From the Forum

A Difference of Perspective on the CMC
Linda Rinta

Respond to this posting on the Stressline Forum

1/6/01 -- After attending the Growers' Association presentation on the marketing order I was left overwhelmed and discouraged. It was clear listening to the handler presentations, which were enlightening, that the whole perspective is different depending on where you sit. I am reminded of the saying, "A flood is a very different problem depending on whether you are a monkey or a fish."

Some of those differences are fundamental to how we look at the volume regulation. These are not accusations, they are observations on the difference of perspective.

John Decas said that this was a handler problem and must be solved by the handlers.
There is too much product in the market and the cost of product has dropped dramatically.
Every one of the handlers, even those who say their supply is in balance, is paying growers less then the cost of production for their fruit and that makes it a grower problem. When the price of finished product drops, profits drop also, but the loses are passed on to the grower as in the co-op. Dean Papas said in his closing remarks that there was more commonality among those on the stage than appeared. He is right, they all still get paid. I am not suggesting that they shouldn't, I am suggesting that a flood is a very different problem to a monkey or a fish.

What is a surplus? This IS fundamental to the whole idea of a volume regulation. To the independent handlers a surplus is anything that is unused at the end of the year. To the co-op that includes a carry-over, and the carry -over is a debatable quantity. To a grower, the surplus is anything unsold or dumped onto the existing market at below cost. $10/B berries hurt us all no matter who sells them.

Which raises the question, what is marketable quantity? Is it marketable when it is given away? Should that be figured into the formula for determining how much fruit should be entered into the market? Handlers make no distinction but to growers, it ain't a sale when it's given away. If below cost fruit is need to stimulate a new market then we ought to know that amount in advance and plug it into a business plan. Marketable quantity to a grower is that quantity that can be sold in the market and return cost plus. Seems easy.

Price is a world different if you are paying or receiving. Handlers told us they do not control the price in the market and cannot tell us in advance. They chase it up, they chase it down, they cannot predict. That might be acceptable IF we were talking about price above cost, but who in the world expects a product to be produced and sold below cost? Farmers! And that is why they have price support programs. I am not suggesting a price subsidy program but I am suggesting that we use this wonderful (?) tool we have to return at least cost to the growers or we don't use it at all! I am suggesting that we don't put it in the arsenal
for market share wars.

We give the handlers a slip of paper, "$40/B", and have them come up with the "marketable quantity" at that price, everything else is "surplus" and goes to the CMC pool in the form of a withholding, and the CMC regulates that amount back into the market at a price that does not allow for price gouging wars. Ocean Spray would have to set a price and pay a dividend at the end of the pool in order to meet their co-op requirements but that can be done. More importantly, no one would have the ability to take the price down beyond cost of production. Every handler would have autonomy within that parameter to come up with their own product mix, product prices, fresh fruit or process.

I heard handlers say that USDA would never allow price fixing (by handlers) and they won't. But USDA does set floor prices for many commodities in a variety of programs based on cost or cost plus, and not just milk as was glibly suggested. Fruits and vegetables do not currently have that in their marketing orders but why not?

One thing I heard on Thursday was that all things are possible when there is an industry consensus...and what are the chances of THAT!

Response from Doanne Andresen - 1/6/01 --

Linda,

One thing I heard on Thursday, was that anything is possible with a grower consensus.
If the growers make a united request to the USDA to set a minimum price, it is possible and legal. In fact, most of the handlers on that stage said that they would support a minimum price of $40.
This can be done in time for this year's crop. There are two possible roads to reach this goal. I propose that we try both.

1. The Cranberry Market Agreement not the Market Order) can set a minimum price if growers request it. This can be presented and acted on at the Feb. 5 CMC Meeting. The Cranberry Market Agreement can be implemented quickly to help growers. This is separate from the Cranberry Marketing Order.
2. The growers can collectively make a request directly to the USDA to implement a minimum price. The Capper-Volstead Act allows growers to act collectively to negotiate a price.

I believe that most of the handlers will support this request if growers act as a group. I believe that the USDA will support our request because the price war is not a simple matter of supply and demand at work in a free market place. First, the handlers are artificially lowering the price to protect their market share. Then the retailers are not lowering their price because there is little motivation for them to do so. A few large retailers are able to set the retail price regardless of supply and demand.
Growers need USDA intervention to stabilize a base price. The laws of supply and demand can not work in this economic environment.

We need to speak in "a loud voice" together.

I believe that is could be do-able through a creative use of setting the marketable quantity via the CMC and if it is done that way I don't think it would require an amendment or rule change but I don't know that. I believe that is what Russ Lawton was suggesting (though not based on price). I do not know anything about appealing to USDA otherwise, but it would seem to take time.

In either case it would take a consensus of growers and THAT is like herding cats! Normally I am pretty optimistic about such things, but I have learned a thing or two, and in the process, I am old and tired and fairly beat-up. You are new to this business and this community of growers. God bless you.

Home