Commission mulls assessment vote
Apple Commission board members say more revenue is needed to account for inflation.
The Washington Apple Commission is exploring the idea of asking growers to add up to 1 cent per box to its assessment rate. The current rate of 3.5 cents was set in 2003 as part of the settlement of a class-action lawsuit that curtailed the commission's activities.
At their May meeting by conference call, board members said they worried that over the years, inflation would affect the commission's ability to continue its activities. A small crop would also diminish the commission's revenue, yet its expenses do not fluctuate with crop size. With less income, it would have to cut programs.
The commission collects $3.5 million in revenue on a 100-million-box fresh apple crop, and receives federal funding from the Market Access Program for export promotions, which last year amounted to $3.9 million.
Of the 3.5 cents per box assessment, 1.5 cents are passed on to help fund the U.S. Apple Association and the Northwest Horticultural Council, 1.6 cents fund the commission's international promotions, and 0.4 cents pay for administration.
George Allan of Yakima said an ad hoc committee that looked at the problem noted that dues to US Apple and the Northwest Hort Council are likely to increase over the years. "We talked about how inflation was going to chew the Apple Commission out of business eventually," he said.
Board members considered several ways to address the problem, Allan said, such as adjusting the assessment rate according to inflation. Eventually, they decided that the best solution might be to cap the assessment at 4.5 cents.
Commission President Dave Carlson said it would not necessarily be a 1-cent increase. The base rate would stay at 3.5 cents. Each year, the board would consider the budget and decide how much more would be needed. The board might decide it only needed 0.25 cents more or 0.5 cents, rather than a whole cent. If the budget didn't require it, none of the additional cent would be used.
"This is not asking for an increase in the assessment," he said.
Allan said the domestic market for apples is fairly static at about 70 to 72 million. As crops grow in volume, it will be important for the export market to absorb the additional production.
The MAP funds that the commission receives are dependent on the industry contributing its own funds to international promotions. In addition to the $1.6 million annually that growers contribute through assessments, Washington shippers and marketers spend about $7 million on overseas marketing.
Carlson said it's possible that the next Farm Bill will double MAP funding over a number of years. Those federal funds for promoting Washington apples would be lost if the commission was not able to administer the export promotion program.
Members of the ad hoc committee said they had talked to the three Yakima area fruit packers who were parties in the lawsuit settlement, about the idea of raising the assessment cap. Evans Fruit Company and Borton and Sons, Inc., seemed positive about the idea, but Washington Fruit and Produce Company was not in favor and preferred that the commission work with the current budget.
Allan said other major shippers were in favor. They believed it important that the industry continue to support USApple, which is working on the immigration issue, and the Northwest Hort Council, which works on many critical trade issues.
Allan stressed that the commission is not pushing the proposal, but is simply seeking input. "It seems as board members of the Apple Commission that we had a responsibility to point out to everybody that the set rate was not going to hold together the program as it is now."
The board planned to seek further input from other shippers, marketers, and growers before deciding at the July 17 meeting whether to move ahead with a proposal to raise the assessment cap.
A request would be made to the Washington State Department of Agriculture to conduct a referendum of the state's apple growers. To pass, the measure would need to be approved by two-thirds of the growers voting and two-thirds of the acreage.