United StatesDepartment ofAgriculture AgriculturalRural Economicand CommunityDevelopment Bargaining:CooperativeServices

Service Report 47In a CompetitiveWorld

Highlights:

39th National and Pacific Coast

Bargaining Cooperative Conference

December l-3,1994

San Diego, CA

NATIONAL COMMITTEE OF COOPERATIVE AGRICULTURALBARGAINING AND MARKETING ASSOCIATIONS

PRESIDENT

Vernon DeLongAgricultural Bargaining Council744 Main Street, Suite 1Presque Isle, ME 04769

VICE PRESIDENT

John WeltyCalifornia Tomato Growers AssociationI? 0. Box 7398Stockton, CA 95267-0398

TREASURER

Ronald A. Schuler, PresidentCalifornia CanningPeach Association

P.O. Box 7001Lafayette, CA 94549

OTHER DIRECTORS

Tom ButlerMichigan Processing Apple Growers (MACMA)r. 0. Box 30960Lansing, MI 489098460

William FerrieraApricot Producers of California064 Woodland Avenue, Suite EModesto, CA 95351

Michael KleinHazelnutGrowers Bargaining Assn.8101 SW Nyborg Rd., I#201Toalatin, OR 97062

Vaughn KoliganRaisin Bargaining Association3425 N. First, Suite 209Fresno, CA 93726

SECRETARYASSISTANT SECRETARY

Adin Hester, ManagerOlive Growers Council of California121 E. Main Street, Suite 8Visalia, CA 93291

Andrew A. JermolowiczUSDA/RBCDS-Cooperative ServicesAg Box 3252Washington, DC 20250-3252

Preface

These proceedings are published by the Cooperative Services program ofUSDA’s Rural Business and Cooperative Development Service (RBCDS) at therequest of the bargaining and marketing cooperatives. This 39th NationalBargaining Conference was combined with the Pacific Coast BargainingConference Dec. l-3, 1994, at San Diego, CA.

Proceedings include speeches delivered at the conference and relatedinformation. Opinions expressed reflect views of participants. The proceedingsshould not be viewed as representing the policies of the United StatesDepartment of Agriculture. Use of commercial names does not constituteendorsement.

Copies of the proceedings may be obtained from RBCDS-CooperativeServices, Ag Box 3255, Washington, DC 20250-3255.

Price: Domestic $5; Foreign: $5.50.

Service Report 47September 1995

ii

Contents

Marketing Orders and USDA Reorganization ...................... .lLonHatamiya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

Services Draw Growers to Bargaining Cooperatives ................ .I 8Ron Schuler, California Canning Peach Association ............ .18

Vaughn Koligian, Raisin Bargaining Assoication . . . . . . . . . . . . . . . .19Dick La Framboise, Central Washington Farm Crops Association . .21

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

. . .111

USDA Reorganization Implements Dramatic Changes

Lon Hatamiya, AdministratorAgricultural Marketing ServiceU.S. Department of Agriculture

As you know, Washington is going throughmany changes at this time. You’ve heard about thechanges on Capital Hill, but I want to talk to youabout the wide ranging and long-lasting changesthis Administration is effecting in the U.S.Department of Agriculture (USDA).Implementation of USDA reorganization, on tapfor 2 years, is now almost completed. We will domore with less people and for less money Someagencies have merged, either improving or at leastnot diminishing services to producers.

USDA’s former Agricultural CooperativeService (ACS), for instance, was merged with theRural Development Administration. (Subsequently,RDA’s Cooperative Services became part of thenew Rural Business and Cooperative DevelopmentService-RBCDS.) The new Farm Service Agencymerged most of the Agricultural Stabilization andConservation Service (ASCS) with the farm creditprograms of Farmer’s Home Administration andthe Field Crop Insurance Corporation program toprovide one-stop shopping. We hope to not onlysave farmers trips, but also save administrativeoverhead by collocating various agencies. Thatmeans a lot to both of us.

As a business person going to the FederalGovernment, I wanted to make sure we saved asmuch as we could. We expect the same benefitsfrom merging the former Soil Conservation Serviceand the ASCS conservation cost-share program intothe new Natural Resources Conservation Service.

As I recently mentioned to the Almond Boardof California, the reorganization will not affectAgricultural Marketing Service (AM% programssignificantly. Adding an Assistant Secretary forMarketing and Regulatory Programs to the originalplan testifies to an appreciation of our uniqueness.

AMS is funded primarily by user-fee programs. Ifour costs skyrocket, our customers, including manyof you, would simply drop the service we provide.The only significant change from reorganizationwill be in the eight product inspection areas whichare being moved to the new Food Safety andInspection Service.

Some administrative changes at AMS will cutduplications and cost and in the end the economieswill benefit you by keeping down the cost of ourservices. Secretary Mike Espy left a smaller, moreefficient USDA because of his leadership and reor-ganization. He also led an effort to make schoollunches healthier. AMS purchases many of thecommodities that you deal with. Since September(1994), we also have nearly tripled our purchases offresh fruits and vegetables. As you know, both theneedy recipients of these products and well as thedistressed producers benefit from these purchases.

Some schools have been concerned about thehandling problems and the perishability of freshproduce. To address those issues, we set up a taskforce with USDA’s Food and Consumer Services.We also started working with the Department ofDefense (DOD) Personnel Support Center on a pilotprogram with eight schools systems to purchasefresh produce through DOD’S economies of scaleand its own sophisticated electronic distributionsystem. This allowed spilt loads and 3-day deliv-ery. Preliminary reports on the program werepromising.

We’ve had a second-quarter report card on theNorthern American Free Trade Agreement(NAFTA) as well, led by a 50-percent surge of freshand processed fruits and vegetables. It is a true suc-cess story. The General Agreement on Tariffs andTrade (GATT) should give everybody in agriculture

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new export possibilities. GATT will reduce tariffs,and since tariffs fund our Section 32 purchasingprogram, GATT may also affect that program astariffs are reduced.

However, we’re studying some very possiblesolutions to some potential problems. U.S. TradeRepresentative Mickey Kantor has made the pointthat as agriculture expands internationally, itsinfluence on trade policies will also expand. Notonly does AMS encourage exports, it administersmarketing orders. This administration supportsmarketing orders. I, myself, have farmed underthem. As you know, Secretary Espy discontinuedthe California-Arizona citrus marketing order lastsummer (19941, and for a good reason. Too manymembers of that order were cheating. ThisAdministration supports orders where membersabide by their own rules.

When the 9th Circuit Court’s decision wasannounced, critics of marketing orders saw it as avictory for their position. In fact, the decision wasotherwise. It spelled out the legality of the Federalorders. It did not fault the task of the almond orderto promote almonds, it only quibbled with theorder’s tools - how that program promoted itsproduct.

However, in its decision, the Court glossedover the issue of generic ads, the orders’ principalpromotional vehicle, missing the distinctionbetween promoting a product to expand a marketand promoting a brand to expand market share.The almond order continues to function under anew promotion program.

Our research and promotion programs alsocontinue. Some have increasing linkages to exportinitiatives, like the Foreign Agricultural Service(FAS) market promotion programs. Perhaps weshall see legislation for them emerge in the 1995Farm Bill. To.date, I have heard about proposalsfrom the conola, kiwi fruit, and hardwood, indus-tries and even from the thoroughbred horse indus-try.

I also oversee the Perishable AgriculturalCommodities Act (PACA). For 65 years, PACA hasprotected produce growers and shippers, but nowit is taking heat from certain quarters. Readers ofthe Pucker and the Produce News know this too well.

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I can’t begin to estimate the dollar value of howmuch misery and chaos PACA has prevented in its65 years of existence. The retail produce business isroughly $80 billion. Just imagine the consequencesof half of that amount embroiled in recovery. Theonly beneficiaries of that situation might belawyers, and even they might not be paid.

As agriculture becomes more international,AMS has expanded its supports for exports, addingmarket news reports from countries to which weexport, or whose exports compete with ours. Weare working to harmonize international gradingstandards that will speed international contracting.We are even working on international standardiz-ing of pallets and packages, and lowering foreignbarriers to our products.

I’ve mentioned NAFTA and the GATT, butthis Administration will progress further onexports thanks to Trade Representative Kantor’srelentless efforts. I suppose you have celebrated theshipping of our apples and beef to Japan, a tri-umph of our trade policy. We are even shippingapples to China. We also should celebrate thePresident’s recent achievement at the Asian PacificEconomic Conference (APE0 in Jakarta where hehas seen the beginning of a mighty Pacific free-trade zone in which we shall be a major partici-pant. Barring unforeseen circumstances, the AMSregulatory programs this bargaining group useswill continue as will the other programs like thosesupporting exports. I look forward not only toadministering them for a long time, but also tobeing your cooperator and resource.Questions From Audience:

Q

A

Regarding potential changes to the AgriculturalCooperative Service (ACS), will you supportmaintaining the functions of ACS within USDA?

