United States

Department of

Agriculture Agricultural

Rural Economic

and Community

Development Bargaining:

Cooperative

Services

Service Report 47

In a Competitive

World

Highlights:

39th National and Pacific Coast

Bargaining Cooperative Conference

December l-3,1994

San Diego, CA
NATIONAL COMMITTEE OF COOPERATIVE AGRICULTURAL

BARGAINING AND MARKETING ASSOCIATIONS

PRESIDENT

Vernon DeLong

Agricultural Bargaining Council

744 Main Street, Suite 1

Presque Isle, ME 04769

VICE PRESIDENT

John Welty

California Tomato Growers Association

I? 0. Box 7398

Stockton, CA 95267-0398

TREASURER

Ronald A. Schuler, President

California Canning

Peach Association

P.O. Box 7001

Lafayette, CA 94549

OTHER DIRECTORS

Tom Butler

Michigan Processing Apple Growers (MACMA)

r. 0. Box 30960

Lansing, MI 489098460

William Ferriera

Apricot Producers of California

064 Woodland Avenue, Suite E

Modesto, CA 95351

Michael Klein

Hazelnut

Growers Bargaining Assn.

8101 SW Nyborg Rd., I#201

Toalatin, OR 97062

Vaughn Koligan

Raisin Bargaining Association

3425 N. First, Suite 209

Fresno, CA 93726

SECRETARY

ASSISTANT SECRETARY

Adin Hester, Manager

Olive Growers Council of California

121 E. Main Street, Suite 8

Visalia, CA 93291

Andrew A. Jermolowicz

USDA/RBCDS-Cooperative Services

Ag Box 3252

Washington, DC 20250-3252
Preface

These proceedings are published by the Cooperative Services program of

USDA’s Rural Business and Cooperative Development Service (RBCDS) at the

request of the bargaining and marketing cooperatives. This 39th National

Bargaining Conference was combined with the Pacific Coast Bargaining

Conference Dec. l-3, 1994, at San Diego, CA.

Proceedings include speeches delivered at the conference and related

information. Opinions expressed reflect views of participants. The proceedings

should not be viewed as representing the policies of the United States

Department of Agriculture. Use of commercial names does not constitute

endorsement.

Copies of the proceedings may be obtained from RBCDS-Cooperative

Services, Ag Box 3255, Washington, DC 20250-3255.

Price: Domestic $5; Foreign: $5.50.

Service Report 47

September 1995

ii
Contents

Marketing Orders and USDA Reorganization ...................... .l

LonHatamiya .............................................

Problems Facing New Bargaining Associations . . . . . . . . . . . . . . . . . . . . 5

JohnMorrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Methyl Bromide Issue, Gary Obernauf, Research Consultant . . . . . . . .7

Update on National Bargaining Law, Donald Frederick . . . . . . . . . . . . . . .13

Services Draw Growers to Bargaining Cooperatives ................ .I 8

Ron Schuler, California Canning Peach Association ............ .18

Vaughn Koligian, Raisin Bargaining Assoication ............... .19

Dick La Framboise, Central Washington Farm Crops Association . .21

Attendance Roster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...24

. . . 111
USDA Reorganization Implements Dramatic Changes

Lon Hatamiya, Administrator

Agricultural Marketing Service

U.S. Department of Agriculture

As you know, Washington is going through

many changes at this time. You’ve heard about the

changes on Capital Hill, but I want to talk to you

about the wide ranging and long-lasting changes

this Administration is effecting in the U.S.

Department of Agriculture (USDA).

Implementation of USDA reorganization, on tap

for 2 years, is now almost completed. We will do

more with less people and for less money Some

agencies have merged, either improving or at least

not diminishing services to producers.

USDA’s former Agricultural Cooperative

Service (ACS), for instance, was merged with the

Rural Development Administration. (Subsequently,

RDA’s Cooperative Services became part of the

new Rural Business and Cooperative Development

Service-RBCDS.) The new Farm Service Agency

merged most of the Agricultural Stabilization and

Conservation Service (ASCS) with the farm credit

programs of Farmer’s Home Administration and

the Field Crop Insurance Corporation program to

provide one-stop shopping. We hope to not only

save farmers trips, but also save administrative

overhead by collocating various agencies. That

means a lot to both of us.

As a business person going to the Federal

Government, I wanted to make sure we saved as

much as we could. We expect the same benefits

from merging the former Soil Conservation Service

and the ASCS conservation cost-share program into

the new Natural Resources Conservation Service.

As I recently mentioned to the Almond Board

of California, the reorganization will not affect

Agricultural Marketing Service (AM% programs

significantly. Adding an Assistant Secretary for

Marketing and Regulatory Programs to the original

plan testifies to an appreciation of our uniqueness.

AMS is funded primarily by user-fee programs. If

our costs skyrocket, our customers, including many

of you, would simply drop the service we provide.

The only significant change from reorganization

will be in the eight product inspection areas which

are being moved to the new Food Safety and

Inspection Service.

Some administrative changes at AMS will cut

duplications and cost and in the end the economies

will benefit you by keeping down the cost of our

services. Secretary Mike Espy left a smaller, more

efficient USDA because of his leadership and reorganization. He also led an effort to make school

lunches healthier. AMS purchases many of the

commodities that you deal with. Since September

(1994), we also have nearly tripled our purchases of

fresh fruits and vegetables. As you know, both the

needy recipients of these products and well as the

distressed producers benefit from these purchases.

Some schools have been concerned about the

handling problems and the perishability of fresh

produce. To address those issues, we set up a task

force with USDA’s Food and Consumer Services.

We also started working with the Department of

Defense (DOD) Personnel Support Center on a pilot

program with eight schools systems to purchase

fresh produce through DOD’S economies of scale

and its own sophisticated electronic distribution

system. This allowed spilt loads and 3-day delivery. Preliminary reports on the program were

promising.

We’ve had a second-quarter report card on the

Northern American Free Trade Agreement

(NAFTA) as well, led by a 50-percent surge of fresh

and processed fruits and vegetables. It is a true success story. The General Agreement on Tariffs and

Trade (GATT) should give everybody in agriculture

1
new export possibilities. GATT will reduce tariffs,

and since tariffs fund our Section 32 purchasing

program, GATT may also affect that program as

tariffs are reduced.

However, we’re studying some very possible

solutions to some potential problems. U.S. Trade

Representative Mickey Kantor has made the point

that as agriculture expands internationally, its

influence on trade policies will also expand. Not

only does AMS encourage exports, it administers

marketing orders. This administration supports

marketing orders. I, myself, have farmed under

them. As you know, Secretary Espy discontinued

the California-Arizona citrus marketing order last

summer (19941, and for a good reason. Too many

members of that order were cheating. This

Administration supports orders where members

abide by their own rules.

When the 9th Circuit Court’s decision was

announced, critics of marketing orders saw it as a

victory for their position. In fact, the decision was

otherwise. It spelled out the legality of the Federal

orders. It did not fault the task of the almond order

to promote almonds, it only quibbled with the

order’s tools - how that program promoted its

product.

However, in its decision, the Court glossed

over the issue of generic ads, the orders’ principal

promotional vehicle, missing the distinction

between promoting a product to expand a market

and promoting a brand to expand market share.

The almond order continues to function under a

new promotion program.

Our research and promotion programs also

continue. Some have increasing linkages to export

initiatives, like the Foreign Agricultural Service

(FAS) market promotion programs. Perhaps we

shall see legislation for them emerge in the 1995

Farm Bill. To.date, I have heard about proposals

from the conola, kiwi fruit, and hardwood, industries and even from the thoroughbred horse industry.

I also oversee the Perishable Agricultural

Commodities Act (PACA). For 65 years, PACA has

protected produce growers and shippers, but now

it is taking heat from certain quarters. Readers of

the Pucker and the Produce News know this too well.

2

I can’t begin to estimate the dollar value of how

much misery and chaos PACA has prevented in its

65 years of existence. The retail produce business is

roughly $80 billion. Just imagine the consequences

of half of that amount embroiled in recovery. The

only beneficiaries of that situation might be

lawyers, and even they might not be paid.

As agriculture becomes more international,

AMS has expanded its supports for exports, adding

market news reports from countries to which we

export, or whose exports compete with ours. We

are working to harmonize international grading

standards that will speed international contracting.

We are even working on international standardizing of pallets and packages, and lowering foreign

barriers to our products.

I’ve mentioned NAFTA and the GATT, but

this Administration will progress further on

exports thanks to Trade Representative Kantor’s

relentless efforts. I suppose you have celebrated the

shipping of our apples and beef to Japan, a triumph of our trade policy. We are even shipping

apples to China. We also should celebrate the

President’s recent achievement at the Asian Pacific

Economic Conference (APE0 in Jakarta where he

has seen the beginning of a mighty Pacific freetrade zone in which we shall be a major participant. Barring unforeseen circumstances, the AMS

regulatory programs this bargaining group uses

will continue as will the other programs like those

supporting exports. I look forward not only to

administering them for a long time, but also to

being your cooperator and resource.

