Cranberry Stressline

Archives

May 15 - 21, 2000

With a 15% reduction, what's a grower to do (newspaper article)
New Jersey view (newspaper article)
Hawthorne endorses China trade bill
Decas exchange of letters with Ocean Spray
"Juicy dispute" at USDA
Food company takeovers
Wild blueberries
Rob Hawthorne's view of competition 
Bogs as a contrarian real estate investment

 

With 15 % crop reduction possible and low prices, what's a cranberry grower to do?


By Tam Moore
Capital Press
Staff Writer

5/19/00 -- COQUILLE, Ore. -- Art Poole, the Oregon State University extension agent who advises Oregon's cranberry growers has been doing a lot of thinking these days. So have extension specialists in Wisconsin and Massachusetts.

It's called crunch time for cranberries. "Any day now," to use words of a Cranberry Marketing Committee staff member, U.S. Department of Agriculture is likely to announce either the 15 percent crop reduction recommended by the committee or some form of it.

Cranberry prices, driven downward by two good harvests that filled freezers, are already below cost of production. If USDA slaps a reduction on the 2000 crop, handlers of processing berries will be allowed to take just 85 percent of average volume. What's left either finds a home in fresh markets not controlled by the marketing order or is dumped.

Poole and others say the possibility leads straight to a strategy that at least on some cranberry beds, the best thing is to try and avoid much of a crop to start with. Time is short. On Oregon's South Coast, scattered flowers were already showing on some uprights of Stevens, the popular variety among a majority of growers.

Continued

 


Ocean Spray's Hawthorne endorses China trade bill

5/20/00 Robert Hawthorne, CEO and President of Ocean Spray, was one of forty-six chief executives from the nation's leading food, beverage, and consumer product companies who urged Congress to grant China permanent normal trade relations (PNTR) status with the United States. The CEOs, whose companies are members of the Grocery Manufacturers of America (GMA), expressed their support for the China trade bill in a letter sent to every Member of Congress. GMA initiated the letter as part of its PNTR communication efforts, which are being spearheaded by GMA Board member Roger Enrico, Chairman and CEO, PepsiCo, Inc. 

Read 5/10/00 press release here.

 


 

A New Jersey view of the cranberry crisis

5/21/00 Until now, New Jersey newspapers have given limited coverage to the cranberry crisis. That changed today with a feature article in the Asbury Park Press by Kirk Moore. Entitled "Glut squeezes berry farmers," the article quotes Ocean County grower Edward V. Lipman, Jr. as saying "two years ago we were getting $50 a barrel, now it's $8.50. We believe it costs us in the neighborhood of $20 to $25 a barrel to produce them... I've never felt so exposed to risk in agriculture." He goes on to predict dire consequences to smaller cranberry farmers in Massachusetts: "From my scanning of the situation in Massachusetts," Lipman said, "it looks like anyone with 50 acres or less is wiped out... (in New Jersey) unless we get prices somewhere in the high teens 15 months from now, I don't know how we'll stay in business."

In New Jersey, where cranberry growers have battled environmentalists over bog expansion into wetlands, the Audubon and Sierra organizations are using the current surplus to bolster their arguments against expansion. Grower and Ocean Spray board member Stephen V. Lee III, who advocates extension of the wetlands permits, states that "sometime in the five-year window, people will have to plant... we have to keep supply and demand in balance... the only way you can do it is to plant more when people want it." William Neil, of the New Jersey Audubon Society counters with "they've got a classic boom and bust. They can't snap their fingers and create the demand... the question is, where's the public interest in this? We'll be hurting small growers, losing (wetlands) resources, and it's not benefiting the consumer."

Excerpt:

Ocean Spray's new chief executive officer, Robert Hawthorne, recently wrote to growers defending the cooperative's push to expand. Ocean Spray's market share had slipped for six consecutive years in the face of competition from other juice and drink lines, Hawthorne said in the letter.

That approach instead built up a surplus that flooded the market and hurt all growers, critics contend. "People certainly knew, but the warnings were not heeded," said Massachusetts grower Hal Brown, whose Internet site www.cranberrystressline.com documents the tribulations in cranberry country. The bad news hit at meetings in February 1999 when Ocean Spray told growers that because of over supply the prices paid farmers would be slashed 30 percent. The news got worse, and led to internecine feelings in the cranberry community, with small farmers blaming larger, richer growers and "the decisions that were made to increase acreage without adequate marketing," Brown said. "People are saying that has to be laid squarely at the door or Ocean Spray."

Cooperative officials say they couldn't control all the factors. "The acreages are only part of it," said Ocean Spray spokesman Brian Gill. "The past three years have seen bumper crops, so Mother Nature had a role in that."

