spray dilemma of excess fruit is to sell significant amounts of fruit to other handlers in order to balance Ocean Spray’s supply and demand. Ocean Spray, in essence, is able to utilize its excess fruit to control the value of all grower fruit. All handlers and all cranberry concentrate users will source fruit at the lowest possible price in order to maximize the profits of their business. Why would Decas, Cliffstar, Pappas, or Northland as handlers or Minute Made, Tropicana, Citrus World, Vitality, Very Fine, Welch, Langers, Apple & Eve, etc. purchase fruit or concentrate from growers at a price higher than Ocean Spray’s price?

As a grower, the best way to be assured that you are receiving the best price for your crop is to take actions that will guarantee a free market for your cranberries and to control the total supply with the Marketing Order. Creating a Handler Marketing Pool is the direct opposite of a free market. The Handler Marketing Pool will simply allow Ocean Spray to absolutely control the price of fruit by utilizing a government program to the detriment of all growers. A free market system forces Ocean Spray management to develop a business plan that generates a per barrel return comparable to the market value of fruit in a free market. If they fail to generate competitive returns, Ocean Spray growers will not renew their contracts and the free market will determine the value of the fruit.

Based on recent data presented during the 2001 CMC debates, I estimate that as much as 30% of Ocean Spray’s barrels are resold to other handlers and other competitive juice companies. I contend that if the buyers of the 30% were forced to purchase fruit directly from the grower, the price would be significantly higher at the farm level. The current system allows Ocean Spray management to control the value of all fruit available in the market. Inclusion of a Handler Market Pool will simply increase the control over the price of fruit at the farm level.

I can only assume that the Ocean Spray branded products generate a price per barrel that is much higher than the "pool price." That "pool price" is brought down by the sales of fruit to other handlers and concentrate sales to other juice companies. Ocean Spray growers would be far better served if the true value of fruit was established by a free market system and Ocean Spray was forced to only purchase fruit that it can sell at a price that allows the grower to break even on the farm.

As growers, we have the ability to create a pool of available fruit within the current Marketing Order. All we have to do is authorize the use of Producer Allotment and Handler Withholding in the same year. We do not need to re-invent the wheel with a new system of a Handler Marketing Pool. I will fight the creation of the Handler Marketing Pool as an anti-competitive idea that will directly shift control from growers to handlers and management of Ocean Spray forever. I continue to believe that the price per barrel for the 2001 crop will be far less than currently predicted due to the excess supply of fruit available. I also believe that growers will, in fact, take back control of the CMC once the 2001 price becomes more apparent. Recent announcements regarding USDA purchases and speculation that Ocean Spray "green fruit" will be applied to the 2000 crop not 2001 will simply add to the supply and the price decline of the 2001 crop.

Growers will need to put aside all the historical inter-handler differences and begin to act as growers in the best interest of growers instead of handlers and management. We need the free market system to provide the checks and balances on management of all handlers in order for the growers to know that we are receiving the best price. Continued use of the Marketing Order, as a self-serving tool of handlers, will destroy the checks and balances of a free market system that can protect us as growers. I urge you to oppose the attempts to create a "Handler Marketing Pool" and protect your ability to market your fruit within a free market system rather than a system that turns over control of the price of fruit to the handlers forever.

Additional Comments on the Handler Marketing Pool Tool

By Doanne Andresen

7/24/01 -- The misuse of the Handler Marketing Pool has been discussed at length by the amendment subcommittee. I am on this subcommittee. CONTINUED