Questions From Audience:

Q

A

Regarding potential changes to the Agricultural

Cooperative Service (ACS), will you support

maintaining the functions of ACS within USDA?

Absolutely. My family has been a member of

five cooperatives my entire life, so we’re

major supporters of them. I lend the support

that I can in terms of the hard work and good

work ACS does. It certainly has been a partnership working with many of the programs

that I administer as well. I think the plan and

reorganization emphasizes the support that
his administration has for what ACS has been

involved in for many years.

Q Will you please comment on how the Personal

Responsibility Act will relate to the school lunch

program. Will there be changes in school lunch

purchases by USDA?

A There really hasn’t been any legislation mandating changes in that area. We’re working on

the basis that we will continue to buy commodities for the program. Keep in mind that

the Federal Government only purchases about

20 percent of the school lunch program needs

and for the feeding programs. Eighty percent

is purchased at the local school district level,

although there are Federal funds available for

use at the discretion of those local school districts. We certainly hope to assist the school

districts in those commodities that are readily

available. I think if you take a look at the congressional changes on the Hill, many of the

new members feel a mandate to cut budgets.

Unfortunately, agriculture has always been

one of the first places considered for cuts. I’m

not so sure that we’re going to benefit as an

industry by some of those changes. Many of

the members defeated were very supportive

of the programs in which we are currently

involved. So, there may be some rough times

ahead. We are also faced with unknown provisions for the 1995 Farm Bill, so anything can

happen.

Q Given the recent election results, it appears as if

agriculture’s role in Washington is diminishing.

Fewer and fewer people in Washington are knowledgeable about agriculture. What can be done to

keep or promote agricultural awareness?

A Agricultural’s influence in terms of its political clout has diminished greatly over the last

half of the decade. I think it’s important that

we emphasize the trade aspect. Given the passage of NAFTA and GATT, we can be influential because of our percentage of the trade balance that’s being exported from this country. I

think Trade Representative Kantor has mentioned that agriculture will have a place at the

table because of its importance in terms of

American trade abroad. I think that’s where

our influence will come from.

Again, I would not venture to guess what

changes will be occurring in the new

Congress. I’m going to work closely with

those new members and try to educate them

as to the benefits of the programs we administer, as will RBCD!%Cooperative Services. I

think we will be looking to providing information in terms of facts and benefits that our

programs really provide to the general consuming public in this country.

You, who are involved with agricultural

issues, need to continue to educate not only

the people you work with, but also your

neighbors, those who don’t know much about

agriculture. You need to stress how important

agriculture is to the economy, not only to this

country, but the world. That’s where I think

our influence will continue.

Q A portion of the Oregon- Washington Reform Act

deals with entitlement programs. What portions or

programs might be dropped or radically changed?

A Again, keep in mind that that is a proposal.

Many things can change in the process. I think

there is a long way to go before it changes. I

think that proposal was a mandate by voters

to cut costs. I’m not so sure that cutting costs

in some of the feeding programs is the best

place for us to look at. I hope that many of the

new members are educated about that. We can

just hope that some reasonable decisions are

made once they come to Congress and look at

what values the programs have provided in

the past.

Q Will the NAFTA and GATT focus on agricultural

programs provide for more exports at a higher rate

OY just more volume?
A Trained as an economist and also being a

farmer, I look at things in the long term. It will

ultimately provide higher disposable income

in many of the countries that we trade with.

They will be willing to pay more for the products we’re producing and in the long term, I

think we will as an industry benefit with higher profits and higher returns to the grower.

That’s going to take some time. I think we’re

starting to see that with NAFI’A. It’s only

been a year since that was passed, but I think

as we see more results coming back from that,

the returns will be good.

Q Many growers see a value in marketing order and

volume supply controls. What is USDA’s position?

A As I mentioned before, this Administration

strongly supports the existing marketing

orders. We support marketing orders that are

supported by the industries that created the

orders. The volume control provisions in the

citrus marketing order was not being enforced

within the industry (so it was terminated).

We will look at other marketing orders or creation of other marketing orders that may have

some volume controls if it makes sense for

providing an efficient, cost-effective supply of

product. We are supportive of marketing

orders and its going to be taken on a case-bycase basis. I can’t say across the board that

volume controls will be affected, but we have

to take a look at each case and the case that

the industry makes to implement a marketing

order. I’m currently looking at a number of

proposals for marketing orders and have been

contacted by many other industries that are

interested in implementing marketing orders.

There is interest despite some attacks being

made in via litigation or legislation in this

State alone in terms of State marketing orders.

We may have to make some adjustments for

new markets because the Marketing Order

Agreement Act was passed in the late 1930s

and amended in the 1940s. It’s only a domestic market anymore, but also an international

marketplace. We may have to make some

adjustments in how those are instituted and

created. We need to be flexible to deal with

that marketplace.

Q Do you oversee the enforcement of the Agricultural

Fair Practices Act? Will you support changes to

the Act?

A I don’t oversee the enforcement of the

Agricultural Fair Practices Act.

4
Problems Facing New Bargaining Associations

John Morrison

National Contract Poultry Growers Association

When we met in Arkansas, we determined

there were two ways to solve our problems. We

needed to talk to the processors, but that required

building membership. Once we had a large enough

membership, we could invite them to negotiate

with us. Because of our size, they would recognize

there was no other alternative.

But we needed an alternative because of hurdles and barriers that exist due to fear and intimidation within the industry. That alternative seemed

to call for changes in State and national legislative

arenas. That further enhanced and supported our

thoughts about having the multi-level approach to

solving our problems.

To those who are not familiar with the poultry

industry, our contract production is not what you

might find in the vegetable, fruit, and nut production areas. We provide the growout facilities, labor,

and utilities to grow these birds that are owned by

major companies like Tysons, Con-Agra,

Continental Grain, or Cargill. They own and provide the birds, feed, medicine, and technical advice

to grow them. So, we have a little bit different situation than you do in contracting for the produce or

the products represented by most of the associations here.

In the regions where we have organized separate cooperatives, this can add to the strength of

agricultural coalitions. This is going to be an

important part of our contribution in furthering the

status and the well-being of agricultural producers

across the Nation.

On the legislative side, we had been trying to

sell our concepts about agricultural bargaining. We

are currently pursuing two national campaigns.

Talking in the vernacular of the political arena in

Washington, we often referred to our agenda this

past year as our “crime bill” and our “health

reform bill.”

Our “crime bill” proposed to Congress recommends that the Packers and Stockyards Act be

amended to provide stronger enforcement on the

poultry side. By addressing unfair and deceptive

practices, we hope to improve things for our producers.

The second item on our legislative agenda

was the agricultural bargaining considerations that

had been mentioned at length by others here today.

We have looked at the Agricultural Fair Practices

Act as a way to strengthen our abilities as producers and raised some questions about the application of this act to our particular situation.

As Don Frederick of USDA’s Rural Business

and Cooperative Development Service pointed out,

one of the main problems of the Act is the disclaimer provision. We do not own our product, so

we question whether we may run into other barriers by trying to use the Act as our bargaining tool.

If you look at the definition of “producer” in

the Act, what about the person who doesn’t produce a product? All we provide are services. Would

that type of service be covered under the Act? So,

in looking at an alternative and recognizing some

of the shortcomings of the Act, we began looking at

a model that we could use as producers of services

rather than producers of products.

We looked at the prior work initiated by the

Michigan and Ohio Farm Bureau people that culminated in the introduction of HR 3535 by (former)

Rep. Leon Panetta. We found some interesting factors that broadened the horizons and possibly fit

our scenarios somewhat better. In the Panetta version of the Agricultural Bargaining Act, producers

means a “person engaged in the production of agri5
cultural products such as a farmer or planter.” The

last part of it-a “grower or farmer furnishing

labor, production management, or facilities for the

growers” fits precisely the contract provisions

(whether it be poultry, swine, or vegetables) in

which the processor is providing the seed and fertilizer, and the producer is providing the labor and

land part of the contract. Is this something we must

consider in trying to develop good faith bargaining?

Another feature of the Panetta version worthy

of consideration is in Section 6. It features an

accreditation of associations- a recognition of

those producers who have joined for bargaining

purposes.

As I read the Agricultural Fair Practices Act, I

saw more hurdles and burdens upon the producer

in trying to establish the right to bargain with a

U.S. handler. It established a procedure in which a

group is recognized by the U.S. Secretary of

Agriculture to bargain for its members. This is an

important aspect of the Act. Frederick pointed out

some shortcomings of the Act, such as the mediation or arbitration provision if a problem develops

in the negotiating process and the ability to assess

damages or penalties. This Act includes these provisions. They offer a good model for use in the bargaining arena.