Absolutely. My family has been a member offive cooperatives my entire life, so we’remajor supporters of them. I lend the supportthat I can in terms of the hard work and goodwork ACS does. It certainly has been a part-nership working with many of the programsthat I administer as well. I think the plan andreorganization emphasizes the support that

his administration has for what ACS has beeninvolved in for many years.

Q Will you please comment on how the PersonalResponsibility Act will relate to the school lunchprogram. Will there be changes in school lunchpurchases by USDA?

A There really hasn’t been any legislation man-dating changes in that area. We’re working onthe basis that we will continue to buy com-modities for the program. Keep in mind thatthe Federal Government only purchases about20 percent of the school lunch program needsand for the feeding programs. Eighty percentis purchased at the local school district level,although there are Federal funds available foruse at the discretion of those local school dis-tricts. We certainly hope to assist the schooldistricts in those commodities that are readilyavailable. I think if you take a look at the con-gressional changes on the Hill, many of thenew members feel a mandate to cut budgets.Unfortunately, agriculture has always beenone of the first places considered for cuts. I’mnot so sure that we’re going to benefit as anindustry by some of those changes. Many ofthe members defeated were very supportiveof the programs in which we are currentlyinvolved. So, there may be some rough timesahead. We are also faced with unknown provi-sions for the 1995 Farm Bill, so anything canhappen.

Q Given the recent election results, it appears as ifagriculture’s role in Washington is diminishing.Fewer and fewer people in Washington are knowl-edgeable about agriculture. What can be done tokeep or promote agricultural awareness?

A Agricultural’s influence in terms of its politi-cal clout has diminished greatly over the lasthalf of the decade. I think it’s important thatwe emphasize the trade aspect. Given the pas-sage of NAFTA and GATT, we can be influen-tial because of our percentage of the trade bal-ance that’s being exported from this country. I

think Trade Representative Kantor has men-tioned that agriculture will have a place at thetable because of its importance in terms ofAmerican trade abroad. I think that’s whereour influence will come from.

Again, I would not venture to guess whatchanges will be occurring in the newCongress. I’m going to work closely withthose new members and try to educate themas to the benefits of the programs we adminis-ter, as will RBCD!%Cooperative Services. Ithink we will be looking to providing infor-mation in terms of facts and benefits that ourprograms really provide to the general con-suming public in this country.

You, who are involved with agriculturalissues, need to continue to educate not onlythe people you work with, but also yourneighbors, those who don’t know much aboutagriculture. You need to stress how importantagriculture is to the economy, not only to thiscountry, but the world. That’s where I thinkour influence will continue.

Q A portion of the Oregon- Washington Reform Actdeals with entitlement programs. What portions orprograms might be dropped or radically changed?

A Again, keep in mind that that is a proposal.Many things can change in the process. I thinkthere is a long way to go before it changes. Ithink that proposal was a mandate by votersto cut costs. I’m not so sure that cutting costsin some of the feeding programs is the bestplace for us to look at. I hope that many of thenew members are educated about that. We canjust hope that some reasonable decisions aremade once they come to Congress and look atwhat values the programs have provided inthe past.

Q Will the NAFTA and GATT focus on agriculturalprograms provide for more exports at a higher rateOY just more volume?

A Trained as an economist and also being afarmer, I look at things in the long term. It willultimately provide higher disposable incomein many of the countries that we trade with.They will be willing to pay more for the prod-ucts we’re producing and in the long term, Ithink we will as an industry benefit with high-er profits and higher returns to the grower.That’s going to take some time. I think we’restarting to see that with NAFI’A. It’s onlybeen a year since that was passed, but I thinkas we see more results coming back from that,the returns will be good.

Q Many growers see a value in marketing order andvolume supply controls. What is USDA’s posi-tion?

A As I mentioned before, this Administrationstrongly supports the existing marketingorders. We support marketing orders that aresupported by the industries that created theorders. The volume control provisions in thecitrus marketing order was not being enforcedwithin the industry (so it was terminated).

We will look at other marketing orders or cre-ation of other marketing orders that may havesome volume controls if it makes sense forproviding an efficient, cost-effective supply ofproduct. We are supportive of marketingorders and its going to be taken on a case-by-case basis. I can’t say across the board thatvolume controls will be affected, but we haveto take a look at each case and the case thatthe industry makes to implement a marketingorder. I’m currently looking at a number ofproposals for marketing orders and have beencontacted by many other industries that areinterested in implementing marketing orders.There is interest despite some attacks beingmade in via litigation or legislation in thisState alone in terms of State marketing orders.We may have to make some adjustments fornew markets because the Marketing OrderAgreement Act was passed in the late 1930sand amended in the 1940s. It’s only a domes-

tic market anymore, but also an internationalmarketplace. We may have to make someadjustments in how those are instituted andcreated. We need to be flexible to deal withthat marketplace.

Q Do you oversee the enforcement of the AgriculturalFair Practices Act? Will you support changes tothe Act?

A I don’t oversee the enforcement of theAgricultural Fair Practices Act.

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Problems Facing New Bargaining Associations

John MorrisonNational Contract Poultry Growers Association

When we met in Arkansas, we determinedthere were two ways to solve our problems. Weneeded to talk to the processors, but that requiredbuilding membership. Once we had a large enoughmembership, we could invite them to negotiatewith us. Because of our size, they would recognizethere was no other alternative.

But we needed an alternative because of hur-dles and barriers that exist due to fear and intimi-dation within the industry. That alternative seemedto call for changes in State and national legislativearenas. That further enhanced and supported ourthoughts about having the multi-level approach tosolving our problems.

To those who are not familiar with the poultryindustry, our contract production is not what youmight find in the vegetable, fruit, and nut produc-tion areas. We provide the growout facilities, labor,and utilities to grow these birds that are owned bymajor companies like Tysons, Con-Agra,Continental Grain, or Cargill. They own and pro-vide the birds, feed, medicine, and technical adviceto grow them. So, we have a little bit different situ-ation than you do in contracting for the produce orthe products represented by most of the associa-tions here.

In the regions where we have organized sepa-rate cooperatives, this can add to the strength ofagricultural coalitions. This is going to be animportant part of our contribution in furthering thestatus and the well-being of agricultural producersacross the Nation.

On the legislative side, we had been trying tosell our concepts about agricultural bargaining. Weare currently pursuing two national campaigns.Talking in the vernacular of the political arena inWashington, we often referred to our agenda this

past year as our “crime bill” and our “healthreform bill.”

Our “crime bill” proposed to Congress recom-mends that the Packers and Stockyards Act beamended to provide stronger enforcement on thepoultry side. By addressing unfair and deceptivepractices, we hope to improve things for our pro-ducers.

The second item on our legislative agendawas the agricultural bargaining considerations thathad been mentioned at length by others here today.We have looked at the Agricultural Fair PracticesAct as a way to strengthen our abilities as produc-ers and raised some questions about the applica-tion of this act to our particular situation.

As Don Frederick of USDA’s Rural Businessand Cooperative Development Service pointed out,one of the main problems of the Act is the dis-claimer provision. We do not own our product, sowe question whether we may run into other barri-ers by trying to use the Act as our bargaining tool.

If you look at the definition of “producer” inthe Act, what about the person who doesn’t pro-duce a product? All we provide are services. Wouldthat type of service be covered under the Act? So,in looking at an alternative and recognizing someof the shortcomings of the Act, we began looking ata model that we could use as producers of servicesrather than producers of products.

We looked at the prior work initiated by theMichigan and Ohio Farm Bureau people that cul-minated in the introduction of HR 3535 by (former)Rep. Leon Panetta. We found some interesting fac-tors that broadened the horizons and possibly fitour scenarios somewhat better. In the Panetta ver-sion of the Agricultural Bargaining Act, producersmeans a “person engaged in the production of agri-

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cultural products such as a farmer or planter.” Thelast part of it-a “grower or farmer furnishinglabor, production management, or facilities for thegrowers” fits precisely the contract provisions(whether it be poultry, swine, or vegetables) inwhich the processor is providing the seed and fer-tilizer, and the producer is providing the labor andland part of the contract. Is this something we mustconsider in trying to develop good faith bargain-ing?

Another feature of the Panetta version worthyof consideration is in Section 6. It features anaccreditation of associations- a recognition ofthose producers who have joined for bargainingpurposes.