Read Asbury Park Press article here.


 

Quote:

On food company takeovers

"Buying shares solely on the basis of takeover speculation isn't a surefire strategy, but when a true wave of consolidation sweeps through an industry, it is often the most troubled and undervalued firms that are picked up out of the ashes." From 5/18/00 press release issued by David Peltier of Individual Investor Online 


In the news:

Supporters fight to keep Massachusetts in dairy compact, from the 5/21/00 Taunton Gazette

Washington growers hear tips on saving family farm, from the 5/19/00 South Beach Bulletin

Bog tax loss amounts to $185,734, loss isn't as much as feared, from The Old Colony Memorial

Carver facing tax decision, town must replace revenue from bogs, from the 5/20/00 Patriot Ledger

Comment sought on registration of cranberry pesticide, 5/19/00 - Wisconsin Rapids Daily Tribune .

5/17/00:  "In any other year, if someone asked to have their taxes cut in half, I'd be outraged," said John Foster, Wareham's director of assessment. "But I'm sure the values were lowered so that the smaller growers can stay alive. They're losing a lot of money. Would you want to be in the cranberry business this year?" Mr. Foster says he has heard up to half of the town's cranberry bogs will not be planted next year, as the price for cranberries continues to drop. "You might look at paying half your taxes as a great thing, but if you don't plant anything at all, it's a big bill to pay," he said.
Link - Bog value hits Wareham Taxpayers, The Standard Times

5/16/00: Link - Devaluation of bogs hits taxpayers; Plymouth and Carver must make up losses By TAMARA RACE The Patriot Ledger

5/15/00 Link - Lower cranberry price has Washington growers struggling in the Oregonian


Press release:

Wild Blueberries ... Nature's Healthy Blue Food(TM) ... Emerge as Nutritional Superstars: USDA Research Discovers Potential Anti-Aging Benefits of Blueberries, The #1 Antioxidant Fruit

``From what I've seen from our research, the anthocyanins which give blueberries their color may be very powerful and very influential in giving blueberries their health punch,'' says Joseph. ``Understanding what's responsible for the blueberry's health punch is fascinating to me. While we've long known that eating a diet rich in fruits and vegetables is good for us, we're just now beginning to understand the reasons why. What we've found is that color may be a strong part of the story, and blue is emerging as one of the most interesting colors of all.'' Read entire press release here.


Bogs: A contrarian real estate investment

5/17/00 In today's Wall Street Journal Peter Grant's column Plots & Ploys is headlined "Life Insurer Gets Bogged Down."  The column describes a "contrarian real estate investment" for those believe that prices for traditional real estate have risen too high. They note that unlike other properties, the cost of cranberry bogs has plummeted. In fact, Grant notes, that John Hancock Life Insurance has spent $3 million in the past eight months to buy 100 acres of bogs in Wisconsin for institutional clients. 

The Wall Street Journal article says:

Why the bullishness on cranberries? "One of the signals we look for is when you can buy for less than replacement cost," says Jeffery Conrad, the group's managing director. John Hancock officials also believe that Ocean Spray Cranberries Inc. is finally solving problems that have diverted the firm for years.

You can read the article online if you have a subscription to the Wall Street Journal by searching the word "cranberry."


Republished from the
Ocean Spray ExtraNet
with permission

Rob’s View: Who is the competition, anyway?

The first in a periodic series of notes from CEO Rob Hawthorne, reflecting on the business, the marketplace and the people in our industry.

5/15/00 - Well, it certainly didn't take long for me to get a reputation among some of our competitors out there as a hard-driving CEO who's out to outdo them. My often-repeated words about beating the competition seem to have struck a chord with those who see themselves in that camp. They're somehow appalled that this Cooperative, which has lost overall market share for six straight years, would actually try to reverse that trend.

In some ways, I suppose it's flattering. But in other ways, they're flattering themselves by assuming I'm speaking only of them when I talk about the competition.

When I think of competitors, I truly have a bigger universe in mind. What are the brands that are trying to muscle us out of the juice aisle and into obscurity? I'll tell you a few of the names, and I'm sure you'll recognize them. It's V-8 Splash. It's Tropicana. It's Gatorade and Minute Maid. And who are the heavy-hitting, deep-pocketed players? It's The Coca-Cola Company. It's PepsiCo. It's Quaker. It's Campbell's. We're in the Major Leagues, and we need to play to win.

Having spent my entire career in the consumer goods business, one of the things I've learned again and again, day in and day out, is that the competition's sole mission in life is to take away our market share and beat us at every turn. If we let them, they will. And if we don't try to get there first, we'll continue to lose market share.