I believe that with the grassroots strength, we

as agricultural producers can build and go to

Washington with our bargaining hat on, rather

than look for a handout. We can generate grassroots strength if we are willing to work and build

support, not just among farmers and agricultural

producers, but with our neighbors and friends and

get them involved in correcting the problems that

exist within agriculture.

As I see the corporate concentration taking

place within the food industry and the rapid movements to vertical integration, I believe we are all at

risk. I’m not talking about just poultry or pork producers. Rather, I’m talking about all of us.

As food producers at risk relative to our livelihood, I think it’s very important that we work

together in addressing ‘issues raised here today. The

work you have done as bargaining associations and

the platform you have set provides us with a real

basis to move forward and to change the environment in which we produce agricultural products.

In conclusion, I would very much appreciate

your consideration as bargaining associations to

look at HR 3535 as the beginning bargaining position for us to promote in Washington this coming

year. Please accept the many thanks of the thousands of poultry producers in our association for

your support as we move down this road. We very

much believe that this is the tool that will help us

move forward.

6
The Methyl Bromide Issue

Gary Obernauf

Research Consultant

Methyl bromide, generally believed to be a

carcinogen or mitigant, is projected to cause nearly

a million deaths in the United States by the year

2015. It is very potent and damaging because it

depletes the ozone layer. I believe activity groups

are no longer concerned about pesticides like this.

They have come to believe (erroneously) that foods

come from the grocery store and that the need for

methyl bromide is just another lie by corporate

farmers who produce food to get Federal subsidies.

I believe bargaining associations and field

prices are not associated with each other. After all,

the associations are social clubs and the prices are

determined by the weather.

Don’t believe all you hear about methyl bromide. There are a lot of half truths and outright lies

about the issue. Pay attention to what’s being said,

really evaluate it, and ask questions.

Science or research is not exact on such issues

as methyl bromide. There is no absolute or zero

risk and never will be. That is why statistics were

invented. What is the probability that the hypothesis of the experiment is true or false? Given this

understanding, you can use science to make logical

and objective decisions.

The problem is that scientific information is

often used or quoted by politicians and others who

have little or no understanding of the information

being used. But,,even worse than politicians using

information incorrectly are pseudo scientists and

individuals who use scientific data incorrectly to

support their point of view. All too often, most of

the available scientific data ,does not support the

individual’s opinion.

Yes, some of us in agriculture have been guilty

of misusing scientific data. The excuse that “the

other side does it,” is not a legitimate reason for us

to do so. We all need to be careful in quoting scientific information. Our usefulness to agriculture will

be greatly reduced and our efforts counterproductive if we lose our credability.

Methyl bromide was introduced in 1982 as relatively simple, straightforward issue. It has

evolved into a complex issue. The issue started in

1982 with the cancellation of ethylene dibromide

(Edb). Some proposed that methyl bromide,

because it was closely related to Edb, also should

be cancelled. Both are strong methylate agents. It

was felt that both would react the same.

Some from our group, as well as some of you,

approached the Environmental Protection Agency

(EPA) and said, ‘Wait, this is guilt by association.

You have no data to support what you are saying.”

EPA said, okay. If you do the work that’s needed to

prove that it is not a carcinogen, we will not cancel.

I’ve been very active and involved in the issue

since 1982.

Several issue today relate to methyl bromide.

The first is what we now call reregistration.

Additional toxicology data is being compiled on

methyl bromide and should be completed soon.

The data looks good today.

We know it kills living tissue and can kill people. But, methyl bromide is not carcinogenic. It will

cause some problems, but again, any toxin of this

nature will, in effect, kill you before it damages the

tissue.We are not complete with the residue data,

but will be finished soon.

The next question to be resolved is the average data intake (ADI) of methyl bromide. There

may be some restrictions based upon the residue

data, but at this time, the toxin information

(residue data) looks very good, contrary to what

EPA predicted in 1982. In addition to the residue

7
information, the most recent and probably most

difficult issue is ozone depletion. Methyl bromide

has been identified as an ozone-depleting sub

stance and therefore is regulated.

Proposition 65 is another issue that we are facing with methyl bromide. We crossed the first hurdle with that issue in California. It may come back

again. The last issue we are concerned about is

work exposure, safety, and community exposure to

methyl bromide.

Methyl bromide has also spread into the arena

that is now or may be regulated on national, State,

and local levels. Locally, the agricultural commissions are going to be more important in the future

regarding this and other pesticide issues. It’s very

apparent that the local air quality control districts

are going to be influenced by what is happening to

pesticides like methyl bromide.

Most of the international activity is happening

under the United Nations Environmental Program

(UNEP) that was started in 1985 at the Vienna convention. Out of that came what’s commonly

referred to as the 1987 Montreal Protocol.

The protocol put together regulations to control the ozone-depleting substances. That agreement was built around materials like CFC 11 (chlorofluorcarbons) that have an ozone depletion

potential of 1. Everything is relative to CFC 11.

That was in 1987. In 1990, UNEP adopted the socalled London Amendments, which actually were

regulations to control ozone-depleting substances.

There are about 80 or 90 chloroflurocarbon

(CFC) materials. Regulations for the halons and

refrigeration-type materials were adopted in 1990.

Methyl bromide was also mentioned in the 1990

London amendments as a possible ozone depleter.

In the 1992 Copenhagen meetings, methyl bromide was actually listed as an ozone-depleting substance, not regulated at that time. The importance

of listing methyl bromide is that it automatically

triggered the Clean Air Act in the United States,

which mean that they had to list methyl bromide.

Two important things happened in the 1994 meetings in Nairobi. We prevented an early phaseout of

methyl bromide in 1997 and they agreed to exempt

quarantine and preshipment treatments.

EPA also is a major player in the international

arena. More than 25 percent of UNEP’s funds come

from the U.S. Our problem is that we strongly disagree with what the EPA is doing domestically and

within UNEP in the international arena.

Convincing other nations that EPA does not

speak for the American farmer is a hard to do. But,

other nations are receptive to that. Developing

nations, of all people, are the most receptive to the

problems we have with EPA. We have a long way

to go in dealing with the international community,

but we’ve made a lot of progress.

The next important meeting of the parties

related to the Montreal Protocol will be the Vienna

meeting this November. At that time, they will

decide on regulating methyl bromide. Most people

feel they will, but the regulations will be different

from what happens in the U.S. The best guess is

that there will be a 25-percent reduction in the production of methyl bromide based on 1991 levels.

That’s a long cry from total elimination of material

as planned in the U.S. There will also be quarantine

exemptions and preshipment variances or exemptions.

One of the current activities is trying to define

preshipment. Does that mean shipment just prior

to going out the door or does it mean post-harvest

treatments? Complicating this further is that 85

percent of the methyl bromide sold is used for soil

treatment. The other 15 percent is for commodity

treatment.

It is different than other things happening

with CFC and ozone-depleting substances. Methyl

bromide naturally occurs in about 70 percent of

what’s going into the stratosphere. It comes from

natural, not man-made sources.

On the international level, steps will be taken

to mitigate problems with methyl bromide. In the

U.S., it doesn’t matter because everything is related

to production of methyl bromide. The reasoning is

that if you eliminate production, then obviously

you control the use of it. In fact, if you can reduce

the amount of methyl bromide going into the

atmosphere or the stratosphere, you can mitigate

the problem. Obviously, our environmental friends

were able to get that legislation approved.

8
The UNEP has several committees you may be

hearing about. The first is the Technology and

Economic Assessment Committee. It reports directly to the members of the parties at their annual

meeting. Actually it is two different committees.

The Technology Committee involves about 190 different scientists from around the world.

The Economic Assessment Committee consists

of “experts” from around the world. The problem

with these objective committees is that EPA has a

tremendous influence on who sits on them and,

more importantly, who chairs them. That’s where

we have run into our greatest problems.

The committees are relatively equal in representing different sides of the issues. But, the people

leading the committees have biased views about

what’s going on. That’s become a difficult issue for

us.

The Methyl Bromide Technical Options

Committee, on which I have served for 2 years,

reports to the economic assessment panel. Its

report will discuss our activities. This committee

asks, “What are the viable alternatives to methyl

bromide?” There obviously is no “silver bullet”

answer for its replacement and few viable alternatives if you consider economics, which to us is an

important factor.

There are things that possibly will work if you

don’t mind paying many times what we paid for

methyl bromide. There has to be some reality to

what is occurring. No single chemical or technology will replace methyl bromide. It is entirely possible that many commodities will have no viable

al terna tive.