As I read the Agricultural Fair Practices Act, Isaw more hurdles and burdens upon the producerin trying to establish the right to bargain with aU.S. handler. It established a procedure in which agroup is recognized by the U.S. Secretary ofAgriculture to bargain for its members. This is animportant aspect of the Act. Frederick pointed outsome shortcomings of the Act, such as the media-tion or arbitration provision if a problem developsin the negotiating process and the ability to assessdamages or penalties. This Act includes these pro-visions. They offer a good model for use in the bar-gaining arena.

I believe that with the grassroots strength, weas agricultural producers can build and go toWashington with our bargaining hat on, ratherthan look for a handout. We can generate grass-roots strength if we are willing to work and buildsupport, not just among farmers and agriculturalproducers, but with our neighbors and friends andget them involved in correcting the problems thatexist within agriculture.

As I see the corporate concentration takingplace within the food industry and the rapid move-ments to vertical integration, I believe we are all atrisk. I’m not talking about just poultry or pork pro-ducers. Rather, I’m talking about all of us.

As food producers at risk relative to our liveli-hood, I think it’s very important that we worktogether in addressing ‘issues raised here today. Thework you have done as bargaining associations andthe platform you have set provides us with a real

basis to move forward and to change the environ-ment in which we produce agricultural products.

In conclusion, I would very much appreciateyour consideration as bargaining associations tolook at HR 3535 as the beginning bargaining posi-tion for us to promote in Washington this comingyear. Please accept the many thanks of the thou-sands of poultry producers in our association foryour support as we move down this road. We verymuch believe that this is the tool that will help usmove forward.

6

The Methyl Bromide Issue

Gary ObernaufResearch Consultant

Methyl bromide, generally believed to be acarcinogen or mitigant, is projected to cause nearlya million deaths in the United States by the year2015. It is very potent and damaging because itdepletes the ozone layer. I believe activity groupsare no longer concerned about pesticides like this.They have come to believe (erroneously) that foodscome from the grocery store and that the need formethyl bromide is just another lie by corporatefarmers who produce food to get Federal subsidies.

I believe bargaining associations and fieldprices are not associated with each other. After all,the associations are social clubs and the prices aredetermined by the weather.

Don’t believe all you hear about methyl bro-mide. There are a lot of half truths and outright liesabout the issue. Pay attention to what’s being said,really evaluate it, and ask questions.

Science or research is not exact on such issuesas methyl bromide. There is no absolute or zerorisk and never will be. That is why statistics wereinvented. What is the probability that the hypothe-sis of the experiment is true or false? Given thisunderstanding, you can use science to make logicaland objective decisions.

The problem is that scientific information isoften used or quoted by politicians and others whohave little or no understanding of the informationbeing used. But,,even worse than politicians usinginformation incorrectly are pseudo scientists andindividuals who use scientific data incorrectly tosupport their point of view. All too often, most ofthe available scientific data ,does not support theindividual’s opinion.

Yes, some of us in agriculture have been guiltyof misusing scientific data. The excuse that “theother side does it,” is not a legitimate reason for us

to do so. We all need to be careful in quoting scien-tific information. Our usefulness to agriculture willbe greatly reduced and our efforts counterproduc-tive if we lose our credability.

Methyl bromide was introduced in 1982 as rel-atively simple, straightforward issue. It hasevolved into a complex issue. The issue started in1982 with the cancellation of ethylene dibromide(Edb). Some proposed that methyl bromide,because it was closely related to Edb, also shouldbe cancelled. Both are strong methylate agents. Itwas 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 toprove that it is not a carcinogen, we will not cancel.I’ve been very active and involved in the issuesince 1982.

Several issue today relate to methyl bromide.The first is what we now call reregistration.Additional toxicology data is being compiled onmethyl bromide and should be completed soon.The data looks good today.

We know it kills living tissue and can kill peo-ple. But, methyl bromide is not carcinogenic. It willcause some problems, but again, any toxin of thisnature will, in effect, kill you before it damages thetissue.We are not complete with the residue data,but will be finished soon.

The next question to be resolved is the aver-age data intake (ADI) of methyl bromide. Theremay be some restrictions based upon the residuedata, but at this time, the toxin information(residue data) looks very good, contrary to whatEPA predicted in 1982. In addition to the residue

7

information, the most recent and probably mostdifficult issue is ozone depletion. Methyl bromidehas been identified as an ozone-depleting substance and therefore is regulated.

Proposition 65 is another issue that we are fac-ing with methyl bromide. We crossed the first hur-dle with that issue in California. It may come backagain. The last issue we are concerned about iswork exposure, safety, and community exposure tomethyl bromide.

Methyl bromide has also spread into the arenathat is now or may be regulated on national, State,and local levels. Locally, the agricultural commis-sions are going to be more important in the futureregarding this and other pesticide issues. It’s veryapparent that the local air quality control districtsare going to be influenced by what is happening topesticides like methyl bromide.

Most of the international activity is happeningunder the United Nations Environmental Program(UNEP) that was started in 1985 at the Vienna con-vention. Out of that came what’s commonlyreferred to as the 1987 Montreal Protocol.

The protocol put together regulations to con-trol the ozone-depleting substances. That agree-ment was built around materials like CFC 11 (chlo-rofluorcarbons) that have an ozone depletionpotential of 1. Everything is relative to CFC 11.That was in 1987. In 1990, UNEP adopted the so-called London Amendments, which actually wereregulations to control ozone-depleting substances.

There are about 80 or 90 chloroflurocarbon(CFC) materials. Regulations for the halons andrefrigeration-type materials were adopted in 1990.Methyl bromide was also mentioned in the 1990London amendments as a possible ozone depleter.

In the 1992 Copenhagen meetings, methyl bro-mide was actually listed as an ozone-depleting sub-stance, not regulated at that time. The importanceof listing methyl bromide is that it automaticallytriggered the Clean Air Act in the United States,which mean that they had to list methyl bromide.Two important things happened in the 1994 meet-ings in Nairobi. We prevented an early phaseout ofmethyl bromide in 1997 and they agreed to exemptquarantine and preshipment treatments.

EPA also is a major player in the internationalarena. More than 25 percent of UNEP’s funds comefrom the U.S. Our problem is that we strongly dis-agree with what the EPA is doing domestically andwithin UNEP in the international arena.

Convincing other nations that EPA does notspeak for the American farmer is a hard to do. But,other nations are receptive to that. Developingnations, of all people, are the most receptive to theproblems we have with EPA. We have a long wayto go in dealing with the international community,but we’ve made a lot of progress.

The next important meeting of the partiesrelated to the Montreal Protocol will be the Viennameeting this November. At that time, they willdecide on regulating methyl bromide. Most peoplefeel they will, but the regulations will be differentfrom what happens in the U.S. The best guess isthat there will be a 25-percent reduction in the pro-duction of methyl bromide based on 1991 levels.That’s a long cry from total elimination of materialas planned in the U.S. There will also be quarantineexemptions and preshipment variances or exemp-tions.

One of the current activities is trying to definepreshipment. Does that mean shipment just priorto going out the door or does it mean post-harvesttreatments? Complicating this further is that 85percent of the methyl bromide sold is used for soiltreatment. The other 15 percent is for commoditytreatment.

It is different than other things happeningwith CFC and ozone-depleting substances. Methylbromide naturally occurs in about 70 percent ofwhat’s going into the stratosphere. It comes fromnatural, not man-made sources.

On the international level, steps will be takento mitigate problems with methyl bromide. In theU.S., it doesn’t matter because everything is relatedto production of methyl bromide. The reasoning isthat if you eliminate production, then obviouslyyou control the use of it. In fact, if you can reducethe amount of methyl bromide going into theatmosphere or the stratosphere, you can mitigatethe problem. Obviously, our environmental friendswere able to get that legislation approved.

8

The UNEP has several committees you may behearing about. The first is the Technology andEconomic Assessment Committee. It reports direct-ly to the members of the parties at their annualmeeting. Actually it is two different committees.The Technology Committee involves about 190 dif-ferent scientists from around the world.

The Economic Assessment Committee consistsof “experts” from around the world. The problemwith these objective committees is that EPA has atremendous influence on who sits on them and,more importantly, who chairs them. That’s wherewe have run into our greatest problems.

The committees are relatively equal in repre-senting different sides of the issues. But, the peopleleading the committees have biased views aboutwhat’s going on. That’s become a difficult issue forus.

The Methyl Bromide Technical OptionsCommittee, on which I have served for 2 years,reports to the economic assessment panel. Itsreport will discuss our activities. This committeeasks, “What are the viable alternatives to methylbromide?” There obviously is no “silver bullet”answer for its replacement and few viable alterna-tives if you consider economics, which to us is animportant factor.

