THE GROWING DEBATE

Will we need commodity commissions?

By Geraldine Warner

Commodity commissions across the country are being sued by producers who claim that by collecting mandatory assessments, the commissions are forcing them to support promotional messages they may not agree with and to associate with other handlers against their will.

Consolidation in the retail sector has led to a drop in the number of suppliers. In Washington State, the top nine apple marketers sell 60 to 65 percent of the crop, according to rough estimates by the state's grower-shipper associations. Many of the larger marketers are running their own retail promotions as well as financially supporting generic programs.

In the first of a new series of questions posed to members of the fruit growing community, we asked:

Will grower-funded commodity promotion commissions be needed in the future?

Yes

Todd Cowan
pear and apple grower
Leavenworth, Washington

"The bottom line is they're going to have to get together as various commissions and ask themselves, 'How can we get a greater return back to the grower?'"

Cowan believes there is a place for commodity commissions in the future, but their programs will have to be refined.

"By that, I mean their past ways of doing business are not going to be successful," he said. "They're going to have to be very, very progressive in their thinking and that extends all the way from the use of their field staff right on through being more involved with the returns that the grower is getting back, or they're going to just not be in existence. Even with the reduction in the Apple Commission assessment, I know there's going to be enough grower unrest and unwillingness to pay that if it's not justified."

Cowan said the commissions' field staff will have to be more proactive in order to generate more grower revenue.

The commissions need to think about the small growers, he added. Otherwise, there will be eight to ten major players in the state of Washington, and the small growers will not be there.

Yes

Barclay Crane
grower-shipper
Brewster
Washington

"We've invested millions of dollars in the Washington logo, and it's very valuable."

The commodity commission of the future will have to be more responsive to growers and work hand in hand with private marketing forces, Crane said. Some of the resources going into commodity commissions now will need to be distributed to private marketing efforts in
the future.

"I think we would know the true value of the Apple Commission in ten minutes if it were privatized," he said.

"I believe there's real value, but I think at this point there's a disproportionate amount of our industry resources focused on the commission. Some of the resources that are now being spent at the commission could be well used by other industry leadership for building public relations and public education in the interests of redeeming agriculture's image in the urban and suburban population."

 

Yes

Micky George
grower and shipper
of table grapes and stone fruit
Dinuba, California

"Things will change in how commissions operate; programs will be changed so they can withstand court challenges."

"My broad response is yes, there will be a continued need in the future for these type of vehicles for our industries," George said. "But there will be change. We will continue to find ourselves in the position of having to change the structure and format of commissions, hand tailoring individual commodity groups to meet specific court challenges."

 

Yes

Jerry Haak
apple grower
Sunnyside, Washington

"I would just as soon see the commission stick around, but it's going to have to go through change, just like we are."

The Washington Apple Commission's collective advertising program will continue to be important, especially for the grower who has no warehouse ownership, Haak said.

"I am fearful that if it ever did become owned by three or four warehouses they would be able to charge who knows how much per box for that value, and I would rather see that held collectively among all the growers," he said. "I'm not ready for the Apple Commission to go away."

He thinks that the commission will continue to collect assessments, but will become a smaller organization. To survive, it will have to be more in touch with what the sales agencies are doing. If the tree fruit industry were a private business, it would not make sense to have the advertising department totally separate from the people who are doing the selling, he pointed out, but that's the way the industry is set up.

The commission's advertising program will have to be more responsive to the market, he said. "It has to be sales desk driven, not Apple Commission driven."

 

No

Bruce Allen
tree fruit grower and shipper
Yakima, Washington

"Everybody tends to prefer to do things themselves because they think they can do it better themselves. Sometimes they can. Sometimes they can't."

In Allen's opinion, commodity commissions won't be necessary in the future, but they could be useful.

As shippers consolidate they tend to engage in many of the activities that the commodity commissions perform, but they might not be as effective.

"There's always the potential that a well-structured cooperative activity can produce more benefit than a multitude of individual shippers," he said.

On the other hand, cooperative activities quite often are reduced to the lowest common denominator, and the results are very watered down, he added.

"I think working with retailers is where both the individual shippers and the commodity commissions will tend to focus. We simply don't have enough dollars to engage in large or generic promotions of apples, so people tend to want to be more focused on specific activities."

 

Maybe

Dale Goldy
apple grower
East Wenatchee, Washington

"It's going to have to be a cooperative effort between the commission and the sales desks. If they're not doing that, they probably won't be around."

If there are generic advertising and promotion programs in the future, the organizations running those programs must work hand in hand with the sales desks, he said.

"If the Apple Commission is going to survive, they're going to have to become an integral part of what the sales desks are doing."

Goldy said it makes sense for the commission to run consumer advertising that ties in the store and the shipper. "If each individual warehouse had to go out and build those TV ads or whatever by themselves, it would be very expensive."

 

Yes

John Eakin
tree fruit shipper
Yakima, Washington

"There's a hole in this private promotion thing, and it may represent 30 to 40 percent of the production."

Eakin said it's questionable whether there will be commodity commissions a few years from now, because of legal challenges, but he thinks the tree fruit industry needs them.

He sees a need for generic promotions in export markets, where there is not the same kind of retail consolidation as in the domestic market. But he also thinks they're necessary in the United States because the market is larger than just the top six or seven major retailers.

"They represent a high percentage of the market, but they don't represent 100 percent of the market, and someone has to promote our product to the people who are currently buying 30 to 40 percent of our product that's not represented by the major retail chains," he said.

Conversely, apple growers who are producing fruit for buyers other than the major retailers also need to be represented.

Yes

Scott Pontin
apple and grape grower and winemaker
Prosser, Washington

"If they're doing their job, they're worth it and they'll be needed in the future. But they must represent all sides and all areas of the industry."

Even though wine is a branded product, Pontin believes the Washington Wine Commission's promotion efforts, such as the Taste Washington events held around the country, help create awareness for Washington wine.

He acknowledged that an area of vulnerability for the Wine Commission in the future could be its weighted voting system, which gives the state's single largest wine producer up to half the votes on the board.

Maybe

Dick Bouchey
grape grower
Grandview, Washington

"Sometimes you wonder why are you paying to help promote your competitors. Who are you propping up?"

"They are probably necessary and important, but for the wine grape industry, a commission might not be as pertinent as other commodities," Bouchey said.

Wine is a branded issue and not generic like other crops.

 

Yes

Glady Bellamy
marketer
Wenatchee, Washington

"I think it would be a huge mistake right now not to have the Apple Commission."

The Washington Apple Commission provides a valuable role for most shippers, Bellamy believes. "Yes, we're starting to do more ad planning and merchandising and category management ourselves, but I think a big mistake that shippers have made so far--and we found this out ourselves when we started getting more involved in these opportunities--is we're not utilizing the Apple Commission enough."

Bellamy said his company, Columbia Marketing International, which is one of the largest marketing agencies in the state, now does its ad planning and merchandising in conjunction with the Apple Commission. The commission has a lot of resources that help make it more effective than if Columbia Marketing tried to do it alone.

"We can combine Apple Commission money plus money we put in ourselves and get more effect on ads and demos, and more bang for the buck," he said.

Many of the Apple Commission's representatives have good relationships with retailers, he added. "It's just like us having a person on our payroll back there that can do things for us."

The Apple Commission is good at communicating with retailers, whereas marketers just take care of their own customers, he added.

However, he thinks the Apple Commission will have a different role in the future, with shippers taking over more of the direct contact with retailers.

"There's no doubt it's going to change, and it already has," he said. "The whole industry is changing, and I don't know exactly what role all these commodity commissions are going to play in the future." m

 

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