It’s also important to realize that in the international community there is what’s called the

“open-ended working group.” Members of each

committee meet before the parties convene for their

annual meeting. They will meet twice in 1995 to

develop the agenda for the Vienna meeting. The

group will develop a definition of preshipment, an

important concern for those dealing with the commodities.

Discussion of preshipment in the international

community will influence what’s happening with

EPA. EPA is well aware of that with shipment of

commodities, especially export shipments in international trade. The agency doesn’t want to avoid

dealing with that issue. If, in fact, the United States

does something different than the international

community, it puts EPA in a real bind. We hope to

make the definition of “preshipment” extremely

liberal. EPA, on the other hand, doesn’t even want

it defined and doesn’t want to deal with quarantine

residues.

Walnuts and raisins are good examples of

potential problems if you are in a quarantine situation or need to treat your commodity before shipment to prevent insects. You can technically ship

walnuts from Turkey to the Midwest or East coast,

but you cannot ship from California to the Midwest

or East coast. That is a real possibility, if things go

forward as planned. EPA is aware of this problem.

Therefore, these developments will have a significant impact on EPA’s decisions.

Along with this activity, we had an annual

international research conference on methyl bromide alternatives and emissions reductions. Not

having a viable alternative to methyl bromide puts

us in an extremely vulnerable position. We have

been actively looking for a replacement since 1982.

The raisin, prune, and walnut boards, along with a

number of other commodity groups, have been

doing this for a number of years.

We are not overly optimistic about finding a

viable alternative at this time. But we need to continue seeking one. In fact, we need to step up our

efforts. At our first annual meeting, more than 90

research papers were presented. Eight countries

were involved. The next meeting will be in

November (1995). It will give you very good

updates on what research is underway concerning

alternative ways to mitigate the problem by capturing, recirculating, deep soil injecting, and other

ways to reduce emissions to the atmosphere.

National Concerns

Several things are important here. The first

consideration is the EPA and the Clean Air Act.

Right now, the potential ozone-depletion trigger

for anything to be listed as a control substance is

0.2 Under UNEP, methyl bromide was listed as

ozone-depletion potential for 0.7, which was auto9
matically triggered and included under the Clean

Air Act.

Contrary to what EPA wanted to do, it took

them 18 months to finally publish it in the Federal

Register in January 1994. There is a 7-year grace

period before it has to be phased out on Jan. 1,

2001. But under the Clean Air Act, there are no

exemptions to any ozone-depleting substance. It

will have to be done at that time unless legislation

is changed, which doesn’t seem likely.

By our interaction with EPA and pushing

USDA, some important things came out in the

Federal Register about this issue.

For the first time, they said there would be no

early phaseout of methyl bromide, although there

have been phaseout dates with the other materials.

In addition, EPA, for the first time, said it would

support exemptions to the Clean Air Act, if, in fact,

there are no viable alternatives for some uses.

They don’t tell you they can support that, but

their hands are tied because legislation does not

allow it at this time. So, to get exemptions for certain uses such as quarantine, even the Clean Air

Act will have to be changed. This will be extremely

difficult.

Taxes have been and will be another important issue with methyl bromide. Under the Clean

Air Act, material that is an ozone-depleting sub

stance can be taxed. For methyl bromide, which

costs between $1 and $1.50 a pound, the first-year

tax will be $3.52. It will accelerate to almost $8.

That’s a pretty steep tax. We have successfully

fought the issue four times, but it will be coming

up again.

Congress is looking for ways to generate

money. Although sales of methyl bromide are not

large, it amounts to several million dollars in this

country alone. The Clean Air Act will have to be

amended to allow critical uses. But, we need to

conduct research for alternatives to methyl bromide. Rather than cry on the shoulders of the

Congress, we must demonstrate that we have in

good faith looked at viable alternatives and, in fact,

been unable to find them. We have to support what

we are saying. We think we will have a good case

put together before the year 2000 to apply for critical exemptions.

Again, reregistration is looming. EPA regulates if a material is registered. Also, recently,

because of what has happened in California, EPA

has made some label changes on methyl bromide.

At this point, it only covers structural. It relates to

the toxicology work required in California. The

State told EPA what was transpiring. It relates to

the deaths that happened 2 years ago in the San

Francisco Bay area after a house was fumigated.

Contrary to instructions, people went back into the

structure, even though they were told not to. They

were killed and EPA issued new label restrictions

on methyl bromide.

Within California, methyl bromide is also

under attack in many areas. I think we are going to

see this same approach taken on a number of other

pesticides. I think it’s important to look at methyl

bromide as a case study of what may occur.

Proposition 65

Because of the data under the Pretris Bill

(Birth Defects Prevention Act), the Clean Water Act

in California required additional toxicology work

on methyl bromide. The lab that did the work

essentially found no cause-and-effect relationship.

People within the Department of Pesticide

Regulations (DPR) examined the study and disagreed with those who did the work. DPR said, to

the contrary, there was cause and effect. Also,

because EPA made a label change on methyl bromide, it was a trigger for listing under Proposition

65 in California. The problem was that the label

change was only to structure. It didn’t affect agricultural commodities.

The problem with Proposition 65 is that there

are no mandatory regulations about withdrawing

the material. With methyl bromide, it means that

within a 9-mile radius you would be required to

notify everybody that you are going to use a material that potentially could cause cancer. That not

only creates a real scare problem, but also adds a

tremendous cost problem for using such a material.

In fact, the purpose of the legislation is to eliminate

the material, not deal with the issue.

Because of this same study, work exposure

became a real important issue. The DPR forced the

10
industry for the first time in its life to conduct

research in an effort to keep methyl bromide. We

had to spend several hundred thousand dollars

doing studies on work and community exposure to

methyl bromide. Normally, the manufacturers of

the material would have had to do this research.

We are also hearing about some other pesticiderelated runoff and work exposure in orchards.

As users of materials, we increasingly are

being forced to become involved in the issue of the

toxicology exposure and what’s going on with

these pesticides. None of us like that, but it’s life.

We’re more comfortable with the manufacturers of

these pesticides handling those issues. But, reality

says we must be increasingly a player in these

issues if we’re going to keep our tools. We must

also be prepared if we lose some of these tools.

Permit restrictions is one way DPR wants to

deal with methyl bromide issues. They weren’t

willing to wait for EPA to change the label. In fact,

EPA still hasn’t changed the label on commodity

regulations. I don’t think they are going to make

significant changes.

Rather than wait on EPA, California is

addressing the issue by putting permit restrictions

on how you use methyl bromide. The State started

with new permit restrictions on structure that related to the label changes at EPA. Next, they published new soil regulations which mean you can

treat up to 20 acres per day. You must issue warnings and clear the area 100 yards around the field

being treated. Regulations concern certain conditions regarding the tractor driver, the worker covering the tarp, etc.

Permit restrictions for commodity treatments

began in January, 1995. These detailed management

restrictions will cost us money. This is also coming

down the road with other pesticides.

Methyl bromide is an important local issue for

a number of reasons. First is the county agricultural commissioner’s office in California, which is

probably similar in other States. The commissioner’s office enforces the permit restrictions and label

changes.

This is our only ray of hope. Most agricultural

commissioners are aware of what’s occurring at the

State capital in Sacramento and are bending over

backwards to work with us on this issue. But, we

need to prevent these statutes from coming on the

books in the first place rather than trying to work

around them as we often have done at the commission office. The commissioner is still an important

player in today’s activity and will be tomorrow.

Another important arena in California is the

local air quality control districts. It’s almost impossible in some districts to add new methyl bromide

fumigation chambers. Even existing chambers are

becoming difficult to keep open. They require considerably higher exhaust fans; they regulate the

pounds that can be used within a certain time

frame; and they are going to become more restrictive down the road.

It’s ironic that methyl bromide is listed as an

ozone-causing substance as far as the air quality

control district is concerned. We’re losing methyl

bromide because it’s an ozone-depleting substance

as far as EPA is concerned. We’re losing it for the

opposite ends of the same issue.

It’s important to recognize the players in this

activity. First is the global coalition of methyl bromide manufacturers from around the world. That

includes the U.S., Israel, Japan, China, and Russia.

A company called Great Lakes is the major (85

percent) U.S. manufacturer. It has a separate

methyl bromide working group. A number of other

manufacturers, like Dow and DuPont, quit producing it about 10 years ago at the very beginning of

this conflict. It was not a big enough volume item

to even become involved in the issue. It was cheaper for them to walk away from it.

Manufacturers say 85 percent of today’s

methyl bromide use is for soil treatment. Most of

the toxicology work required will be for commodity treatments. We couldn’t financially justify doing

that work, so a national group called Methyl

Bromide Task Force was formed to jointly fund toxicology research. At this point, we are glad that we

did because the toxicology work looks very favorable.