There are things that possibly will work if youdon’t mind paying many times what we paid formethyl bromide. There has to be some reality towhat is occurring. No single chemical or technolo-gy will replace methyl bromide. It is entirely possi-ble that many commodities will have no viableal terna tive.

It’s also important to realize that in the inter-national community there is what’s called the“open-ended working group.” Members of eachcommittee meet before the parties convene for theirannual meeting. They will meet twice in 1995 todevelop the agenda for the Vienna meeting. Thegroup will develop a definition of preshipment, animportant concern for those dealing with the com-modities.

Discussion of preshipment in the internationalcommunity will influence what’s happening withEPA. EPA is well aware of that with shipment ofcommodities, especially export shipments in inter-

national trade. The agency doesn’t want to avoiddealing with that issue. If, in fact, the United Statesdoes something different than the internationalcommunity, it puts EPA in a real bind. We hope tomake the definition of “preshipment” extremelyliberal. EPA, on the other hand, doesn’t even wantit defined and doesn’t want to deal with quarantineresidues.

Walnuts and raisins are good examples ofpotential problems if you are in a quarantine situa-tion or need to treat your commodity before ship-ment to prevent insects. You can technically shipwalnuts from Turkey to the Midwest or East coast,but you cannot ship from California to the Midwestor East coast. That is a real possibility, if things goforward as planned. EPA is aware of this problem.Therefore, these developments will have a signifi-cant impact on EPA’s decisions.

Along with this activity, we had an annualinternational research conference on methyl bro-mide alternatives and emissions reductions. Nothaving a viable alternative to methyl bromide putsus in an extremely vulnerable position. We havebeen actively looking for a replacement since 1982.The raisin, prune, and walnut boards, along with anumber of other commodity groups, have beendoing this for a number of years.

We are not overly optimistic about finding aviable alternative at this time. But we need to con-tinue seeking one. In fact, we need to step up ourefforts. At our first annual meeting, more than 90research papers were presented. Eight countrieswere involved. The next meeting will be inNovember (1995). It will give you very goodupdates on what research is underway concerningalternative ways to mitigate the problem by captur-ing, recirculating, deep soil injecting, and otherways to reduce emissions to the atmosphere.

National Concerns

Several things are important here. The firstconsideration is the EPA and the Clean Air Act.Right now, the potential ozone-depletion triggerfor anything to be listed as a control substance is0.2 Under UNEP, methyl bromide was listed asozone-depletion potential for 0.7, which was auto-

9

matically triggered and included under the CleanAir Act.

Contrary to what EPA wanted to do, it tookthem 18 months to finally publish it in the FederalRegister in January 1994. There is a 7-year graceperiod before it has to be phased out on Jan. 1,2001. But under the Clean Air Act, there are noexemptions to any ozone-depleting substance. Itwill have to be done at that time unless legislationis changed, which doesn’t seem likely.

By our interaction with EPA and pushingUSDA, some important things came out in theFederal Register about this issue.

For the first time, they said there would be noearly phaseout of methyl bromide, although therehave been phaseout dates with the other materials.In addition, EPA, for the first time, said it wouldsupport 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, buttheir hands are tied because legislation does notallow it at this time. So, to get exemptions for cer-tain uses such as quarantine, even the Clean AirAct will have to be changed. This will be extremelydifficult.

Taxes have been and will be another impor-tant issue with methyl bromide. Under the CleanAir Act, material that is an ozone-depleting substance can be taxed. For methyl bromide, whichcosts between $1 and $1.50 a pound, the first-yeartax will be $3.52. It will accelerate to almost $8.That’s a pretty steep tax. We have successfullyfought the issue four times, but it will be comingup again.

Congress is looking for ways to generatemoney. Although sales of methyl bromide are notlarge, it amounts to several million dollars in thiscountry alone. The Clean Air Act will have to beamended to allow critical uses. But, we need toconduct research for alternatives to methyl bro-mide. Rather than cry on the shoulders of theCongress, we must demonstrate that we have ingood faith looked at viable alternatives and, in fact,been unable to find them. We have to support whatwe are saying. We think we will have a good caseput together before the year 2000 to apply for criti-cal exemptions.

Again, reregistration is looming. EPA regu-lates if a material is registered. Also, recently,because of what has happened in California, EPAhas made some label changes on methyl bromide.At this point, it only covers structural. It relates tothe toxicology work required in California. TheState told EPA what was transpiring. It relates tothe deaths that happened 2 years ago in the SanFrancisco Bay area after a house was fumigated.Contrary to instructions, people went back into thestructure, even though they were told not to. Theywere killed and EPA issued new label restrictionson methyl bromide.

Within California, methyl bromide is alsounder attack in many areas. I think we are going tosee this same approach taken on a number of otherpesticides. I think it’s important to look at methylbromide 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 Actin California required additional toxicology workon methyl bromide. The lab that did the workessentially found no cause-and-effect relationship.People within the Department of PesticideRegulations (DPR) examined the study and dis-agreed with those who did the work. DPR said, tothe contrary, there was cause and effect. Also,because EPA made a label change on methyl bro-mide, it was a trigger for listing under Proposition65 in California. The problem was that the labelchange was only to structure. It didn’t affect agri-cultural commodities.

The problem with Proposition 65 is that thereare no mandatory regulations about withdrawingthe material. With methyl bromide, it means thatwithin a 9-mile radius you would be required tonotify everybody that you are going to use a mater-ial that potentially could cause cancer. That notonly creates a real scare problem, but also adds atremendous cost problem for using such a material.In fact, the purpose of the legislation is to eliminatethe material, not deal with the issue.

Because of this same study, work exposurebecame a real important issue. The DPR forced the

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industry for the first time in its life to conductresearch in an effort to keep methyl bromide. Wehad to spend several hundred thousand dollarsdoing studies on work and community exposure tomethyl bromide. Normally, the manufacturers ofthe material would have had to do this research.We are also hearing about some other pesticide-related runoff and work exposure in orchards.

As users of materials, we increasingly arebeing forced to become involved in the issue of thetoxicology exposure and what’s going on withthese pesticides. None of us like that, but it’s life.We’re more comfortable with the manufacturers ofthese pesticides handling those issues. But, realitysays we must be increasingly a player in theseissues if we’re going to keep our tools. We mustalso be prepared if we lose some of these tools.

Permit restrictions is one way DPR wants todeal with methyl bromide issues. They weren’twilling to wait for EPA to change the label. In fact,EPA still hasn’t changed the label on commodityregulations. I don’t think they are going to makesignificant changes.

Rather than wait on EPA, California isaddressing the issue by putting permit restrictionson how you use methyl bromide. The State startedwith new permit restrictions on structure that relat-ed to the label changes at EPA. Next, they pub-lished new soil regulations which mean you cantreat up to 20 acres per day. You must issue warn-ings and clear the area 100 yards around the fieldbeing treated. Regulations concern certain condi-tions regarding the tractor driver, the worker cov-ering the tarp, etc.

Permit restrictions for commodity treatmentsbegan in January, 1995. These detailed managementrestrictions will cost us money. This is also comingdown the road with other pesticides.

Methyl bromide is an important local issue fora number of reasons. First is the county agricultur-al commissioner’s office in California, which isprobably similar in other States. The commission-er’s office enforces the permit restrictions and labelchanges.

This is our only ray of hope. Most agriculturalcommissioners are aware of what’s occurring at theState capital in Sacramento and are bending over

backwards to work with us on this issue. But, weneed to prevent these statutes from coming on thebooks in the first place rather than trying to workaround them as we often have done at the commis-sion office. The commissioner is still an importantplayer in today’s activity and will be tomorrow.

Another important arena in California is thelocal air quality control districts. It’s almost impos-sible in some districts to add new methyl bromidefumigation chambers. Even existing chambers arebecoming difficult to keep open. They require con-siderably higher exhaust fans; they regulate thepounds that can be used within a certain timeframe; and they are going to become more restric-tive down the road.

It’s ironic that methyl bromide is listed as anozone-causing substance as far as the air qualitycontrol district is concerned. We’re losing methylbromide because it’s an ozone-depleting substanceas far as EPA is concerned. We’re losing it for theopposite ends of the same issue.

It’s important to recognize the players in thisactivity. First is the global coalition of methyl bro-mide manufacturers from around the world. Thatincludes the U.S., Israel, Japan, China, and Russia.

A company called Great Lakes is the major (85percent) U.S. manufacturer. It has a separatemethyl bromide working group. A number of othermanufacturers, like Dow and DuPont, quit produc-ing it about 10 years ago at the very beginning ofthis conflict. It was not a big enough volume itemto even become involved in the issue. It was cheap-er for them to walk away from it.

