Goals for the proposed 2001 C.M.C. Marketing Order

by Russ Lawton

with Linda Rinta



7/25/00 -- I believe that a marketing order for the 2001 crop is needed, or more importantly, demanded by the growing community. We can no longer live, or break even, at these historically low prices; nor can we wait to market our way out of this problem. Growers need to realize that any order the Cranberry Marketing Committee (CMC) asks the Secretary of Agriculture to endorse will be without price guarantees. However, we have models drawn that should show the grower what price levels are attainable at different allotment levels. Ed Jesse, an Agriculture Economist and alternate public member of the CMC, drew these models for the marketing committee.

I will offer for your thought the four alternatives, as I see them, available to the members of the CMC and add the pros and cons for each option. They will be listed with the first as the best option and the fourth being the worst, in my opinion. There are three things to keep in mind while reviewing these options:

  • FIRST: Our goal is to eliminate 100% of the surplus in one year and maintain that goal in future years with the use of the order.

  • SECOND: We must set the marketable quantity to have no more than 7,500,000 barrels total supply for the 2001-2 marketing season.  Refer to the Jesse tables (ed note: we haven't yet been able to access this file but are working on it). This means the marketable quantity needs to be set at 7,500,000 barrels, minus estimated August 31 inventories.

  • THIRD: 50% seems to be the number of barrels to be withheld, or dumped, for this year to arrive at 100% elimination of surplus from the market.

All handlers are not in the same condition, even though all growers are, because some handlers manage their businesses differently and do not carry a proportional amount of inventory.  It is not in our interest to adopt any regulation that will destroy any handler.

Option 1


Producer Allotment at 50% with a Restricted Pool and a buyback provision.

PROS

  1. Growers have the opportunity to make their own decisions, within the parameters of the allotment, whether or not to grow a crop after talking to their respective handler about price and need for their respective crop. 

  2. Growers and handlers can save dumping costs, and public relations nightmares with the press, by agreeing not to grow a full crop, and only grow what their handler needs. 

  3. Growers regain control of their destiny and can make better business decisions regarding the future and work with lenders knowing the surplus will be under control. 

  4. Handlers have the opportunity to acquire additional fruit from their own growers to meet sales commitment.  

CONS

  1. Under the Marketing Order today, the restricted pool and buy back provisions are not authorized under the Producer Allotment section of the order. However, the buyback of excess cranberries is authorized under by proposed rule changes that are now being considered. The producer allotment system seems to have the most support in the industry by both growers and handlers. It will take a major effort on the part of the cranberry industry to convince the Secretary of Agriculture and Congress that we need this rule change immediately. I believe this effort is justified. 

  2. Inequities abound in trying to establish Sales History and Allotments for growers, as we saw first hand last fall.

  3. There is no guarantee that handlers could acquire sufficient fruit
    from their growers to meet sales commitments, and there is no guarantee that producers would receive any payment for deliveries in excess of their allotments. 

  4. Any buyback by handlers would add to the marketable quantity if the CMC could not find any handlers willing to replace the fruit bought back with fruit under allotment.  This would cause "slippage" in the price effect of the allotment program.

Option 2

Handler withholding, with 50% of the crop going into the restricted pool. This is a good option if option #1 is not approved.

PROS

  1. Easy to administer, as growers grow 100% of their crop and deliver to their handler. No inequities among growers as they grow all they want. 

  2. Only 6 handlers to work with, not 1100 growers. 

  3. Handler buy back provision allowed under present order. Rules that govern the buy back are in place, no need for any rule changes. 

  4. Pricing of the crop should be similar to Option#1, with the exception of added disposal costs.

CONS

  1. Growers have no options. To get credit for their crop they must grow 100% of their crop, and incur growing, harvesting, and hauling costs for fruit that ends up being dumped. 

  2. A potential political nightmare as we dump, or field spread, a few
    million barrels of cranberries while the press looks on. 

  3. The additional costs to the grower of disposing of those excess cranberries.

Option 3

Producer allotment at 90% of sales history, or 10% dump.

PROS

  1. All handlers will have enough fruit to meet market needs. 

  2. Growers will get to grow 90% of their crop for $10.00 cranberries if they want to.

  3. Growers have the choice to market their allotment to other growers and not grow a crop.


CONS

  1. It will look just like last year, with $10.00 cranberries forever! 



 Option 4

No Marketing Order at all in 2001.

PROS

  1. Do not laugh. There are some that embrace this idea.


CONS

  1. 1-50  Too many to list.

Summary

In closing, I believe more plans may be presented prior to the meeting
and everyone should explore each plan carefully because it could be the
"best" plan for all growers. Remember any plan must fall within the guidelines and rules of the present Marketing Order. We may be able to
stretch a little, but we cannot rewrite the rules prior to the 2001 crop.

I would like to thank the growers and handlers who have offered insight over the past three weeks in developing these ideas and special thanks to USDA and Dave Farrimond for keeping me inside the ropes.

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