The last group is the Crop Protection

Coalition. I was instrumental in its development

and served as its first vice-president. Dave Riggs is

coalition president and Dan Botts of the Florida

Fruit and Vegetable Association is secretary-trea11
surer. We have strong representation from the

States of Washington and Texas and a number of

different commodity groups.

Coalition members, such as grower organizations, use methyl bromide. All too often, users are

lost in discussions about what’s happening with

the pesticide issues. The manufacturers usually

dominate discussion. We feel we have a viable

alternative. If so, it becomes another issue.

The coalition also has been active in a number

of arenas. As users of methyl bromide, we have

been actively working with EPA. Its first announcement in the Federal Register said EPA would be

eliminating the product by the year 2000; that there

would be a possible phaseout of the material; and

that there would be no support for exemptions.

Because of the views we expressed, we made some

significant inroads into EPA’s thinking.

We prepared a 30-page document that demonstrated how we felt about methyl bromide. The

necessary research to develop a viable alternative

will cost about $60 million. We took this document

to Congress and we got $1 million. We were lucky

to get that. We also convinced Congress to instruct

USDA to redirect $5 million of its money towards

this issue. That effort is in progress.

In addition, Congress put wording into appropriations that require EPA to form an advisory

committee. As users, we are becoming directly

involved in what research is and is not being done

about methyl bromide alternatives. We feel the

research on this issue is critical.

12
Update on National Bargaining Law1

Rural Business and Cooperative Development Service

U.S. Department of Agriculture

I. BACKGROUND

A. Sherman Act (1890) - Basic antitrust law.

Makes it illegal to enter into contracts and

combinations that restrain trade (§l) and

to monopolize or attempt to monopolize

interstate commerce (52).

B. Clayton Act (1914) - Provides forming a

nonprofit agricultural producers association, without capital stock, doesn’t violate

antitrust law (56).

C. Capper-Volstead Act (1922) - Authorizes

agricultural producers to market their

products on a cooperative basis (§I).

Secretary of Agriculture prevents undue

price enhancement (52).

D. Cooperative Marketing Act of 1926 -

Authorizes Secretary of Agriculture to

support cooperatives. Sanctions sharing of

market information among producers

through producer associations (55).

E. Fishermen’s Collective Marketing Act

(1934) - Extends the protection of the

I

1 Donald A. Frederick, Program Leader, Legal & Policy,

RDA\Cooperative Services, U.S. Department of

Agriculture. Presented at the 1994 Pacific Coast and

National Bargaining Conference, December 2,1994, San

Diego, California. This material does not represent the official position of the U.S. Department of Agriculture or any

other government agency. It is presented only to inform and

stimulate discussion among conference participants.

Capper-Volstead Act to fishermen and

aquaculturists.

F. Fundamental changes in farm marketing

have been occurring since WW II.

1. Replacement of traditional open markets

by contract production and vertical integration.

2. Processor and retailer concentration.

G. Efforts of producers to organize met with

retaliation by processors, notably against

Ohio tomato growers, California raisin

growers, and Arkansas poultry growers.

H. In 1959, at the urging of the Ohio Farm

Bureau, the American Farm Bureau

Federation (AFBF) initiated a farm bargaining program, the American

Agricultural Marketing Association. AFBF

met processor resistance and become interested in using its political power to enact

legislation to protect bargaining associations.

I. AFBF drafted and had introduced in

Congress in May, 1964, legislation to protect bargaining associations from discrimination. As enacted in April, 1968, the

Agricultural Fair Practices Act applied

anti-discrimination provisions to producer

associations as well as processors, protected certain processor practices, and contained a diluted enforcement provision.

13
II. AGRICULTURAL FAIR PRACTICES ACT OF

1967

(7 U.S.C. QQ 2301-2305)

Section 2-Congressional findings and declaration of policy. Individual agricultural producers must be free to join together voluntarily into cooperative marketing associations.

Interference with this right is contrary to public interest and adversely affects commerce.

Section 3-Definitions. “Handler” means

buyer, processor, producer association, or

agent for any of the above.

Section 4-Prohibited practices. It shall be

unlawful for a handler knowingly to engage

or permit any employee or agent to engage in

the following practices:

(a) To coerce any producer to join or refrain

from joining a producer association, and

To refuse to deal with a producer because

of membership in a producer association.

(b) To discriminate against a producer with

respect to price, quantity, quality, or other

terms of purchase because of membership

in an association.

(c) To coerce a producer to enter into or terminate a membership agreement or marketing contract with a producer association or

a contract with a handler.

(d) To pay or loan money, or otherwise bribe a

producer to cease belonging to a producer

association.

(e) To make false reports about the finances,

management, or activities of a producer

association or a handler.

(D To conspire with others to do any of the

above prohibited practices.

Section 5-Disclaimer of intention to prohibit normal dealing. Nothing in the act shall:

l Prevent handlers and producers from

selecting their customers and suppliers

for any reason other than a producer’s

membership in or contract with a producer association.

l Require a handler to deal with an association of producers.

Section 6 - Enforcement provisions.

(a) A victim of a prohibited practice may seek

a restraining order.

(b) The Secretary of Agriculture may ask the

Attorney General to seek a restraining

order to stop prohibited practices.

(c) A victim of a prohibited practice can sue

for monetary damages. The court may

allow the prevailing party reasonable

attorney’s fees.

(d) Suits shall be brought in U.S. district

court.

III. WEAKNESSES IN THE AFPA

As enacted, the AFPA falls far short of the

strong public policy statement in support of

farm bargaining envisioned by its original

supporters. Its principal weaknesses include:

A. The Disclaimer Provision. The language

permitting processors to refuse to do business with a producer for any reason other

than membership in a producer association

leaves association leaders and members

vulnerable to discrimination, disguised as

legitimate reasons to refuse to deal.

The phrase stating processors aren’t

required to deal with producer associations gives processors justification to total

14
B.

C.

D.

ly disregard a producer association, or to

go through the motions of negotiating and

then, at some critical period when producers are under the greatest pressure, walk

away from the table and offer growers

take-it-or-leave-it contracts.

No Inducements to Bargain. There is no

requirement that handlers bargain in good

faith with producer associations. Nor is

there any mechanism to resolve disputes

during negotiation. Thus, even if honest

bargaining occurs, there is no assurance

that a contract is likely in time for orderly

marketing of the farmers’ product.

Insufficient Penalties. The only penalty

that can be assessed in a suit by the government is an order against further illegal

conduct. As a result, there is little motivation for government prosecutors to accept

AFPA cases or for handlers to fear meaningful sanctions if the government does

bring a lawsuit. The most a private litigator can realize is damages and attorney’s

fees. If a violator pays only damages when

discovered and successfully sued, there is

little incentive to follow the law.

Free Loaders. Non-members almost

always receive prices and other terms of

trade at least as favorable as those of association members. Yet, they pay no fees to

support negotiation. This serves as a disincentive for producers to join the association, reducing the association’s power at

the bargaining table.

IV. PANETTA BILL (HR 3535, introduced

April 9,1979)

Agricultural bargaining interests quickly recognized the shortcomings of the AFPA.

Throughout the 1970’s the AFBF, spurred by

state farm bureaus from states where bargaining was well established - Michigan, Ohio,

California - pushed for stronger legislation.

States without an interest in bargaining, particularly in the South, not only failed to reinforce the efforts of these states but resented

AFBF expending energy on a topic in which

they saw no benefit to themselves.

This effort peaked with the introduction, in

1979, of HR 3535. Drafted as a compre-hensive

replacement for the AFPA, it received the

broadest support of any bargaining bill within

the agricultural community. But the continuing fragmentation throughout agriculture led

to its demise, as it had its predecessors.

V. STATE LAWS

A number of states have enacted pro-bargaining legislation. While no two state laws are

identical, common provisions do appear

among the jurisdictions.

A.

B.

C.

D.

E.

A statement of unfair or prohibited practices, based on the prohibited practices section of AFPA. (California, Maine,

Michigan, Minnesota, New Jersey, Oregon

and Washington)

Require good faith bargaining (California,

Maine, Michigan, Minnesota, Ohio,

Washington)

Dispute resolution through mediation

(California, Michigan, Minnesota) or binding arbitration (Maine)

Fees check-off (California, Idaho, New

Jersey)

Advisory committee, to study effectiveness

of state law (California, Washington)

VI. SUPREME COURT AND PRE-EMPTION

In 1984, the U.S. Supreme Court invoked the

Supremacy Clause of the Constitution to find

two provisions of Michigan’s bargaining law

invalid because they were pre-empted by provisions of AFPA (Michigan Canners & Freezers

15
Assn. v. Agricultural Marketing and Bargaining

Board, 467 U.S. 461).

The Michigan law did not require a producer

to join an association. However, a nonmember

could be compelled to honor an association’s

contract with a processor and to pay fees to an

association. The court found this had the same

effect as coercing the nonmember (1) to join an

association, a violation of 5 4(a) of AFPA, and

(2) to enter into a marketing agreement with

an association, a violation of § 4(c) of AFPA.