Manufacturers say 85 percent of today’smethyl bromide use is for soil treatment. Most ofthe toxicology work required will be for commodi-ty treatments. We couldn’t financially justify doingthat work, so a national group called MethylBromide Task Force was formed to jointly fund tox-icology research. At this point, we are glad that wedid because the toxicology work looks very favor-able.

The last group is the Crop ProtectionCoalition. I was instrumental in its developmentand served as its first vice-president. Dave Riggs iscoalition president and Dan Botts of the FloridaFruit and Vegetable Association is secretary-trea-

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surer. We have strong representation from theStates of Washington and Texas and a number ofdifferent commodity groups.

Coalition members, such as grower organiza-tions, use methyl bromide. All too often, users arelost in discussions about what’s happening withthe pesticide issues. The manufacturers usuallydominate discussion. We feel we have a viablealternative. If so, it becomes another issue.

The coalition also has been active in a numberof arenas. As users of methyl bromide, we havebeen actively working with EPA. Its first announce-ment in the Federal Register said EPA would beeliminating the product by the year 2000; that therewould be a possible phaseout of the material; andthat there would be no support for exemptions.Because of the views we expressed, we made somesignificant inroads into EPA’s thinking.

We prepared a 30-page document that demon-strated how we felt about methyl bromide. Thenecessary research to develop a viable alternativewill cost about $60 million. We took this documentto Congress and we got $1 million. We were luckyto get that. We also convinced Congress to instructUSDA to redirect $5 million of its money towardsthis issue. That effort is in progress.

In addition, Congress put wording into appro-priations that require EPA to form an advisorycommittee. As users, we are becoming directlyinvolved in what research is and is not being doneabout methyl bromide alternatives. We feel theresearch on this issue is critical.

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Update on National Bargaining Law1

Rural Business and Cooperative Development ServiceU.S. Department of Agriculture

I. BACKGROUND

A. Sherman Act (1890) - Basic antitrust law.Makes it illegal to enter into contracts andcombinations that restrain trade (§l) andto monopolize or attempt to monopolizeinterstate commerce (52).

B. Clayton Act (1914) - Provides forming anonprofit agricultural producers associa-tion, without capital stock, doesn’t violateantitrust law (56).

C. Capper-Volstead Act (1922) - Authorizesagricultural producers to market theirproducts on a cooperative basis (§I).Secretary of Agriculture prevents undueprice enhancement (52).

D. Cooperative Marketing Act of 1926 -Authorizes Secretary of Agriculture tosupport cooperatives. Sanctions sharing ofmarket information among producersthrough 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 ofAgriculture. Presented at the 1994 Pacific Coast andNational Bargaining Conference, December 2,1994, SanDiego, California. This material does not represent the offi-cial position of the U.S. Department of Agriculture or anyother government agency. It is presented only to inform andstimulate discussion among conference participants.

Capper-Volstead Act to fishermen andaquaculturists.

F. Fundamental changes in farm marketinghave been occurring since WW II.

1. Replacement of traditional open marketsby contract production and vertical inte-gration.

2. Processor and retailer concentration.

G. Efforts of producers to organize met withretaliation by processors, notably againstOhio tomato growers, California raisingrowers, and Arkansas poultry growers.

H. In 1959, at the urging of the Ohio FarmBureau, the American Farm BureauFederation (AFBF) initiated a farm bar-gaining program, the AmericanAgricultural Marketing Association. AFBFmet processor resistance and become inter-ested in using its political power to enactlegislation to protect bargaining associa-tions.

I. AFBF drafted and had introduced inCongress in May, 1964, legislation to pro-tect bargaining associations from discrimi-nation. As enacted in April, 1968, theAgricultural Fair Practices Act appliedanti-discrimination provisions to producerassociations as well as processors, protect-ed certain processor practices, and con-tained a diluted enforcement provision.

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II. AGRICULTURAL FAIR PRACTICES ACT OF1967

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

Section 2-Congressional findings and dec-laration of policy. Individual agricultural pro-ducers must be free to join together voluntari-ly into cooperative marketing associations.Interference with this right is contrary to pub-lic interest and adversely affects commerce.

Section 3-Definitions. “Handler” meansbuyer, processor, producer association, oragent for any of the above.

Section 4-Prohibited practices. It shall beunlawful for a handler knowingly to engageor permit any employee or agent to engage inthe following practices:

(a) To coerce any producer to join or refrainfrom joining a producer association, andTo refuse to deal with a producer becauseof membership in a producer association.

(b) To discriminate against a producer withrespect to price, quantity, quality, or otherterms of purchase because of membershipin an association.

(c) To coerce a producer to enter into or termi-nate a membership agreement or market-ing contract with a producer association ora contract with a handler.

(d) To pay or loan money, or otherwise bribe aproducer to cease belonging to a producerassociation.

(e) To make false reports about the finances,management, or activities of a producerassociation or a handler.

(D To conspire with others to do any of theabove prohibited practices.

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

l Prevent handlers and producers fromselecting their customers and suppliersfor any reason other than a producer’smembership in or contract with a pro-ducer association.

l Require a handler to deal with an associ-ation of producers.

Section 6 - Enforcement provisions.

(a) A victim of a prohibited practice may seeka restraining order.

(b) The Secretary of Agriculture may ask theAttorney General to seek a restrainingorder to stop prohibited practices.

(c) A victim of a prohibited practice can suefor monetary damages. The court mayallow the prevailing party reasonableattorney’s fees.

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

III. WEAKNESSES IN THE AFPA

As enacted, the AFPA falls far short of thestrong public policy statement in support offarm bargaining envisioned by its originalsupporters. Its principal weaknesses include:

A. The Disclaimer Provision. The languagepermitting processors to refuse to do busi-ness with a producer for any reason otherthan membership in a producer associationleaves association leaders and membersvulnerable to discrimination, disguised aslegitimate reasons to refuse to deal.

The phrase stating processors aren’trequired to deal with producer associa-tions gives processors justification to total

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B.

C.

D.

ly disregard a producer association, or togo through the motions of negotiating andthen, at some critical period when produc-ers are under the greatest pressure, walkaway from the table and offer growerstake-it-or-leave-it contracts.

No Inducements to Bargain. There is norequirement that handlers bargain in goodfaith with producer associations. Nor isthere any mechanism to resolve disputesduring negotiation. Thus, even if honestbargaining occurs, there is no assurancethat a contract is likely in time for orderlymarketing of the farmers’ product.

Insufficient Penalties. The only penaltythat can be assessed in a suit by the gov-ernment is an order against further illegalconduct. As a result, there is little motiva-tion for government prosecutors to acceptAFPA cases or for handlers to fear mean-ingful sanctions if the government doesbring a lawsuit. The most a private litiga-tor can realize is damages and attorney’sfees. If a violator pays only damages whendiscovered and successfully sued, there islittle incentive to follow the law.

Free Loaders. Non-members almostalways receive prices and other terms oftrade at least as favorable as those of asso-ciation members. Yet, they pay no fees tosupport negotiation. This serves as a disin-centive for producers to join the associa-tion, reducing the association’s power atthe bargaining table.

IV. PANETTA BILL (HR 3535, introducedApril 9,1979)

Agricultural bargaining interests quickly rec-ognized the shortcomings of the AFPA.Throughout the 1970’s the AFBF, spurred bystate farm bureaus from states where bargain-ing was well established - Michigan, Ohio,California - pushed for stronger legislation.

States without an interest in bargaining, par-ticularly in the South, not only failed to rein-force the efforts of these states but resentedAFBF expending energy on a topic in whichthey saw no benefit to themselves.

This effort peaked with the introduction, in1979, of HR 3535. Drafted as a compre-hensivereplacement for the AFPA, it received thebroadest support of any bargaining bill withinthe agricultural community. But the continu-ing fragmentation throughout agriculture ledto its demise, as it had its predecessors.

V. STATE LAWS

A number of states have enacted pro-bargain-ing legislation. While no two state laws areidentical, common provisions do appearamong the jurisdictions.

A.

B.

C.

D.

E.

A statement of unfair or prohibited prac-tices, based on the prohibited practices sec-tion of AFPA. (California, Maine,Michigan, Minnesota, New Jersey, Oregonand Washington)

Require good faith bargaining (California,Maine, Michigan, Minnesota, Ohio,Washington)

Dispute resolution through mediation(California, Michigan, Minnesota) or bind-ing arbitration (Maine)

Fees check-off (California, Idaho, NewJersey)

Advisory committee, to study effectivenessof state law (California, Washington)

VI. SUPREME COURT AND PRE-EMPTION

In 1984, the U.S. Supreme Court invoked theSupremacy Clause of the Constitution to findtwo provisions of Michigan’s bargaining lawinvalid because they were pre-empted by pro-visions of AFPA (Michigan Canners & Freezers

15

Assn. v. Agricultural Marketing and BargainingBoard, 467 U.S. 461).

