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Pundit’s Mailbag — A First-Step Suggestion For Merging PMA/United

Jim Prevor’s Perishable Pundit, July 31, 2007

For many months we’ve hosted discussions on the subject of a possible merger between PMA and United. When both associations recently confirmed that new talks were being conducted regarding a merger or other forms of cooperation, we ran an in-depth piece entitled, An Industry Discussion: Pros And Cons Of A PMA/United Merger, which attempted to analyze the basic issues at stake in these discussions.

We’ve received many responses, and we dealt with two of them in a piece entitled, Pundit’s Mailbag — Finding The Right Answers For Possible PMA And United Merger. This was quickly followed by another letter, which we addressed in Pundit’s Mailbag — PMA And United Need To Remain Separate.

We then picked up an additional letter, which came from a United board member. We called the piece, Pundit’s Mailbag — Getting The Facts Straight On United’s Global Outreach, which dealt with United’s international efforts.

We’ve also dealt with topics that overlapped on the United/PMA merger discussion. Cool Compromise Shows Association Leadership But Battle Scars Remain was one such piece as was another letter, which we dealt with in Pundit’s Mailbag — What Is The Best Model For industry Lobbying Efforts?

Now Harris Cutler, who possesses both a strong mind and industry dedication, weighs in with an interesting idea:

Regarding the potential for the getting together of PMA and United. May I suggest a short first step.

When at a PMA convention in San Diego a number of years ago, I was asked to join a panel at a National Association of Perishable Agricultural Receivers (NAPAR) meeting to discuss a potential merger between PMA and United, (Jeff Gargiulo was the Chairman of PMA at that time). I spoke of the potential clout that the new organization would have.

In thinking of how I could possibly offer assistance to this effort, I thought that perhaps the two associations could actually send six or less representatives from each association and the two professionals and form a new interim group that could be invested with the cause of speaking for the industry. This new group would be the authorized and official voice of all of us.

We would then have one voice that could react to public concerns, government regulations, and anything that would require a response.

The Pundit could say this much better than I can, but perhaps what needs to be done first is to see if the egos can step aside quietly in favor of the cause.

The result of a focus of efforts on all our areas of concern would be tremendous. If every member of PMA and United got hold of their elected officials right now, we could do anything. I mean anything. We are the most admired industry in the country — no other industry comes close.

Our food is healthy, reasonably priced, and delicious. All of it. The promotion of our industry interests will always be watered down when there is more than one authorized voice speaking for the industry. This is the time for this to happen.

Jim, you have the vehicle to make it happen. Everyone is reading your column, perhaps not every single day, but I would offer that it is the most forwarded produce information on the net, with no one in second place.

The “clout” that a combined United and PMA would have would be amazing.

Thanks as always for your fearless and strong journalism.

It is so important to our industry’s future.

— Harris Cutler
President
Race-West Company
Clarks Summit, Pennsylvania

We appreciate this letter very much. Partly because we greatly appreciate the kind words about the Pundit. Mostly, however, it is because if the industry is to advance, ideas have to be put on the table and Harris, in a very specific and valuable way, is doing that here. It is a genuine service to the trade for which he should be commended.

Obviously, of course, not all the ideas will be adopted, but brainstorming is important. If people hesitate to put ideas out there because they might not be adopted or will, after analysis, be discovered to be impractical, many good ideas will never be considered.

So many thanks to Harris for giving us all some valuable food for thought.

Our initial take on the idea is that it falls into the category of “interesting, if practical.”

To the extent that the motivation for considering merging the associations is to create “one unified voice,” Harris proposes to do it by taking both PMA and United out of the policy-setting arena.

In other words, each association could do what it wishes in terms of programming and conventions but each would forswear public policy and leave that to a separate board. .

Yet on several levels, we question whether this could be implemented:

First, the meshing of the two association boards into one policy board strikes us as arbitrary — perhaps an evasion of the decision that has to be made. After all, if United partisans would not be satisfied to give PMA’s board the authority to speak for the industry, well, why would they agree to give it blocking power on industry statements? Same goes with PMA partisans when it comes to United speaking for the industry.