Under Michigan Canners & Freezers, state laws

that provide producer protections beyond

those in AFPA may be vulnerable to legal

attack.

VII. FEDERAL LEGISLATION,

FRONT-BURNER REFORMS

Experienced bargaining association leaders

and advisers are studying a menu of amendments to AFPA to select one or more that

might be desirable and enactable. The first

four of these ideas seem to have the most support.

A. Repeal of the Disclaimer provision, or at

least the last part of it. The U.S. Supreme

Court has ruled that AFPA pre-empts conflicting state laws passed subsequent to its

enactment. Thus, the last portion of the

Disclaimer clause, stating processors need

not deal with producer associations, hangs

like a cloud over existing state laws that

provide for good faith bargaining and

third-party assistance (mediation, conciliation, arbitration) in resolving negotiation

impasses.

Repeal of the entire Disclaimer would also

delete the connotation that processors are

free to refuse to do business with association members or leaders if they can come

up with any other possibly defensible reason to discriminate other than association

participation.

B. Require good faith bargaining. Designating

failure to bargain in good faith a prohibited

practice under AFPA 5 4, coupled with

repeal of the last portion of the Disclaimer,

would give bargaining associations leverage to compel negotiations. Such a change

would likely spur bargaining as a means of

counter balancing processor economic

power.

C. Dispute resolution mechanism.

Disinterested third-party participation in

the bargaining process has proven useful

in getting a negotiated contract. Mediation

and conciliation encourage settlement

without disrupting the marketplace by

forcing parties to accept contract terms

against their will.

Adoption of good faith bargaining and a

dispute resolution mechanism at the

Federal level would put producers and

processors in the same relative position

across the country. If a private mediation

service is used, such as the American

Arbitration Association, with the parties

sharing the costs (California), these changes

should have little budget impact.

D. USDA civil enforcement au thori ty. Giving

the Secretary of Agriculture the power to

assess civil penalties for violation of AFPA

would likely improve compliance. It

would place responsibility for reviewing

potential violations in the hands of those

persons most familiar with the intent of

the law and who possess the expertise to

evaluate whether punitive action is appropriate.

16
I

VIII. BACK-BURNER REFORMS

Other reform measures have been suggested,

but have not received as widespread support

as those above.

A. Processor collection of fees. Compelling

handlers to honor producer requests to

deduct association fees from checks to producers would strengthen association financial bases and free management from the

timeconsuming chore of collecting dues

from members.

B.

C.

D.

Advisory committee. California has a committee with equal association and processor representation to study the effectiveness of its state bargaining law. Such a

committee at the national level might keep

bargaining in the mainstream of public policy debate and stimulate discussion and

research on better negotiation techniques

to reach agreements more efficiently and

with less acrimony

Mandatory fees. To eliminate the free-ride,

compel all producers who benefit from a

bargaining association to help finance its

activities.

Agency shop. To eliminate competition

between association members and nonmembers, compel all producers to abide by

the association contract, even if they

choose not to join the association.

Assuming rational and effective bargaining by the association, this option would

likely have the greatest positive impact on

producer income.

17
Panel Discussion-Bargaining Conference

Services Draw Growers to Bargaining Cooperatives

Service progams ranging from special financing to influencing legislation on State and national

agricultural issues extend beyond important price

discovery negotiations with commodity processors

that binds fruit and vegetable growers to the

nation’s agricultural bargaining cooperatives.

At last winter’s combined National and

Pacific Coast Bargaining Cooperative Conference at

San Diego, CA, three experienced panelists from

West coast cooperatives reviewed their service programs that are at the base of attracting and retaining members.

Panelists were Ron Schuler, California

Canning Peach Association; Vaughn Koligian,

Raisin Bargaining Association; and Dick

LaFramboise, Central Washington Farm Crops

Association. Their discussion follows:

Ron Schuler: The question of whether there

is a role beyond bargaining for these cooperatives

brings to mind a visit I had some years ago with

one of my canning customers in the Midwest. I was

sitting in his office when he received a phone call. I

could tell he was talking to an individual who bargained for some tomato farmers. When he hung up

the phone, he said, “I never hear from that individual except when he wants to set the price. And,

once the price is set, I never hear from him again.”

Membership is important and you build it

providing service. We spend a lot of time contacting growers. I’m going to give two examples. I visit

a large grower of peaches every year. This particular grower had only a token amount invested in the

peach association. That year, his processor, one of

the largest, did not contract for a portion of his

orchard. Needless to say, the next time I visited

him, he was willing to put his entire tonnage into

the association. He’s now on our board of directors

and one of the key players on the pricing committee. I think the processor learned a very valuable

lesson.

Another grower I visit annually had at one

time opposed and fought us. We had a hail storm

on a Tuesday afternoon and Wednesday morning I

called and told him, “We have some opportunities

to help you out with the fruit that was damaged in

the hail storm last night.” He said his processor

would give him a hail tolerance. “Don’t worry, I

really don’t need your help,” he commented. I told

him not to hesitate calling us if he did need help.

Our juice program helped some other growers.

Another day went by and I didn’t hear from him.

But, I knew he could not expect that canner to give

him the relief he was looking for. Finally, on Friday

morning, he called and asked for help.

Now that grower’s son is on our board and

sales committee. We‘ve gained something because

we had an outlet to take some of that distressed

fruit. We built what we call “alternative markets.”

We got into the juice business in 1977 to expand

our role. The crop was hit by a big hail storm that

year. From that point on we’ve been able to deal in

that kind of fruit. We continue working to find

ways to get fruit into those “alternative” uses.

In 1994, things were so bad in the business

that we bought No. 1 fruit, subsidized it, and

placed it into the juice side of the business.

Through continual contact, we developed membership. We have provided these alternative uses in

good and bad times. When supplies were short, we

took every sort-out and cull that the grower wanted to deliver to us, providing it didn’t have any

brown rot, worms, or grounders. We took all of the

18
off-grade fruit and with it built membership by

providing this extra income and service.

Added Business in Mexico

Then we really became involved. Rich

Hudgins, California Canning Peach Association,

who chaired the session on association reports,

worked hard to put together our operation with

Mexican canners. For many years, we were shipping all the way to Mexico City for processing.

Now, we have a processor who has a cannery in

Tecate, just across the border and we are expanding

our operation there. CoBank and Rich Hudgins

have helped us assemble a staff that has made this

work.

We actually got some Californians to work in

that plant. We also have our own staff people at the

border. We’ve had our share of problems and will

probably have more in 1995, but we have expanded

the sales there again.

We also work with the processors where we

can to find ways to help in the financing end back

to growers. Processors want to defer payment,

especially when they’re competing in an industry

such as ours where you have a large cooperative

versus a large proprietary company. So, it wants to

defer payment because the large cooperative definitely defers payment. We’ve developed an “early

payment” program. We provide the grower upfront

money and charge a prime interest rate for our service. It has allowed us to earn a good return on our

money, better than what we could receive with our

revolving fund and certificates of deposit. We

charge at the prime rate which is unavailable to

most growers. It helps them to more quickly repay

their loans.

We looked into how else we could expand our

financing program to serve others, such as a cotton

company in California. We haven’t progressed any

further, but it’s another area where we can serve

our members. It helps them and in turn helps the

association.

No doubt, many of us are involved politically.

Those who are not may have to be. Everything is

having an impact. You’ve heard about the small

role we have as far as a political clout and numbers. So, we have to do it another way. Our political action committee may make small contributions, but they open doors so we can get in and tell

our story.

That’s the extended service you must offer. I

look at it and say that canner or processor is my

customer. Just like the canner’s customer is the

chain store or the distributor. We have to take care

of those customers and try to improve that relationship all along.

All we ask is a fair return, a reasonable price.

We can’t negotiate the highest price that our growers would like to have. It just doesn’t happen. So

we also work with the processors most of the year

to see where we can expand this market.

Vaughn Koligian: I don’t know how much

bargaining there is today. Certainly, many of you

do it. But, I see us more as a cog in the marketing

wheel. Many of us are plagued by overproduction,

carrying that surplus, and global competition. The

bargaining or the tightness of the trading is influenced by so many of these factors. A lot more

things influence what we do than our own ability

to negotiate a best price.

For instance, we had two marketing orders.

Our a State order for marketing and promoting our

products was called the California Raisin Advisory

Board (CALRAB), known best for the dancing

raisins promotion. Our association will be very

involved in reestablishing this new order. It had

been terminated by one group of processors who

were in conflict with the branded packer.

So, I think one role beyond bargaining is taking a leadership role in the reestablishment of the

generic promotional campaign for our raisins. This

role beyond bargaining has been successful for us

and the entire industry.