The Michigan law did not require a producerto join an association. However, a nonmembercould be compelled to honor an association’scontract with a processor and to pay fees to anassociation. The court found this had the sameeffect as coercing the nonmember (1) to join anassociation, a violation of 5 4(a) of AFPA, and(2) to enter into a marketing agreement withan association, a violation of § 4(c) of AFPA.

Under Michigan Canners & Freezers, state lawsthat provide producer protections beyondthose in AFPA may be vulnerable to legalattack.

VII. FEDERAL LEGISLATION,FRONT-BURNER REFORMS

Experienced bargaining association leadersand advisers are studying a menu of amend-ments to AFPA to select one or more thatmight be desirable and enactable. The firstfour of these ideas seem to have the most sup-port.

A. Repeal of the Disclaimer provision, or atleast the last part of it. The U.S. SupremeCourt has ruled that AFPA pre-empts con-flicting state laws passed subsequent to itsenactment. Thus, the last portion of theDisclaimer clause, stating processors neednot deal with producer associations, hangslike a cloud over existing state laws thatprovide for good faith bargaining andthird-party assistance (mediation, concilia-tion, arbitration) in resolving negotiationimpasses.

Repeal of the entire Disclaimer would alsodelete the connotation that processors arefree to refuse to do business with associa-tion members or leaders if they can comeup with any other possibly defensible rea-

son to discriminate other than associationparticipation.

B. Require good faith bargaining. Designatingfailure to bargain in good faith a prohibitedpractice under AFPA 5 4, coupled withrepeal of the last portion of the Disclaimer,would give bargaining associations lever-age to compel negotiations. Such a changewould likely spur bargaining as a means ofcounter balancing processor economicpower.

C. Dispute resolution mechanism.Disinterested third-party participation inthe bargaining process has proven usefulin getting a negotiated contract. Mediationand conciliation encourage settlementwithout disrupting the marketplace byforcing parties to accept contract termsagainst their will.

Adoption of good faith bargaining and adispute resolution mechanism at theFederal level would put producers andprocessors in the same relative positionacross the country. If a private mediationservice is used, such as the AmericanArbitration Association, with the partiessharing the costs (California), these changesshould have little budget impact.

D. USDA civil enforcement au thori ty. Givingthe Secretary of Agriculture the power toassess civil penalties for violation of AFPAwould likely improve compliance. Itwould place responsibility for reviewingpotential violations in the hands of thosepersons most familiar with the intent ofthe law and who possess the expertise toevaluate whether punitive action is appro-priate.

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IVIII. BACK-BURNER REFORMS

Other reform measures have been suggested,but have not received as widespread supportas those above.

A. Processor collection of fees. Compellinghandlers to honor producer requests todeduct association fees from checks to pro-ducers would strengthen association finan-cial bases and free management from thetimeconsuming chore of collecting duesfrom members.

B.

C.

D.

Advisory committee. California has a com-mittee with equal association and proces-sor representation to study the effective-ness of its state bargaining law. Such acommittee at the national level might keepbargaining in the mainstream of public pol-icy debate and stimulate discussion andresearch on better negotiation techniquesto reach agreements more efficiently andwith less acrimony

Mandatory fees. To eliminate the free-ride,compel all producers who benefit from abargaining association to help finance itsactivities.

Agency shop. To eliminate competitionbetween association members and non-members, compel all producers to abide bythe association contract, even if theychoose not to join the association.Assuming rational and effective bargain-ing by the association, this option wouldlikely have the greatest positive impact onproducer income.

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Panel Discussion-Bargaining Conference

Services Draw Growers to Bargaining Cooperatives

Service progams ranging from special financ-ing to influencing legislation on State and nationalagricultural issues extend beyond important pricediscovery negotiations with commodity processorsthat binds fruit and vegetable growers to thenation’s agricultural bargaining cooperatives.

At last winter’s combined National andPacific Coast Bargaining Cooperative Conference atSan Diego, CA, three experienced panelists fromWest coast cooperatives reviewed their service pro-grams that are at the base of attracting and retain-ing members.

Panelists were Ron Schuler, CaliforniaCanning Peach Association; Vaughn Koligian,Raisin Bargaining Association; and DickLaFramboise, Central Washington Farm CropsAssociation. Their discussion follows:

Ron Schuler: The question of whether thereis a role beyond bargaining for these cooperativesbrings to mind a visit I had some years ago withone of my canning customers in the Midwest. I wassitting in his office when he received a phone call. Icould tell he was talking to an individual who bar-gained for some tomato farmers. When he hung upthe phone, he said, “I never hear from that individ-ual 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 itproviding service. We spend a lot of time contact-ing growers. I’m going to give two examples. I visita large grower of peaches every year. This particu-lar grower had only a token amount invested in thepeach association. That year, his processor, one ofthe largest, did not contract for a portion of hisorchard. Needless to say, the next time I visitedhim, he was willing to put his entire tonnage into

the association. He’s now on our board of directorsand one of the key players on the pricing commit-tee. I think the processor learned a very valuablelesson.

Another grower I visit annually had at onetime opposed and fought us. We had a hail stormon a Tuesday afternoon and Wednesday morning Icalled and told him, “We have some opportunitiesto help you out with the fruit that was damaged inthe hail storm last night.” He said his processorwould give him a hail tolerance. “Don’t worry, Ireally don’t need your help,” he commented. I toldhim 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 givehim the relief he was looking for. Finally, on Fridaymorning, he called and asked for help.

Now that grower’s son is on our board andsales committee. We‘ve gained something becausewe had an outlet to take some of that distressedfruit. We built what we call “alternative markets.”We got into the juice business in 1977 to expandour role. The crop was hit by a big hail storm thatyear. From that point on we’ve been able to deal inthat kind of fruit. We continue working to findways to get fruit into those “alternative” uses.

In 1994, things were so bad in the businessthat we bought No. 1 fruit, subsidized it, andplaced it into the juice side of the business.Through continual contact, we developed member-ship. We have provided these alternative uses ingood and bad times. When supplies were short, wetook every sort-out and cull that the grower want-ed to deliver to us, providing it didn’t have anybrown rot, worms, or grounders. We took all of the

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off-grade fruit and with it built membership byproviding this extra income and service.

Added Business in Mexico

Then we really became involved. RichHudgins, California Canning Peach Association,who chaired the session on association reports,worked hard to put together our operation withMexican canners. For many years, we were ship-ping all the way to Mexico City for processing.Now, we have a processor who has a cannery inTecate, just across the border and we are expandingour operation there. CoBank and Rich Hudginshave helped us assemble a staff that has made thiswork.

We actually got some Californians to work inthat plant. We also have our own staff people at theborder. We’ve had our share of problems and willprobably have more in 1995, but we have expandedthe sales there again.

We also work with the processors where wecan to find ways to help in the financing end backto growers. Processors want to defer payment,especially when they’re competing in an industrysuch as ours where you have a large cooperativeversus a large proprietary company. So, it wants todefer payment because the large cooperative defi-nitely defers payment. We’ve developed an “earlypayment” program. We provide the grower upfrontmoney and charge a prime interest rate for our ser-vice. It has allowed us to earn a good return on ourmoney, better than what we could receive with ourrevolving fund and certificates of deposit. Wecharge at the prime rate which is unavailable tomost growers. It helps them to more quickly repaytheir loans.

We looked into how else we could expand ourfinancing program to serve others, such as a cottoncompany in California. We haven’t progressed anyfurther, but it’s another area where we can serveour members. It helps them and in turn helps theassociation.

No doubt, many of us are involved politically.Those who are not may have to be. Everything ishaving an impact. You’ve heard about the smallrole we have as far as a political clout and num-

bers. So, we have to do it another way. Our politi-cal action committee may make small contribu-tions, but they open doors so we can get in and tellour story.

That’s the extended service you must offer. Ilook at it and say that canner or processor is mycustomer. Just like the canner’s customer is thechain store or the distributor. We have to take careof those customers and try to improve that relation-ship all along.

All we ask is a fair return, a reasonable price.We can’t negotiate the highest price that our grow-ers would like to have. It just doesn’t happen. Sowe also work with the processors most of the yearto see where we can expand this market.

Vaughn Koligian: I don’t know how muchbargaining there is today. Certainly, many of youdo it. But, I see us more as a cog in the marketingwheel. Many of us are plagued by overproduction,carrying that surplus, and global competition. Thebargaining or the tightness of the trading is influ-enced by so many of these factors. A lot morethings influence what we do than our own abilityto negotiate a best price.

