Proposal for a USDA Marketing Agreement to Supplement the Existing Cranberry Marketing Order

by John Decas

January, 2001

1. Handlers will report to the Cranberry Marketing Committee all cranberries as defined by the Cranberry Marketing Order held in inventory by each handler as of December 31, 2001 that were in inventory prior to the harvest of 2001. This figure will represent 100% of each handler’s portion of the industry surplus.
2. Under the supervision of the CMC, each handler will be required to dispose of an amount of berries equal to their individual surplus as reported under Section A to the CMC not later than [after December 31].
3. The Committee will keep each handler’s surplus inventory confidential. The CMC may reduce by any percent they determine, the amount of surplus to be disposed of if they determine that overall inventories are insufficient to meet market demand. Such determination must be made prior to harvest.

Procedures under this Agreement:

1. Section A requires that handlers report to the CMC all berries they have in inventory as of December 31, 2001 that remain from the crop of 2000 and all years prior to 2000.
2. Section B means that 100% of this amount of berries must be disposed of by a prescribed date after December 31, 2001.
3. Handlers can anticipate their surplus and dispose of any portion of that amount as the new crop comes in. This allows the handler to dispose of berries of lower quality such as pies, seconds, light color and low brix, improving overall quality standards while avoiding the cost of cleaning and storing surplus berries.
4. Any remaining disposal obligations will then be taken from stored berries as of December 31.
5. CMC will:

1. Manage the inventory reporting.
2. Document the disposal of berries.

Note: The Marketing Agreement must be reached among the handlers and approved by the Secretary of Agriculture.

How will growers be affected?

1. Growers lose no revenue from 2000 crop for which they will have been paid by the time the surplus is disposed of.
2. Growers will grow a crop in 2001 that will likely have more value, given the fact that the surplus from the 2000 crop will be totally eliminated.
3. Growers can grow the 2001 crop knowing the following as it relates to the Cranberry Marketing Order:

1. There will be no dumping imposed on the growers.
2. No grower will be given an exemption that favors him or her over other growers.
3. No fresh fruit considerations necessary.
4. No appeal procedure necessary.

1. Bankers would be likely to give growers greater consideration regarding debt service obligations.

2. Cheating by growers cannot occur under this agreement as allegedly occurred last year under the allotment program, because the compliance obligation will be on handlers.
3. It is worth repeating that ALL compliance obligations will be on the handlers and NOT on the growers.

How will handlers be affected?

1. This agreement works because it happens simultaneously with the purchase of 1,000,000 barrels of berries by the USDA. While Ocean Spray and Northland have the greater volumes of surplus, they will be given a soft landing in view of the fact that they will get the 1,000,000 barrel sale. The government will pay them $30,000,000 for berries they hold and can’t sell. These sales are not significantly available to other handlers.
2. Will allow all handlers to clean up the surplus with the USDA agreement and have the opportunity to make adjustments to avoid future crises like the one we are presently experiencing.
3. Agreement serves notice to all handlers that any surplus they accumulate once existing surplus is disposed of becomes their problem, and their obligation to manage.
4. Sends signal to handlers to keep their foreign berry imports at reasonable levels.
5. Handlers must adopt reasonable new acre policies to avoid future surpluses, which will become their sole obligation. Future surpluses will become a handler’s short-term problem rather than the industry’s long-term problem.
6. No handler’s surplus will be revealed.
7. Independent handlers cannot argue that this agreement will cause them to lose market share.
8. Handlers have a year to prepare.

How will the CMC be affected?

1. Simple program, easy to administer.
2. Budget kept to minimum.
3. Minimal rulemaking; no appeals necessary.
4. No buyback management necessary.
5. Enough flexibility to reduce dumping requirements in the event of a 2001 crop failure.
6. If 2001 crop is large enough to create another surplus, program can be repeated the following year.
7. If handlers and the Secretary of Agriculture accept the proposed marketing agreement, then the CMC can focus on implementation while avoiding the need to conduct a difficult and time consuming debate on volume control alternatives.
8. CMC has a full year to prepare for this program.

Recommendations to make CMC more effective and accountable to the growing community:

1. Find methods to enhance marketing and not dumping.
2. Move immediately to adopt a domestic generic promotion program.
3. All meetings should be held in locations easily accessible to growers and local press, and with appropriate notification.
4. Just as Independent growers nominate and elect their CMC representatives, co-op growers should be given the same opportunity.
5. Handlers should agree that CMC members not be instructed by their handlers’ management or directors on how to vote on any issue until after the full CMC has a chance to hear from all interested parties at the CMC meetings, and to give appropriate consideration to fellow members as they each develop their thoughts and recommendations collectively in open sessions. All handlers have ample opportunity to present their views and recommendations at all CMC meetings.
6. No lawyers on the Committee. If the CMC needs legal advice, they should hire a lawyer. Handlers’ lawyers should not be eligible as employees of growers.
7. Stop delaying the growers’ legal right to vote on the CMO referendums as required by law.
8. Have a periodic meeting with Cranberry Institute Directors to discuss matters of mutual interest that require CMC/CI coordination, such as labeling, imports, promotion, health studies, etc.
9. CI should have an observer at all CMC meetings.
10. All state growers’ associations should develop monitoring capabilities regarding the CMC and its activities on behalf of their membership. The purpose of this would be to help keep their members current on CMC issues. The CMC is less effective and accountable when it conducts its business in a vacuum.
11. The CMC must improve its ability to act at the early stages of a surplus, rather than allow the problem to become a major crisis. The CMC could have headed off the present crisis in 1997 and perhaps even 1998 with a modest volume regulation. Ocean Spray has been predicting a major surplus since at least 1993.

It is imperative that each grower reports their total crop to the CMC as opposed to reporting by individual properties. This was the original CMC concept, but somewhere along the line it was changed, giving some growers greater rights over other growers. The standard should be one tax ID number, one report.

Home