It will be funded by us and nonassociated

growers. Ralph Bungee used to call them nags who

get a free ride. So, we are going to be actively

involved in reestablishing the new order. We also

hold 34 percent of the seats on the Federal board.

I see this role as very critical. There’s always a

group of packers, one supporting their proprietary

interest and the other supporting their brand and

proprietary interests. I think the grower group

19
brings them together and goes forward. And it also

helps to be the largest group when you have two

divided factions.

It reminds me of the story about the three

partners who owned the company. Two of the partners each owned 49 percent and the third owned 2

percent. The partner who owns 2 percent runs the

company. The growers are pushing the plan

forward.

This grower order is designed to work for

both growers and processors. Our role beyond bargaining is to make sure that the order continues to

support the efforts of our industry. I think we do a

good job of it. Membership is important. As you

know, we have slightly more than 2,000 members.

You get seats on that board by membership. So we

are always seeking more members to gain more

control on that board. Actually, you get it by tonnage, but members and tonnage are related. We

have 15 seats on the 47-member board. Being active

in that takes a lot of my time.

We continue to remain the conciliator between

processors, whether they be domestic and export

branded or nonbranded. Sometimes they need the

grower group to make the motion because the

other two favor one side or the other of an issue.

So, we are continually being called upon to be that

neutral driving force that keeps talks in the center

of the road so they can go forward.

Long-Range Planning

One of your roles beyond bargaining is to be

the catalyst that develops the long-range plans in

the industry-whether you are a sole proprietor,

sole proprietor working as a processor, or major

corporation which can be a family owned operation or a publicly traded company. Not many

industries, including ours, have internal long-range

plans.

Many of the decisions we make are like buying an airplane ticket and not knowing where we

are going. The difference is that long-range planning takes commitment and a desire to compromise. By contrast, short-range planning takes minimal commitment and really no compromise. You

go on from whatever the decision was that day. I

think again, the grower group needs that role

beyond bargaining. You need to develop, maintain,

and stay with the long-range plan.

If you ask any processor in the industry what

he sees as the solution to oversupply .problem, he

would reply, “Sell more raisins!” But how and what

do you have in mind? You terminated our marketing order. You always have that conflict right now.

One of the roles is to develop an industry longrange plan that covers the next 5 to 10 years.

Political Action Committees

We have Federal and State Political Action

Committees (PACs) and we spend about what we

collect every year except for the reserve we want to

keep. I think its important to be politically active at

both State and Federal levels. We happen to be a

little more active at the Federal level because our

Federal orders kept us a little more involved. I

think we’ve got support for the State order.

Any of us, whether large or small, need that

medium to get your voice heard and somebody to

carry that message. Believe me, when you call on

that representative, his office staff has already

looked at their files to see if you contributed money

to the campaign. He may even have seen you at a

fundraising event. A couple of dollars here and

there have opened some doors that might have

been closed if 6 months earlier we hadn’t spent

$250 or $1,000 on some fundraisers for particular

candidates.

We also support people elected in other parts

of the nation. A California vote generally supports

California interests. But, when you have someone

from New Jersey supporting something taking

place that affects California, that’s got a different

type of credibility. He has no proprietary interest.

He will do it because he believes it’s right. So, that

carries a lot of weight. We support candidates in

other parts of the Nation as well, who have supported us.

Market Promotion Program

Another big area is funding for the Market

Promotion Program (MPP), a very controversial

20
issue nationwide. Frankly, it’s nice to draw congressional support from many of the Eastern States.

We continue to fund the PAC because I think we

have that obligation to support the industry from a

legislative standpoint.

Ron Schuler gave a slant about attracting

growers who might have problems we can help

solve. I think our program is similar. We are frequently called upon to negotiate disputes between

growers and processors. These disputes often

involve attorneys. We do not provide legal advice,

so we are very cautious in our approach.

But generally, we can bring both parties

together, although not everyone will like our solution. Differences generally result from misinterpretations or miscommunications and the parties are

in total division. We have continual contact with

our processors. I talk with some packers 4 out of 5

days a week. I talk with our processors more than

our board. I think, as Schuler said, you’ve got to

see them. They are your clients. I’m working for

the members, but those people sign the contracts.

think we need a good relationship with them.

I

We include the processors on our newsletter

mailing list. I think what’s fair to share with the

growers is also fair to share with processors. Many

of them frequently call us back and ask for a clarification or more details about subjects they should

know and should be explaining to us. So, there is a

good response. That’s part of bringing them into

the fold and keeping them informed.

One of our roles beyond bargaining is to keep

up with the financial condition of our processors.

About 3 years ago, we were involved in a lawsuit

that costs a fortune. We questioned a processor’s

ability to have an operating line to pay growers.

We were in court 7 times over 2 years and prevailed each time. I truly believe that if those 280

growers had delivered to that processor, it was

questionable if they would have been paid. Even

the growers have superior lien positions in the

advent the processor goes broke. The delay inpayment and the complexity of that repayment would

have caused really debilitating effects on growers.

We subscribe to Dun and Bradstreet, one of

the services I use to at least get payment records

from processors or their financial statements. New

processor members (we’ve had two) must provide

financial statements or at least prove that they were

financially able to pay the growers and have an

operating line. In addition, we annually check the

financial condition of our processors. In one case, I

think it saved millions of dollars.

There is considerable support for the association by processors. We value that. Ninty to 95 percent of our funding comes from them. We assess

our growers 1 percent for a revolving fund that’s

collected in November-December and repaid every

July 15. Even though we sit on a pretty good cash

reserve, the only thing we really operate on is the

interest we earn. Processors pay a $4 fee for each

ton delivered to them and that funds the association.

We’ve tried other things in the past. One

unsuccessful program was financing growers’ purchase of raisin bins. We borrowed up to $800,000 to

finance the program, but eventually scuttled it. We

also had a very successful workers compensation

program for 2 years that provided a dividend of 44

percent through Pan American Underwriters. A

health insurance plan and a property liability program are also available. Those are some of the

things we do beyond bargaining.

Dick La Framboise: Our organization has to

look at it from a significantly smaller scale than

many others. I feel there is a role beyond bargaining. But, I think it is one that you have to look at

for the protection of your growers and anything

that might affect their pricing structure. We start

with grading. There are certain processsors who we

feel price by grading. Anytime a processor or plant

manger walks out to the grading shed and says,

“Be a little tougher because the back end isn’t coming out right,” knows it’s something that shouldn’t

be done, and at that point and time, I feel we have

to step in.

Unlike many industries, the processor furnishes the initial seed and tells the grower exactly what

days it will be planted. Later, he advises the grower

when the crop will be harvested. The grower is in

effect kind of a contractor. Although he is responsible and owes for the seed, in effect he doesn’t pay

for the harvest because it’s figured in the price. So,

21
anything that happens that affects any one of those

things is really something beyond bargaining,

although a part of bargaining. You have to get

involved with it.

Water Issues

We have water issues in parts of our area that

have suffered from drought for the past 3 years.

The 82-mile-long Yakima River Basin serves an area

30 miles wide. The water rights to the growers in

those areas are divided between those who were

there before the Bureau of Reclamation came to the

scene and developed some water, and those who

got water under that Federal system. The latter

group has what we call “junior water rights.”

They have developed ground on which they

planted not only corn but also fruit crops like pears

and apples. When those people get only 34 percent

of their normal used water, it creates a problem.

These water issues have nothing to do with

bargaining, but certainly affect pricing. When these

issues surface, we have to get involved, be knowledgeable, and participate in what goes on so that

when you do sit at the bargaining table, the subject

is relavent.

I think public relations is a given part of political action. You have to be aware of what’s going

on. Eventually it will affect the pricing of whatever

you are doing. Our contract or articles of incorporation limit us to pricing, but again, there are many

related things in which you get involved.

Questions and Answeres:

Q How do you fund your Political Action Committee

(PAC) and what would be the size of the contribution you would make?

I

A Under our PAC, a typical grower delivers 100

tons of raisins and gets $700. We withhold $1

per ton, or $7 in this case, and repay it in July.

Every year or so we send a blanket letter asking them to allow us to deduct contributions

to the PAC fund from their revolving fund.

They can contribute in a lump sum amount or

on a dollar-per-ton basis. Typically, it’s $1 or

$2 per ton. On the disbursement, we literally

show proceeds due grower, less PAC fund

contribution, the way they made it and then

we pay the balance to them. We try and

reward those who have done a good job.

Q Tell us about your followup program.

A Only about 46 to 50 percent of the growers

participate. Each grower is asked to contribute

a minimum of $25, with a maximum of $250,

by checkoff. You sign the card, submit it, and

can have it stopped at any time. We deduct it

from what we revolve back. It’s been very .

tough to go above that 50 percent level, even

though you make the appeal many times.