For instance, we had two marketing orders.Our a State order for marketing and promoting ourproducts was called the California Raisin AdvisoryBoard (CALRAB), known best for the dancingraisins promotion. Our association will be veryinvolved in reestablishing this new order. It hadbeen terminated by one group of processors whowere in conflict with the branded packer.

So, I think one role beyond bargaining is tak-ing a leadership role in the reestablishment of thegeneric promotional campaign for our raisins. Thisrole beyond bargaining has been successful for usand the entire industry.

It will be funded by us and nonassociatedgrowers. Ralph Bungee used to call them nags whoget a free ride. So, we are going to be activelyinvolved in reestablishing the new order. We alsohold 34 percent of the seats on the Federal board.

I see this role as very critical. There’s always agroup of packers, one supporting their proprietaryinterest and the other supporting their brand andproprietary interests. I think the grower group

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brings them together and goes forward. And it alsohelps to be the largest group when you have twodivided factions.

It reminds me of the story about the threepartners who owned the company. Two of the part-ners each owned 49 percent and the third owned 2percent. The partner who owns 2 percent runs thecompany. The growers are pushing the planforward.

This grower order is designed to work forboth growers and processors. Our role beyond bar-gaining is to make sure that the order continues tosupport the efforts of our industry. I think we do agood job of it. Membership is important. As youknow, we have slightly more than 2,000 members.You get seats on that board by membership. So weare always seeking more members to gain morecontrol on that board. Actually, you get it by ton-nage, but members and tonnage are related. Wehave 15 seats on the 47-member board. Being activein that takes a lot of my time.

We continue to remain the conciliator betweenprocessors, whether they be domestic and exportbranded or nonbranded. Sometimes they need thegrower group to make the motion because theother two favor one side or the other of an issue.So, we are continually being called upon to be thatneutral driving force that keeps talks in the centerof the road so they can go forward.

Long-Range Planning

One of your roles beyond bargaining is to bethe catalyst that develops the long-range plans inthe industry-whether you are a sole proprietor,sole proprietor working as a processor, or majorcorporation which can be a family owned opera-tion or a publicly traded company. Not manyindustries, including ours, have internal long-rangeplans.

Many of the decisions we make are like buy-ing an airplane ticket and not knowing where weare going. The difference is that long-range plan-ning takes commitment and a desire to compro-mise. By contrast, short-range planning takes mini-mal commitment and really no compromise. Yougo on from whatever the decision was that day. I

think again, the grower group needs that rolebeyond bargaining. You need to develop, maintain,and stay with the long-range plan.

If you ask any processor in the industry whathe sees as the solution to oversupply .problem, hewould reply, “Sell more raisins!” But how and whatdo you have in mind? You terminated our market-ing order. You always have that conflict right now.One of the roles is to develop an industry long-range plan that covers the next 5 to 10 years.

Political Action Committees

We have Federal and State Political ActionCommittees (PACs) and we spend about what wecollect every year except for the reserve we want tokeep. I think its important to be politically active atboth State and Federal levels. We happen to be alittle more active at the Federal level because ourFederal orders kept us a little more involved. Ithink we’ve got support for the State order.

Any of us, whether large or small, need thatmedium to get your voice heard and somebody tocarry that message. Believe me, when you call onthat representative, his office staff has alreadylooked at their files to see if you contributed moneyto the campaign. He may even have seen you at afundraising event. A couple of dollars here andthere have opened some doors that might havebeen closed if 6 months earlier we hadn’t spent$250 or $1,000 on some fundraisers for particularcandidates.

We also support people elected in other partsof the nation. A California vote generally supportsCalifornia interests. But, when you have someonefrom New Jersey supporting something takingplace that affects California, that’s got a differenttype of credibility. He has no proprietary interest.He will do it because he believes it’s right. So, thatcarries a lot of weight. We support candidates inother parts of the Nation as well, who have sup-ported us.

Market Promotion Program

Another big area is funding for the MarketPromotion Program (MPP), a very controversial

20

issue nationwide. Frankly, it’s nice to draw con-gressional support from many of the Eastern States.We continue to fund the PAC because I think wehave that obligation to support the industry from alegislative standpoint.

Ron Schuler gave a slant about attractinggrowers who might have problems we can helpsolve. I think our program is similar. We are fre-quently called upon to negotiate disputes betweengrowers and processors. These disputes ofteninvolve attorneys. We do not provide legal advice,so we are very cautious in our approach.

But generally, we can bring both partiestogether, although not everyone will like our solu-tion. Differences generally result from misinterpre-tations or miscommunications and the parties arein total division. We have continual contact withour processors. I talk with some packers 4 out of 5days a week. I talk with our processors more thanour board. I think, as Schuler said, you’ve got tosee them. They are your clients. I’m working forthe members, but those people sign the contracts.think we need a good relationship with them.

I

We include the processors on our newslettermailing list. I think what’s fair to share with thegrowers is also fair to share with processors. Manyof them frequently call us back and ask for a clarifi-cation or more details about subjects they shouldknow and should be explaining to us. So, there is agood response. That’s part of bringing them intothe fold and keeping them informed.

One of our roles beyond bargaining is to keepup with the financial condition of our processors.About 3 years ago, we were involved in a lawsuitthat costs a fortune. We questioned a processor’sability to have an operating line to pay growers.We were in court 7 times over 2 years and pre-vailed each time. I truly believe that if those 280growers had delivered to that processor, it wasquestionable if they would have been paid. Eventhe growers have superior lien positions in theadvent the processor goes broke. The delay inpay-ment and the complexity of that repayment wouldhave caused really debilitating effects on growers.

We subscribe to Dun and Bradstreet, one ofthe services I use to at least get payment recordsfrom processors or their financial statements. New

processor members (we’ve had two) must providefinancial statements or at least prove that they werefinancially able to pay the growers and have anoperating line. In addition, we annually check thefinancial condition of our processors. In one case, Ithink it saved millions of dollars.

There is considerable support for the associa-tion by processors. We value that. Ninty to 95 per-cent of our funding comes from them. We assessour growers 1 percent for a revolving fund that’scollected in November-December and repaid everyJuly 15. Even though we sit on a pretty good cashreserve, the only thing we really operate on is theinterest we earn. Processors pay a $4 fee for eachton delivered to them and that funds the associa-tion.

We’ve tried other things in the past. Oneunsuccessful program was financing growers’ pur-chase of raisin bins. We borrowed up to $800,000 tofinance the program, but eventually scuttled it. Wealso had a very successful workers compensationprogram for 2 years that provided a dividend of 44percent through Pan American Underwriters. Ahealth insurance plan and a property liability pro-gram are also available. Those are some of thethings we do beyond bargaining.

Dick La Framboise: Our organization has tolook at it from a significantly smaller scale thanmany others. I feel there is a role beyond bargain-ing. But, I think it is one that you have to look atfor the protection of your growers and anythingthat might affect their pricing structure. We startwith grading. There are certain processsors who wefeel price by grading. Anytime a processor or plantmanger walks out to the grading shed and says,“Be a little tougher because the back end isn’t com-ing out right,” knows it’s something that shouldn’tbe done, and at that point and time, I feel we haveto step in.

Unlike many industries, the processor furnish-es the initial seed and tells the grower exactly whatdays it will be planted. Later, he advises the growerwhen the crop will be harvested. The grower is ineffect kind of a contractor. Although he is responsi-ble and owes for the seed, in effect he doesn’t payfor the harvest because it’s figured in the price. So,

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anything that happens that affects any one of thosethings is really something beyond bargaining,although a part of bargaining. You have to getinvolved with it.

Water Issues

We have water issues in parts of our area thathave suffered from drought for the past 3 years.The 82-mile-long Yakima River Basin serves an area30 miles wide. The water rights to the growers inthose areas are divided between those who werethere before the Bureau of Reclamation came to thescene and developed some water, and those whogot water under that Federal system. The lattergroup has what we call “junior water rights.”

They have developed ground on which theyplanted not only corn but also fruit crops like pearsand apples. When those people get only 34 percentof their normal used water, it creates a problem.

These water issues have nothing to do withbargaining, but certainly affect pricing. When theseissues surface, we have to get involved, be knowl-edgeable, and participate in what goes on so thatwhen you do sit at the bargaining table, the subjectis relavent.

I think public relations is a given part of polit-ical action. You have to be aware of what’s goingon. Eventually it will affect the pricing of whateveryou are doing. Our contract or articles of incorpo-ration limit us to pricing, but again, there are manyrelated 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 contribu-tion you would make?

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A Under our PAC, a typical grower delivers 100tons of raisins and gets $700. We withhold $1per ton, or $7 in this case, and repay it in July.Every year or so we send a blanket letter ask-ing them to allow us to deduct contributionsto the PAC fund from their revolving fund.They can contribute in a lump sum amount oron a dollar-per-ton basis. Typically, it’s $1 or

$2 per ton. On the disbursement, we literallyshow proceeds due grower, less PAC fundcontribution, the way they made it and thenwe pay the balance to them. We try andreward those who have done a good job.

