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Cranberry growers shake-up industry By the Wisconsin Cranberry Cooperative
(March 15, 2002 – CropChoice guest column) -- A tidal wave of discontent is sweeping across the cranberry marshes of central Wisconsin. Growers, who have endured three years of prices below the cost of production, have organized to save the industry and their individual farms. They are joined by growers in the other leading cranberry producing state, Massachusetts, as well as the Pacific Northwest in challenging the market dominance of Ocean Spray and a handful of other independent processors and handlers. The Wisconsin Cranberry Cooperative (WCC) was formed last year after 70 growers met in Tomah, Wisconsin, to develop strategic options to save family-scale cranberry farms.
"There is no question that too much new cranberry production was brought on-line too quickly in the late nineties, destabilizing the market," said the new cooperative's president, Greg Gitter, a Wisconsin Rapids cranberry grower. "However, the slow recovery has, in part, been allegedly engineered by manufacturers manipulating the inventory of cranberries and market prices." The stated goal of the cooperative is to empower farmers, putting them on a level playing field with manufacturers and handlers in this multibillion dollar industry.
Growers are becoming much more vocal in their criticism of Ocean Spray, which controls 60-70% of the cranberry market. Ocean Spray, a cooperative that due to its bylaws is controlled by the couple dozen largest of its 700 members, has left many of its rank-and-file growers feeling disenfranchised. Wisconsin Ocean Spray grower Randy Jonjak recently said, "If your survival strategy is to out-farm your neighbor, you’re falling into a trap. You’re condemning yourself, and your neighbor, to a career of subsistence farming. The marketplace wins, not the farmer".
Growers that shipped to the four other primary industry purchasers of cranberries feel aggrieved that not only are they also receiving prices below the cost of production, but have also had prices reduced arbitrarily (during a contracted delivery period). Some growers have filed lawsuits resulting in substantial settlements based on these grievances. As a result, grower contracts have deteriorated further, obligating growers to deliver berries for multiple years without any price assurances.
Wisconsin Cranberry Cooperative members say they have a vision for a brighter future in the cranberry industry. They have developed a three-pronged approach with stated goals of raising industry prices and returning a larger share of margin dollars to growers; political action, creating a collective bargaining agency; and potentially developing high-value cranberry products in market niches that the large players have left unaddressed.
Their political efforts this year focus on WCC's submittal of four proposed amendments to the USDA's cranberry marketing orders. They will give more representation to growers on the Cranberry Marketing Committee, increase the democratic voice of growers by prohibiting "bloc voting" by cooperatives, and make it harder for marketing organizations to block the export of surplus berries.
They have already started representing independent producers in negotiations with cranberry buyers. "Currently, cranberry growers have absolutely no negotiating leverage in entering into contracts with handlers," said Mark Kastel, President of M. A. Kastel Associates, Inc., a La Farge, Wisconsin, based farm policy analyst retained by the cooperative. "Not only do we have the opportunity to negotiate more equitable terms on behalf of growers, we also can provide a service to the handlers, reducing their procurement/operating costs."
Lastly, the cooperative's preliminary market research has identified a number of value-added market niches that have been overlooked by the industry's major players. "We are looking for very high margin products that will justify the cooperative making an investment and culminating in higher returns for growers," according to Kastel.
This year the WCC is strongly supporting a market order to constrain production. "We've seen a greatly improved inventory condition over the past two years due to production quotas set by the USDA's cranberry marketing order. It would be a crying shame to see all this reversed in a matter of one season if we remove production constraints and simultaneously have a bumper crop", stated Gitter. "We need to develop a supply management system for the industry that will assure very small growers, with low yields healthy market access, while reasonably constraining the rest of us", Gitter added. The cooperative strongly feels that in order to maintain stable pricing, a permanent management system, balancing supply and demand, needs to be created. "The ideal system might combine a grower quota with a handler reserve. But I want to emphasize that the grower cannot be stuck with the bill".
After initial meetings or phone conversations with officials with all major cranberry buyers, the cooperative sent letters to each organization inviting them to participate in a summit meeting designed to discuss supply management system options, capable of returning the cranberry industry to stability and profitability.
"We are making every effort to work collaboratively with other industry leaders in an effort to save our nation's cranberry production/processing infrastructure", affirmed Gitter. "On behalf of growers we have retained our own team of professional advisors (competent legal counsel, policy experts, and business development specialists). Returning the cranberry industry to profitability is worth fighting for!"
Growers interested in joining the cooperative effort to tip the balance of power back to the farmer can contact the Wisconsin Cranberry Cooperative at: 715-424-4528 or wiscrancoop@netscape.net.
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