John C. Decas statement presented to theWisconsin State Cranberry Growers' Association Seminar 1/23/011/23/01 -- The two most powerful forces in this industry are telling us that we must, in the year 2001, destroy the entire surplus for the good of the industry. Mr. Swendrowski and Mr. Hawthorne are promoting their approach to eliminating the entire surplus through a volume control regulation under the Cranberry Marketing Order. Mr. Swendrowski favors the withholding method (handler dumps X% of all deliveries), and Mr. Hawthorne favors the allotment method (grower cannot deliver beyond X% of his sales history). Mr. Swendrowski would regulate all the handlers, and Mr. Hawthorne would regulate all the handlers and all the growers. Mr. Swendrowski and Mr. Hawthorne are the two most powerful forces in our industry because they manage the two biggest companies. Between them, they control perhaps 85% of all berries grown in North America. They also control virtually the entire industry surplus. They also are the biggest when it comes to acquired debt. The rest of us did not impose their debt or their surplus upon them. But the rest of us (handlers and growers) have been badly damaged by the mistakes they have made, resulting in the surplus that they hold but that effects us all. Now we have the two companies most responsible for the mess we are in saying that they and they alone have the answers to the industry’s problems. That we must look to them for solutions. That no other voices or ideas are credible. That any proposal other than theirs will be voted down by Ocean Spray members on the Cranberry Marketing Committee. They refuse to fix their own problem, which would be easy to do, but insist that the rest of us share their burden. Please understand that my criticism is meant to be constructive and not confrontational. The mistakes of the past, however, must be understood to be avoided in the future. I believe the forces of a free marketplace will eventually fix our surplus problem without any CMO regulations, and will do so more quickly and more permanently than any CMC regulation. However, neither a free marketplace approach nor the proposed regulations will save all the growers. Any handler failures that occur will lead to even greater grower failures. The Ocean Spray and Northland proposals as presented thus far will cause handler failures. Having said all that, and recognizing existing trends and recognizing existing grower anguish and demands for action, I stand before you to say that I am prepared to enter into some sort of an industry-wide agreement to eliminate the surplus in its entirety this year. I have a proposal that deserves equal consideration with the Swendrowski and Hawthorne proposals. It is flexible enough to accommodate their concerns as publicly expressed by John Swendrowski and Jack Crooks of Ocean Spray. Any proposal that comes from a handler like myself who has not contributed to the surplus, has managed its inventories in accordance with its sales, and has expanded its market share mostly by creating new markets, should have at the very least an equal opportunity to be heard as the proposals of the two companies that have taken their companies, as well as the industry, to the brink of extinction. I will ultimately support any plan that, at the end of the day, will eliminate the surplus or any part of the surplus in a manner that gives no handler an advantage over another handler. That must be the ultimate standard. Independent CMC members need to insist on that standard before agreeing to anything. Hawthorne with his four Ocean Spray CMC votes cannot get anything without Independent support. Independents hold the cards. To attempt to eliminate the surplus in its entirety under either of the CMC options in the volumes proposed is nothing short of a legalized predatory opportunity, allowing the big to become bigger by devouring the smaller but more successful family businesses, also known as Independent handlers along with their growers. The consequences of this will not prove to be beneficial to any grower, including Ocean Spray growers. You are dreaming if you believe that some handler failures will improve returns to the growers of surviving handlers. It doesn’t work that way. Any grower and handler failures that may occur should be the consequence of their own bad decisions and inefficiency of operation, not because unsuccessful big handlers with power can impose overwhelming government enforced restrictions on successful handlers who have managed their business and their inventories intelligently and who have only committed the sin of not becoming as bloated as their bigger counterparts. I realize I stand before a group that is made up mostly of Ocean Spray growers. I understand and appreciate that you look to your handler for guidance on these matters. I respectfully suggest to you, however, that I offer a plan that is as good for Ocean Spray growers as it is for Independent growers, and isn’t that the way it should be? While my plan is by no means the total answer to our problems, it is a better plan for the industry as a whole than either the Swendrowski plan or the Hawthorne plan. I am hopeful that I can, at the very least, convince enough of you