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CTFA downsized to secure support for federal referendum

by Rand Green | January 17, 2011
The ballot mail-in period for the quadrennial referenda on continuation of federal marketing orders for California peaches and nectarines began Jan. 12 and continues through Feb. 2.

"For the orders to continue, at least two-thirds of the growers voting in the referenda or growers representing at least two-thirds of the volume of nectarines, pears and peaches represented in the referenda must vote in favor of the order," according to a Dec. 13 press release from the U.S. Department of Agriculture's Agricultural Marketing Service.

The federal referenda come on the heels of a similar referendum in October 2010 on a state marketing order for peaches and nectarines, which formed the California Tree Fruit Marketing Board, also administered by the California Tree Fruit Agreement. In that referendum, growers voted not to continue the program.

Following "the failure of the state program" in the referendum, "the executive committee [of CTFA] felt compelled ... to show the industry that they got the message and they were concerned and they were willing to make changes to secure the favor of the industry going into the federal referendum," CTFA President Gary Van Sickle told The Produce News Jan. 10.

Among those changes is a slashing of the proposed budget for 2011, by between 40 and 50 percent, which was submitted to the USDA in December, along with a reduction of the recommended assessment to 3 cents a box "which, on a commodity basis, is about half of what it was last year," Mr. Van Sickle said.

The federal peach marketing order was established in 1937, and the nectarine marketing order was established in 1958. Both programs, according to the USDA, "authorize production and marketing research, promotion projects, minimum quality requirements and various requirements to standardize marketing practices." CTFA also administers a state plum marketing order.

Michael Reimer, vice president of sales for Brandt Farms, chairman of the soon-to- be-defunct California Tree Fruit Marketing Board and also chairman of the CTFA executive committee, told The Produce News that the state marketing board was put in place about five years ago because growers wanted an option to the mandatory inspections allowed under the federal marketing order.

"The industry wanted to move to voluntary inspection or a spot-check or audit-type program that would still maintain quality but at reduced costs," he said. "There is no provision under the federal marketing orders for such a deal. Federal orders are either no inspection or the full-on inspection. ... So in order to get around that, we decided to do a state marketing order which did have provisions for voluntary or audit-type programs."

Some other programs were also run under the auspices of the state marketing board, he said, "but most of it was for the inspections."

In the 2003 federal referenda, the nectarine and peach programs came close to defeat. Actual balloting was insufficient to assure continuation of the program, but rather than discontinue the programs, the USDA exercised its option to hold hearings with stakeholders and then continue the marketing orders with changes believed by the department to reflect the wishes of the industry.

Since that time, several CTFA programs have been cut back. The biggest curtailment in the domestic marketing program prior to the state referendum in October had occurred about two years ago, Mr. Reimer said. However, "there was not really that much staff reduction that had taken place" prior to the state referendum.

Following the vote in October to terminate the state marketing board, "as an executive committee, what we had to listen to was what were the concerns" of the growers, said Mr. Reimer. "Why did the state referendum fail, and what are the important features of CTFA? What are the important things that are valued by the constituents or the assessment payers, and what are not?"

CTFA therefore rescheduled its fall meeting from early December to Dec. 21 and undertook to identify what the organization "needs to look like" to assure "that it has a future," he said.

"I have gone out and met with most of the major people in the industry to get input from them as to what they want in a budget ... and what they feel concerned about," said Mr. Van Sickle.

As an outgrowth of that process, CTFA announced at the Dec. 21 meeting a number of measures intended to address growers' concerns. Among the measures taken was a roughly 40 percent reduction in staff. Among those who were let go were Gordon Smith, director of marketing, and Dale Janzen, director of industry relations. Mr. Janzen had been with CTFA for around 25 years.

"We are still going to focus on [production and post-harvest] research" but with a smaller research budget, Mr. Van Sickle said. "We are going to focus on statistics, crop estimates and packout information" and also on crisis management.

"We are keeping our industry relations funding almost the same as last year," he continued. That involves programs funded jointly with other industry organizations such as the California Grape & Tree Fruit League in order to keep costs down for all participating organizations.

The domestic marketing program, which "had been slashed significantly back in 2008," will continue but with still less funding. "We are going to be cutting that budget from roughly $1 million to about $325,000," of which about $100,000 is earmarked for a consumer research project, he said.

"The other big one is our international programs." They will take a 40 percent cut, "but we are still going to be able to retain a program" and to leverage USDA Market Access Funding grant money, he said.

Commenting on the dramatic changes that have taken place in the industry over the past decade, Mr. Van Sickle noted that in 2001, the industry had 270 handlers (basically marketers, some of which represented more than one packer). That was down to about 270 in 2005 and currently stands at around 97, about one-third as many as a decade ago, even though total volume is about the same. As a further indication of the consolidation that has taken place in the industry, just 14 handlers currently account for about 72 percent of the state's peach and nectarine volume. With the changes that have been made in CTFA, Mr. Reimer said, "We think we will have the support" needed to continue the peach and nectarine programs. "I think we've got the organization where it needs to be."

"I think there is certainly a lot more support than we had back in October," said Mr. Van Sickle. Most people in the industry he talked to told him that with the changes, "it would be much easier for them to support it. Now we are just waiting to get through the next two months and find out if we are still putting on a program for them."