Where the subject may be perishable
but the insight isn’t.

Pundit’s Mailbag –
United’s President/CEO Responds
(Part 1)

Jim Prevor's Perishable Pundit, November 3, 2006

Tom Stenzel, President and CEO of the United Fresh Produce Association, was kind enough to take a moment from his busy day, during these busy times and send the Pundit a letter. The letter mentioned both issues related to the possibility of a merger between PMA and United and addressed the Pundit’s analysis of government relations as it applies to food safety.

In order to keep things clear, we will address his letter in two separate parts. Today, we’ll deal with the part of Tom’s letter that dealt with the issue of PMA/United merger:

As usual, we appreciate your opinion on the age-old question of merger (PMA/United Merger Fresh on Our Minds). I have a lot of confidence in some very smart people — those who serve on both the PMA and United Fresh Boards — to listen carefully to members’ views and chart a strong future course to serve the industry, whether as separate or combined organizations in the future.

We are certainly in full agreement that it is the boards and the membership of the trade associations who, ultimately, must make the decision as to whether United and PMA should merge. Here at the Pundit, we brought up the issue because many industry leaders — board members of PMA, United and members of the USDA Fruit and Vegetable Advisory Board, as well as other important industry participants — raised the issue with the Pundit at the recent PMA convention.

We’ve never particularly pushed this issue. In fact, in extending the Pundit’s best wishes to the newly named United Fresh Produce Association, we expressed our opinion on the issue as follows:

Over the years, many people have bandied about the idea of a merger between PMA and United. It may happen one day. It is not a better-or-worse situation. These things are often matters of timing and personality, and perhaps one day the timing and personalities will be right.

Yet, despite the fact that multiple associations inevitably drain industry coffers, decades of carefully watching industry trade associations have not convinced me that one association would really be better.

Partly it is the capitalist in me talking. In every other facet of our economy, we find that competition produces better outcomes. Why should association management not also benefit from robust competition?

In addition, this is a substantial industry, filled with passionate and devoted people who want to be part of industry leadership. The Pundit’s mailbag overflows on this subject. We have dealt with it here, here and here, and there is much more to come.

Maybe a second national association serves as a kind of escape valve for the pressure that would build up otherwise when someone is denied a seat on a national association board or denied a chance to go on to become chairman.

If there was a monopoly, all that person could do is fume, or be destructive. Now that person can take his business — and his passion, leadership and willingness to work — elsewhere and contribute to the industry in another way. This is a big win for the trade, perhaps more than enough to compensate for some operational inefficiencies.

Still, despite that opinion being the product of over two decades of reflection on the issue, the Pundit remembers the words of John Maynard Keynes: “When my information changes, I change my opinion. What do you do, Sir?” And so we are open to ideas, which is precisely the course we would urge on the boards of the two national produce associations.

As the Pundit has spoken to many influential members of the industry, including many board members at both PMA and United, it has become quite clear that, with a few caveats, there is substantial interest in exploring a merger.

For many, the issue is waste of industry resources via duplication of efforts; in other cases people feel that two associations inevitably make us seem divided in Washington, D.C.

As always, though, the devil is in the details. One issue is the question of grower representation. What mechanism can be established that would provide a way of insuring that grower interests, even if they conflict with retail interests, would be represented?

Obviously this is a subject for discussion. The Pundit can remember many discussions on this issue back 15 years ago. The most viable was the creation of a kind of “Congress” of regional grower groups. The idea was that the national produce trade association would handle the general interests of the trade, but that a Congress of local grower groups would be able to represent growers when their interests conflicted or they had particular interests that didn’t apply to the industry at large.

Funding was always an issue, but the gist of the proposal was that the National Produce Organization would provide office space and some staff support to this Congress of Grower Groups and would work to develop in every region a viable organization.

Beyond this specific problem the bigger issue regarding how to approach a merger is philosophical. One group would like to start with a blank piece of paper and design an organization as if the trade never had one before. Another group says that in the real world mergers don’t happen that way.

Thomas Paine said, “We have it in our power to begin the world over again.” There is something in that thought very appealing to Americans who, after all, settled a “new world.” Yet it isn’t really so.

We can only deal with the world we are given. Tom Stenzel has done a phenomenal job at United. He came to an association with a very uncertain future, stabilized it and began building it up again, including merging with IFPA.

Now the changes at FMI are threatening a major funding source and element of participation for United.

Bottom line: PMA has a phenomenally successful business model, and it is unlikely that any board would ever junk that model in exchange for an untested plan. It might even be irresponsible of them to do so.

It is interesting that Tom mentions the boards and members of the associations as key in these discussions. For in speaking to industry leaders, what we heard over and over again was that, though typically they relied on the paid professional staff of the associations to guide most decisions, this particular decision had to be driven by the industry.

Staff desires for position and compensation are understandable and reasonable and, indeed, must be dealt with in any final agreement. But the industry will be living with the results of this discussion long after all current staff members are retired.