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Bee Sweet Departure Adds To Sunkist Woes

Jim Prevor’s Perishable Pundit, February 7, 2007

What a difference less than five months and one freeze can make:

February 5, 2007

“Yes, I can confirm that we are no longer part of the Sunkist co-op as of February 2. We had a one-year agreement. It was a trial. We were independent before that. Since the freeze happened, Sunkist was gracious enough to let us go our own way. That’s all I’d like to say.”

— Jim Marderosian
President
Bee Sweet Citrus
Fowler, California

September 21, 2006:

“We’re extremely pleased to welcome Bee Sweet into the Sunkist system,” said Nick Bozick, chairman of Sunkist’s board of directors. “This new affiliation demonstrates the expanding opportunities and benefits offered to citrus growers and packers by Sunkist.”

Sunkist Press Release, September 21, 2006

The freeze brought this matter to the fore, but everything wasn’t perfect in paradise before the freeze, and many knowledgeable people expected Bee Sweet to leave when its September 1st commitment was up anyway.

Here at the Pundit, we have been trying to wrestle with how Sunkist can best move ahead. Most recently we contrasted Sunkist’s decision to give up selling strawberries with its need to diversify in a piece titled Freeze Points Out Sunkist’s Need To Diversify.

But our coverage on this subject started with Sunkist Wake-up Call? which asked what the message was in the loss of Paramount Citrus as a Sunkist shipper. A piece titled International Positions Of Two Citrus Companies suggested that the grower/owners of Sunkist should think about where Seald Sweet would be if it hadn’t gone international in a big way.

We ran a Pundit’s Mailbag with a lengthy letter from Rick A. Eastes, then director of global sourcing for Sunkist Global LLC, explaining Sunkist’s international efforts, and the Pundit responded by praising the effort but pointing out that these were the easy, noncompetitive decisions to make. The grower/owners of Sunkist still had to deal with competitive regions such as China.

We extended congratulations to the newly appointed president and CEO of Sunkist, Timothy J. Lindgren, but asked Will Tim Lindgren Go To China? The question was both literal: Would Tim Lindgren establish a strategy for Sunkist with regard to Chinese citrus? and figurative: Would he use his grower-friendly credentials to take the co-op public or otherwise lead it in a direction that had previously been resisted?

Pundit’s Mailbag — In Defense of Sunkist’s New CEO was a reader’s take on the situation.

Increasingly, though, it is becoming clear that the problem is in the governance structure of Sunkist.

Many things that would make perfect sense are blocked because Sunkist is not a normal cooperative where growers simply run the show. Sunkist is a federated co-op. This means the packing houses have enormous influence.

This creates a tremendous conflict of interest.

The Pundit has been pushing for shares to be distributed to growers and Sunkist to go public with a stock offering on the New York Stock Exchange. It is a great idea for the growers. They will get valuable stock and can sell their fruit to whomever they choose.

But for a packer who owns little fruit himself, this is a terrible idea. What he wants is to use Sunkist as a tool to drive cartons through his packing house.

The growers have to push to break the conflict of interest of having packers so influential on the board. That will be the key to making progressive changes for Sunkist.

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