I’ve served on the National Council of Farmer

Cooperatives (NCFC) PAC for many years. We

finally reached 94 percent of the board participation. So, it’s something that you have to

work on. It’s important to all of our 20 groups

because we are getting beat up by somebody

else and each of us has a different point of

view on PACs.

Our small organizations have neither that

kind of money nor a PAC. So, our board has

elected to work on a very low-key area. We

encourage our members to contribute individually. We are also members of our State Ag

Council in California and NCFC. From our

viewpoint, belonging to those organizations

keeps them apprised of our problems and

enables us to stretch our limited dollars.

Q One of the issues that keeps coming out of marketing orders and challenges is bloc-voting throughout the country. Vaughn (Koligian) will you support that order as an association? Will you

consider bloc-voting and if so, how?

A (Vaughn Koligian) We will bloc-vote that

issue. The law allows a grower to vote contrary to bloc-vote. We have carried that issue

to almost every district meeting. Growers

have supported directors casting their bloc22
vote as they thought best for the industry, In

our case, about a third of the members and

then the board will vote and the president or I

will vote on behalf of the association.

The interesting thing about the order, passage

requires 65 percent of the growers representing at least 51 percent of the tonnage or 51

percent of the growers representing at least 65

percent of the tonnage. So when you have a

body of 40 percent that can bloc-vote, you can

kill any effort by anyone trying to establish an

order unless you get your two cents worth in

there. One order is totally unacceptable to our

group so we will bloc-vote against it and in

turn bloc-vote yes on a compromise. Our

membership has been supportive of that.

23
ATTENDEES

Agricultural Bargaining Council (Maine)

744 Main Street

Presque Isle, Maine 04769

207/764-3380

Vernon DeLong

Thomas Graham

American Farm Bureau Federation

225 W. Touhy Avenue

Park Ridge, Illinois 60068

312/399-5747

Scott Rawlins

Apricot Producers of California

2125 Wylie Drive, Suite 2A

Modesto, California 95355

209 /524-0801

Bill Ferriera Connie Ferriera

Tom Brenkwitz Barbara Brenkwitz

Gene Bays Eleanor Bays

Julius Traina Marie Traina

Bill Sloan June Sloan

Ed Maring Mimi Maring

James Mahaffey Carleen Mahaffey

Jeff Arambel

California Pear Growers

1600 Sacramento Inn Way, Suite 229

Sacramento, California 95815

916/924-0530

David R. Long Bill Johnson

California Tomato Growers Association, Inc.

P.O. Box 7398 ’

Stockton, California 95267-0398

209/478-1761

John Welty Susan Welty

Jo Anne Hancock

California Canning Peach Association

P.O. Box 7001

Lafayette, California 94549

510/284-9171

Ron Schuler Rich Hudgins

Jasbir Bains Bill Bryan

Steve Scheuber Cass Flatley

Catfish Bargaining Association

P.O. Box 247

Belzoni, Mississippi 39038

601/247-4913

Bruce Dunlap Myra1 Dunlap

Central Washington Farm Crops Association

P.O. Box 202

Yakima, Washington 98907

509/575-0155

Dick LaFramboise

Hanson, Bridgett, Marcus, Vlahos & Rudy

333 Market Street, 23rd Floor

San Francisco, California 94105-2173

415/777-3200

Ron Peterson Gerry Marcus

Stephen B. Peck William J. Bush

Hazelnut Growers Bargaining Association

8101 S.W. Nyberg Road, #201

Tualatin, Oregon 97062

503/692-5932

Michael Klein

Larry Christenson

Bert Coleman

Colin Kohlmeyer

Milo Lemert

Jim Marnach

Keith Olson

Elmer Skurdahl

Milburn Ziegler

Lois Christenson

Gerda Coleman

Judy Kohlmeyer

Victoria Lemert

Jenene Marnach

Arlene Olson

Charlotte Skurdahl

Velma Ziegler

24
Malheur Potato Bargaining Association

P.O. Box 665

Vale, Oregon 97913

503/473-3122

Jack Pressley Melinda Pressley

Meshell Pressley

Marionberry Marketing Association

P.0. Box 804

Salem, Oregon 97308

503 /585-2255

David H. Leonard Brent LaFollette

Michigan Agricultural Cooperative Marketing

Association (MACMA)

P.O. Box 30960

7373 West Saginaw Highway

Lansing, Michigan 48909

517/323-7000

Randy G. Harmson Jerry Campbell

Richard Walsworth John Gallagher, Jr.

Michigan Asparagus Advisory Board

2133 University Park Drive, Suite 700

Okermos, Michigan 48864

517/347-2530

Harry A. Foster Mark C. Trommater

Michigan Processing Apple Growers

P.O. Box 30960

Lansing, Michigan 48909

l-800-248-2760

Tom Butler Dawn Messer

Allan Overhiser Mike Paradis

National Council of Farmer Cooperatives

50 F Street, N.W., Suite 900

Washington, D.C. 20001

202/626-8700

Leslie Mead

Nationwide Insurance Enterprise

One Nationwide Plaza

Columbus, Ohio 43215-2220

614/249-5330

Harold Weihl Mary Weihl

Olive Growers Council

121 East Main, Suite 4

Visalia, California 93291

209/734-1710

Adin Hester Squeakie Akin

Pat Akin

Ontario Chicken Producers’ Marketing Board

3380 South Service Road, P.O. Box 5035

Burlington, Ontario L7R 3Y8

Canada

905 /637-0025

Ron O’Connor

Ontario Vegetable Growers’ Marketing Board

435 Consortium Court

London, Ontario N6E 2S8

Canada

519/681-1875

Keith Strang Lloyd Arnold

Richard Penner Elfrieda Brown

Walt Brown Brenda Mumford

John Mumford

Prune Bargaining Association

335 Teegarden Avenue, Suite B

Yuba City, California 95991

916/674-5636

Neil1 Mitchell

Joe Bains

Ken Lindauer

Sandra Mitchell

Kay Bains

Greg Thompson

25
Raisin Bargaining Association

3425 N. First Street, Suite 209

Fresno, California 93726-6819

209/221-1925

Jim Andreas

Steve Kister

Dwayne Cardoza

Steve Lehman

Sam Esralelian

Marvin Melikian

John Kalebjian

Denis Salwasser

Monte Lauritzen

Monte Schutz

Bob Kaprielian

Frank Silva

Raymond Kay

Louis Spate

Steve Spate

Robert Tusan

Mike Weber

Vaughn Koligian

Norman Engelman

Linda Kister

Janet Cardoza

Patty Lehman

Margie Esraelian

Nancy Melikian

Esther Kalebjian

Dorothy Salwasser

Laraine Lauritzen

Kim Schutz

Mariam Kaprielian

Janice Silva

Thelma Kay

Rosalie Spate

Tracy Spate

Frances Tusan

Kim Weber

Mary Ann Koligian

USDNRBCDS/Cooperative Services

AG Box 3253

Washington, D.C. 20250-3253

202/690-1411

Andrew Jermolowicz Randy Torgerson

Washington-Oregon Canning Pear

Association

P.O. Box 344

Yakima, Washington 98907

509/452-8515

Dick McFarland Lucille McFarland

Nick Blair Larry Judd

Doug McDougall Diane McDougall I

26
U.S. Department of Agriculture

Rural Business and Cooperative Development Service

Cooperative Services

Ag Box 3200

Washington, D.C. 20250-3200

RBCDS’s Cooperative Services provides research, management, and educational

assistance to cooperatives to strengthen the economic position of farmers and other

rural residents. It works directly with cooperative leaders and Federal and State

agencies to improve organization, leadership, and operation of cooperatives and to give

guidance to further development.

Cooperative Services (1) helps farmers and other rural residents develop cooperatives

to obtain supplies and services at lower cost and to get better prices for products they

sell; (2) advises rural residents on developing existing resources through cooperative

action to enhance rural living; (3) helps cooperatives improve services and operating

efficiency; (4) informs members, directors, employees, and the public on how

cooperatives work and benefit their members and their communities; and (5)

encourages international cooperative programs. Cooperative Services publishes

research and educational materials and the monthly Farmer Cooperatives magazine.

The United States Department of Agriculture (USDA) prohibits discrimination in its

programs on the basis of race, color, national origin, sex, religion, age, disability, political

beliefs and marital or familial status. (Not all prohibited bases apply to all programs).

Persons with disabilities who require alternative means for communication of program

information (braille, large print, audiotape, etc.) should contact the USDA Office of

Communications at (202) 720-2791 .

To file a complaint, write the Secretary of Agriculture, U.S. Department of Agriculture,

Washington, D.C. 20250, or call (202) 720-7327 (voice) or (202) 720-1127 (TDD).

USDA is an equal employment opportunity employer.