that my plan should be given equal consideration by growers who only want an effective plan, regardless of its author, and that you will support me at least to that extent. An open mind is all I can hope for. I have no slides or overheads with which to dazzle you. I have no five-year projections; my plan does not guarantee any fixed returns, nor do I rely upon so-called economic experts to provide me with rationale. That is not to demean the economists, but they calculate based on a perfect and predictable world. They assume all handlers have good intentions. That we are all interested in what’s good for all and not just for some. That we all make decisions based simply on the best interest of our growers. That we all play by the rules. That is not our history, and until they include our history in their calculations I choose to ignore their conclusions, and you should as well. My plan begins by defining surplus as it applies to cranberries. I recognize the Jack Crooks – John Swendrowski definition of surplus as all berries left from the previous crop after pipeline needs are met, and that pipeline needs conclude sometime in late December of each year. I am open to any other definition that can be agreed upon, if required. My plan says, therefore, that each handler will dispose of an amount of berries equal to all berries that a handler holds on, say, December 21, that remain in inventory from the previous crop. My critics suggest a problem under my plan on the issue of disposal. Let me address that. Methods of disposal can be determined by agreement. There is no reason why each handler cannot be allowed to choose one of several options regarding disposal. Indeed, they can use any combination of options as may be proposed by any handler. Three options I would suggest are as follows:
These three options would compliment the fact that the U.S. government will be buying at least 1,000,000 barrels of berries from Ocean Spray and/or Northland. This USDA purchase will greatly benefit Ocean Spray and Northland by significantly reducing their disposal requirements. It will allow them to, in effect, dispose of a major portion of their surplus, greatly reducing their December 21 obligation and getting paid $30 million for it to boot. Think about that: $30 million for berries for which there is no market. They have this advantage over the rest of us, but that’s okay with me if it reduces their burden enough that they give us some consideration as we attempt to compromise. The mechanics and rationale for my plan are outlined in my handout, and I try to show today the flexibility given to individual handlers. Under my plan it is this flexibility that should alleviate unfounded concerns expressed by critics of my proposal. How can this plan be worked out and agreed upon? It must begin with a meeting of the six major handlers and should, and perhaps must be attended by the USDA. This would keep the meeting orderly and businesslike, and it would fulfill our legal requirements under the anti-trust laws. This group will discuss all plans and agree on one if they can. If they can’t, the CMC might agree on Hawthorne’s allotment program or Swendrowski’s withholding program, if they can. But remember, this cannot be achieved by Ocean Spray votes alone. As I see it, we compromise or we do nothing. My plan creates an environment for compromise. Nothing but good can come from a meeting of the six handlers. Could Mr. Hawthorne be fearful of such a meeting, and if so, why? If the six handlers agree on some compromise, it must be presented to the Secretary of Agriculture for a hearing and for her approval. It is likely that she will approve if all six handlers will agree. It is legally allowable and there is precedence. Can the six handlers rise above the controversy and make an effort? If Ocean Spray refuses to participate, then my plan has no chance of approval. Will Ocean Spray refuse? It remains to be seen if Mr. Hawthorne believes that he can successfully promote his plan by ignoring the majority of Independents who, I believe, will support my recommendation. You, the growers, should demand that all handlers participate in such a meeting with an attitude of compromise. But, again, no handler should get an advantage over any other handler. In conclusion, I believe my presentation here today answers every concern as expressed by Jack Crooks in his recent article stating his opposition to my plan. If he still believes that I have not adequately responded to his concerns, I will be happy to further respond to him or anyone else on any specific point that they may wish to raise. I stand willing to be cross-examined by Jack, John Swendrowski, Rob Hawthorne or anyone else, today and beyond. I firmly believe I have advanced a plan that will be easy to administer, fair to all, that will send the right message to the trade early in the year when the message is most effective, and will get you to $40/barrel a lot sooner than the Hawthorne or Swendrowski plans, and certainly a lot sooner than the Ocean Spray goal of 2003. If we must wait that long there won’t be many growers left, except perhaps in Canada. More viewpoints on a Cranberry Marketing OrderJohn
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