Q Tell us about your followup program.

A Only about 46 to 50 percent of the growersparticipate. Each grower is asked to contributea minimum of $25, with a maximum of $250,by checkoff. You sign the card, submit it, andcan have it stopped at any time. We deduct itfrom what we revolve back. It’s been very .tough to go above that 50 percent level, eventhough you make the appeal many times.

I’ve served on the National Council of FarmerCooperatives (NCFC) PAC for many years. Wefinally reached 94 percent of the board partici-pation. So, it’s something that you have towork on. It’s important to all of our 20 groupsbecause we are getting beat up by somebodyelse and each of us has a different point ofview on PACs.

Our small organizations have neither thatkind of money nor a PAC. So, our board haselected to work on a very low-key area. Weencourage our members to contribute individ-ually. We are also members of our State AgCouncil in California and NCFC. From ourviewpoint, belonging to those organizationskeeps them apprised of our problems andenables us to stretch our limited dollars.

Q One of the issues that keeps coming out of market-ing orders and challenges is bloc-voting through-out the country. Vaughn (Koligian) will you sup-port that order as an association? Will youconsider bloc-voting and if so, how?

A (Vaughn Koligian) We will bloc-vote thatissue. The law allows a grower to vote con-trary to bloc-vote. We have carried that issueto almost every district meeting. Growershave supported directors casting their bloc-

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vote as they thought best for the industry, Inour case, about a third of the members andthen the board will vote and the president or Iwill vote on behalf of the association.

The interesting thing about the order, passagerequires 65 percent of the growers represent-ing at least 51 percent of the tonnage or 51percent of the growers representing at least 65percent of the tonnage. So when you have abody of 40 percent that can bloc-vote, you cankill any effort by anyone trying to establish anorder unless you get your two cents worth inthere. One order is totally unacceptable to ourgroup so we will bloc-vote against it and inturn bloc-vote yes on a compromise. Ourmembership has been supportive of that.

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ATTENDEES

Agricultural Bargaining Council (Maine)744 Main StreetPresque Isle, Maine 04769207/764-3380

Vernon DeLongThomas Graham

American Farm Bureau Federation225 W. Touhy AvenuePark Ridge, Illinois 60068312/399-5747

Scott Rawlins

Apricot Producers of California2125 Wylie Drive, Suite 2AModesto, California 95355209 /524-0801

Bill Ferriera Connie FerrieraTom Brenkwitz Barbara BrenkwitzGene Bays Eleanor BaysJulius Traina Marie TrainaBill Sloan June SloanEd Maring Mimi MaringJames Mahaffey Carleen MahaffeyJeff Arambel

California Pear Growers1600 Sacramento Inn Way, Suite 229Sacramento, California 95815916/924-0530

David R. Long Bill Johnson

California Tomato Growers Association, Inc.P.O. Box 7398 ’Stockton, California 95267-0398209/478-1761

John Welty Susan WeltyJo Anne Hancock

California Canning Peach AssociationP.O. Box 7001Lafayette, California 94549510/284-9171

Ron Schuler Rich HudginsJasbir Bains Bill BryanSteve Scheuber Cass Flatley

Catfish Bargaining AssociationP.O. Box 247Belzoni, Mississippi 39038601/247-4913

Bruce Dunlap Myra1 Dunlap

Central Washington Farm Crops AssociationP.O. Box 202Yakima, Washington 98907509/575-0155

Dick LaFramboise

Hanson, Bridgett, Marcus, Vlahos & Rudy333 Market Street, 23rd FloorSan Francisco, California 94105-2173415/777-3200

Ron Peterson Gerry MarcusStephen B. Peck William J. Bush

Hazelnut Growers Bargaining Association8101 S.W. Nyberg Road, #201Tualatin, Oregon 97062503/692-5932

Michael KleinLarry ChristensonBert ColemanColin KohlmeyerMilo LemertJim MarnachKeith OlsonElmer SkurdahlMilburn Ziegler

Lois ChristensonGerda ColemanJudy KohlmeyerVictoria LemertJenene MarnachArlene OlsonCharlotte SkurdahlVelma Ziegler

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Malheur Potato Bargaining AssociationP.O. Box 665Vale, Oregon 97913503/473-3122

Jack Pressley Melinda PressleyMeshell Pressley

Marionberry Marketing AssociationP.0. Box 804Salem, Oregon 97308503 /585-2255

David H. Leonard Brent LaFollette

Michigan Agricultural Cooperative MarketingAssociation (MACMA)P.O. Box 309607373 West Saginaw HighwayLansing, Michigan 48909517/323-7000

Randy G. Harmson Jerry CampbellRichard Walsworth John Gallagher, Jr.

Michigan Asparagus Advisory Board2133 University Park Drive, Suite 700Okermos, Michigan 48864517/347-2530

Harry A. Foster Mark C. Trommater

Michigan Processing Apple GrowersP.O. Box 30960Lansing, Michigan 48909l-800-248-2760

Tom Butler Dawn MesserAllan Overhiser Mike Paradis

National Council of Farmer Cooperatives50 F Street, N.W., Suite 900Washington, D.C. 20001202/626-8700

Leslie Mead

Nationwide Insurance EnterpriseOne Nationwide PlazaColumbus, Ohio 43215-2220614/249-5330

Harold Weihl Mary Weihl

Olive Growers Council121 East Main, Suite 4Visalia, California 93291209/734-1710

Adin Hester Squeakie AkinPat Akin

Ontario Chicken Producers’ Marketing Board3380 South Service Road, P.O. Box 5035Burlington, Ontario L7R 3Y8Canada905 /637-0025

Ron O’Connor

Ontario Vegetable Growers’ Marketing Board435 Consortium CourtLondon, Ontario N6E 2S8Canada519/681-1875

Keith Strang Lloyd ArnoldRichard Penner Elfrieda BrownWalt Brown Brenda MumfordJohn Mumford

Prune Bargaining Association335 Teegarden Avenue, Suite BYuba City, California 95991916/674-5636

Neil1 MitchellJoe BainsKen Lindauer

Sandra MitchellKay BainsGreg Thompson

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Raisin Bargaining Association3425 N. First Street, Suite 209Fresno, California 93726-6819209/221-1925

Jim AndreasSteve KisterDwayne CardozaSteve LehmanSam EsralelianMarvin MelikianJohn KalebjianDenis SalwasserMonte LauritzenMonte SchutzBob KaprielianFrank SilvaRaymond KayLouis SpateSteve SpateRobert TusanMike WeberVaughn Koligian

Norman EngelmanLinda KisterJanet CardozaPatty LehmanMargie EsraelianNancy MelikianEsther KalebjianDorothy SalwasserLaraine LauritzenKim SchutzMariam KaprielianJanice SilvaThelma KayRosalie SpateTracy SpateFrances TusanKim WeberMary Ann Koligian

USDNRBCDS/Cooperative ServicesAG Box 3253Washington, D.C. 20250-3253202/690-1411

Andrew Jermolowicz Randy Torgerson

Washington-Oregon Canning PearAssociationP.O. Box 344Yakima, Washington 98907509/452-8515

Dick McFarland Lucille McFarlandNick Blair Larry JuddDoug McDougall Diane McDougall

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U.S. Department of AgricultureRural Business and Cooperative Development Service

Cooperative ServicesAg Box 3200

Washington, D.C. 20250-3200

RBCDS’s Cooperative Services provides research, management, and educationalassistance to cooperatives to strengthen the economic position of farmers and otherrural residents. It works directly with cooperative leaders and Federal and Stateagencies to improve organization, leadership, and operation of cooperatives and to giveguidance to further development.

Cooperative Services (1) helps farmers and other rural residents develop cooperativesto obtain supplies and services at lower cost and to get better prices for products theysell; (2) advises rural residents on developing existing resources through cooperativeaction to enhance rural living; (3) helps cooperatives improve services and operatingefficiency; (4) informs members, directors, employees, and the public on howcooperatives work and benefit their members and their communities; and (5)encourages international cooperative programs. Cooperative Services publishesresearch and educational materials and the monthly Farmer Cooperatives magazine.The United States Department of Agriculture (USDA) prohibits discrimination in itsprograms on the basis of race, color, national origin, sex, religion, age, disability, politicalbeliefs and marital or familial status. (Not all prohibited bases apply to all programs).Persons with disabilities who require alternative means for communication of programinformation (braille, large print, audiotape, etc.) should contact the USDA Office ofCommunications 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.