My point in all of this is not to hurl threats or project some sort of bravado. And I certainly harbor no ill will whatsoever against any independent cranberry grower who, in many cases, are neighbors, friends and even relatives of our growers and employees. Competition is brand vs. brand. It's not grower vs. grower.

My point is simple. The competition's job is to beat us. Our job is to not let them. Our job is to compete -- fairly and squarely -- to reverse our losses and make new gains. That's what I was hired to do. I've been given a clear charge by the Board to turn this great company around. And I owe it to growers and employees to deliver. 


Previous edition

The Juice Aisle: Labels
Overproduction has growers writing with red ink form the Grayland Daily World
The Farmer as Warrior - review  of Hanson's latest book from the Boston Globe
Dairy farmland development in Bridgewater, Mass.
Editorial on Managing Anger
How the cranberry crisis effects Carver, Mass.
Does it flow? from the Motley Fool
S. Korean company seeks to buy dried berries
Ocean Spray makes appointment to newly created European position
William Pietersen: O.S. news board member
Gatorade goes "FIERCE"
Snapple leads Triarc earnings
Don Hatton quoted in South Beach Bulletin
Farm labor immigration bill

Washington Post cites lobbying efforts as a  "juicy dispute" at USDA

"The U.S. Department of Agriculture is in the middle of a food fight over cranberries."

5/18/00 Washington Post reporter Judy Sarasohn, in her column "Special Interests," describes the lobbying efforts of  Cliffstar, Clement Pappas, and Ocean Spray to influence the USDA on their decision regarding the cranberry marketing order. She quotes Stephen Lacey, a lawyer at Olsson, Frank and Weeda, a D.C. law firm that specializes in food, drug and agricultural issues, who represents Cliffstar Corp. and Clement Pappas, as saying "the independents don't have a surplus. . . . [They] want to buy everything their growers can deliver." The article states that Cliffstar and Clement Pappas lobbyists "contend the cranberry glut that has resulted in a dramatic decline in cranberry prices is largely the doing of Ocean Spray Cranberries Inc., the cooperative of growers that dominates the industry." Lacey told the Post that his clients "aren't trying to kill the marketing order, they just want it to be more equitable."

Excerpts: 

Ocean Spray, which supports the cut in cranberry production because it has the bulk of the surplus, and its longtime lobbyist, Cassidy & Associates, are trying to sound a conciliatory note. "We're the market leader, and we have not done a good job of creating demand," Ocean Spray spokesman Chris Phillips said. "We just have to market, market, market. There are family farmers out there that are ailing."

The cooperative's new chief executive, Robert Hawthorne, is an active lobbyist in his own right. In his first months on the job, he met several times with Glickman about the marketing order and other issues.

USDA staff met with Ocean Spray, Cliffstar, Clement Pappas, their lobbyists and others this week to work out a compromise. An agency spokeswoman says no decision has been made on the order.

Read article here: Washington Post - scroll down to center of page

Decas responds to Ocean Spray

5/19/00 -- (Ed. note: the following correspondence is from John Decas to his growers and is being made public at his request.) On April 15, 2000 I wrote my growers a letter providing them with information regarding the state of the industry, their grower returns for the 1999 crop, and our view of what’s ahead for the coming year. Subsequent to that I received, at Ocean Spray CEO Rob Hawthorne’s instruction, a letter dated May 5 from Ocean Spray’s corporate attorney. This letter was in response to observations regarding Ocean Spray made by me in my letter to you. This letter included language that I took to be threatening. Ocean Spray made their letter to me available to all Ocean Spray growers several days before I received it. I have since answered that letter with a letter dated May 11 and sent directly to Mr. Hawthorne.

While he made the Ocean Spray letter to me available to his growers, he has not chosen to make my response available to them. This follows the Ocean Spray tradition of controlling information to their growers by deciding what they are and are not allowed to read. My growers, in the meantime, have read neither, but have heard a lot about the Ocean Spray letter from Ocean Spray growers.

In order that Ocean Spray growers get a chance to see my response to their CEO, and to provide Decas growers with the same information, I am making both Ocean Spray’s letter and my response public. Unlike Ocean Spray, we do not fear growers being fully informed.

Enclosed are copies of these letters. I will also forward these letters to the Cranberry Stressline in order to make them available to others in our industry who are also aware of the letter to me from Ocean Spray’s lawyer.

Sincerely,

John C. Decas

JCD/crg

Enclosures:

Letter from James O'Shaughnessy to John Decas

Letter from John Decas to Rob Hawthorne

Print all letters

 

 

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