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Waiting For Desperation? Is It Only Necessity That Can Prompt A PMA/United Merger?

Jim Prevor’s Perishable Pundit, September 20, 2012

We have written about relations between United and PMA for a long time.

We also analyzed the recently collapsed talks. We started with an overview piece defining the issues related to a merger or combination of the two associations:

PMA And United: To Merge Or Not To Merge? That Is The Question

Then after the talks collapsed, we analyzed why and suggested ways to jump-start the talks:

The United/PMA Fiasco: THE SPIN IS JUST HALF THE STORY — Lessons Learned: Open Up To Industry Input And Focus On Big Things First

Three Possible Reasons For The Collapse Of The United/PMA Merger Talks

An Unusual Perspective — Leader Who Has Served On Both United And PMA Boards Offers Insights On Merger Failure: HARD TO BELIEVE IT REALLY CAME DOWN TO CEO

Pundit’s Mailbag — Putting Leadership First: Consider The Example Of The Ohio Florist’s Association

Pundit’s Mailbag — Power Lies In The Pocket Book

A Modest Proposal For Reviving The Merger Of PMA And United

United/PMA Impasse More Than Just A Decision About A CEO — It Is A Battle For The Soul Of The New Association

THIRTEEN VOICES: Industry Leaders Weigh In On United/PMA Merger

Without Change, The Question Will Not Be Who Will Survive, But Rather Can Either Survive? “A Modest Proposal” Take-2 From The Pundit

As Association Staff Feels The Strain, Would Wall Street M&A Group Provide Quick Solution To Merger?

Where’s The Face Of The Industry? Is It The Face Of A PMA Or United Executive Or A Volunteer Leader?

How Much Duplication Is There?

United/PMA Merger Comes Down To Philosophy And Function

Neither United Nor PMA Represent Production Agriculture

Do We Have To Wait Another Seven To Ten Years To Make A Merger Happen?

Pundit’s Mailbag — Get It Done

Pundit’s Mailbag — ONE Global Produce Industry Needs ONE Voice

Pundit’s Mailbag — Good Ol’ Fashioned Produce Candor Needed

In the end, we invoked both Moses…

A CLOSER LOOK AT THE DYNAMICS THAT LED TO THE COLLAPSE OF THE UNITED/PMA MERGER: Buyer/Seller Disconnect And Consensus-builders Versus Nonconformists

And Jesus…

Pundit’s Mailbag — When Confronted With A United/PMA Merger Question, What Would Jesus Do?

Yet opinions keep coming in. This came from an important east coast shipper who asked that we shield his identity:

Enjoyed your articles on the merger very much. Our company has been a member of both organizations for many years and has enjoyed the benefits of being an invested member.

Our founder mentored us all.  He was a man who could add perspective with a single sentence.  I tried to think of what he would say of the failed merger.  I think he would say “Neither organization is hurting bad enough.” 

Some kind of pain to either organization or to both will ultimately force the merger. Until then they each have enough time, money and member support to continue independently and work toward making themselves right.

This is surely correct, but the question is whether it is the optimal outcome for the industry.

After all, just as most companies would strive to make changes proactively rather than wait until circumstances compel such changes, it would seem that industry ownership would prefer to find a way to organize its assets in an optimal manner, rather than waiting for necessity to compel an organizational change.

One possibility is that the industry really doesn’t want a merger. After all, we are mostly all capitalists here and a little competition stirs the animal spirits and produces better outcomes.

An alternative possibility is that the associations have “gone rogue.” One argument one could make for why associations should not be allowed financial reserves and why they should not be allowed to operate businesses is that both conditions tend to make the associations less responsive to members. Associations that depend 100% each year on dues income have to be highly responsive — because a 5% drop in dues means layoffs and big problems. So, perhaps, the views of industry ownership are just not that important.

Still another possibility is that the associations aren’t all that important to the most important players. We received several outraged calls when the talks collapsed, and although some players may take some private action — say dropping membership or sending fewer people to a trade show — nobody thought the matter important enough that they were prepared to publicly do anything.

Finally, the whole idea of merger — the idea that there is just one industry ownership — may just not be quite true.  In the end, our discussions with leaders on both sides of the negotiations came up with the realization that the two sides were never as close as they thought. They agreed to forms but not substance. They never came to an agreement on what the priorities of the new association ought to be. We saw the collapse over who should be CEO as a proxy battle for the soul of the new association.

It has become clear to us that there is one group heavily focused on advocacy in government that should be headed by a broad majority of domestic grower/shippers.

There is another group — retailers, foodservice operators, many overseas producers —each of which has its own advocacy group and is mostly interested in networking and business-building opportunities.

Obviously, nothing is 100% one way or the other, and domestic producers want to network also and retailers and foodservice operators want a political environment that sustains a supply base.

Yet there are serious and sustained differences on what the priorities of a national association should be.

We suspect that the goal of somehow papering over the different priorities was doomed to fail — if not in the negotiations then years later in the execution.  Now we have suggested here and here a revenue-sharing proposal that would create one national funding mechanism, eliminate duplication but sustain two separate boards.

We think it could work, but it is innovative and complicated, and as our correspondent points out, neither association is desperately motivated.

The sadness though, for those who love the industry, is that desperation may compel a decision, but it also constrains options and thus may, one day, lead to a less than optimal decision being made.       

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