Second, although it is easy to think that Government Relations is mostly about policy pronouncements — speaking for the industry — that is rarely so. There are whole years that pass without major “policy pronouncements” by associations. The nuts and bolts of government relations play out on a much more detailed and prolonged turf. For example, the FDA or the USDA might wind up getting authority to regulate produce safety — which means there could be years of back-and-forth comment periods and private meetings, all to determine the specifics of what this pre-determined policy actually would mean.

And the questions the industry would get asked tend to be technical questions as much as policy questions.

The best analogy might be the subject of national defense. Wanting a strong national defense is a policy pronouncement. Yet the implementation of that policy is reflected by hundreds, probably thousands of votes and regulations on discrete weapon systems. Congress may or may not vote on a pronouncement that it wants a strong national defense, but whether we get one is determined by the vote to raise military salaries, to build a particular missile system and what not.

So this Platonic board — sitting in abstract, defining the essence of produce industry positions — probably wouldn’t have that much to do and couldn’t be very effective without a staff working day-to-day, hand-in-hand with FDA, USDA, Congressional staffers, etc., to make policy.

Third, it is true, as Harris says, that if we were truly “united,” we could achieve a great deal. But we are not always “united” because we sometimes have different interests. Think of automobile manufacturers and automobile dealers. Together they are strong, and sometimes they do work together, but when they are divided, they are each other’s most bitter opponents. Is it so different in produce?

Fourth, a separate board maintained in perpetuity with a pre-determined breakdown of board seats, detached from the membership numbers of any association, is bound to cause problems down the road. It is like Lebanon’s constitution. Based on a long-ago census, the country divided its top jobs by religion. Then it was afraid to hold a census forever more, as changes in the demographic makeup of the country would unsettle those settled arrangements.

Even assuming a 50/50 split was acceptable today on the board — and PMA as the larger association would surely object — what if membership ratios change over time, as they surely will? One day someone will ask why industry policy is being made based on this formula.

Fifth, actually it won’t be “one day,” it will be more like next week. So if an issue such as NAFTA or PACA comes up and the “new board” doesn’t act or acts in opposition to somebody’s interests, a new association will be formed, a regional group will be empowered, and we will be back where we started.

Sixth, who will care about United? United has many fine programs, but the passion behind United comes from trade perception that United is the government relation’s arm for the production end of the produce industry. If it loses that because some board is now handling things — we can only assume it will have enormous difficulty retaining membership.

Seventh, who will pay for government relations? This proposed board could issue pronouncements on policy, but it would have no staff or money to lobby or attempt to actualize these positions. Yet surely it is unrealistic to think that the two associations would independently fund efforts to actualize policies that their own boards might oppose.

Eighth, it seems unlikely either association would agree to such a plan for the simple reason that they are membership-driven organizations and so feel a need to be responsive to their members. This is an often-overlooked point. Although United and PMA are popularly perceived as representing “the produce industry,” they really represent their members and these do not always overlap.

Ninth, whatever its merits, such “clean-sheet thinking” of how the produce industry should be organized probably won’t happen. We have existing organizations, with different levels of success, different strengths and weaknesses and, contrary to what Thomas Paine may have said, we probably do not have it in our power to begin the world anew.

We suppose if one were pessimistic about United’s future and assume that the FMI alliance will crash and burn and United will lose that revenue source… if we assume that WGA will rally other regionals to be a strong independent voice for growers in DC… one could make a case for why United should consider such a deal, but why would PMA choose to voluntarily give up its right to make policy decisions?

Tenth, a lot of the pressure for a merger over the years has come from large industry members that did not want the burden of funding two separate trade associations. This proposal doesn’t solve that dilemma; it actually institutionalizes it, so many of the strongest advocates of merger, won’t support this proposal.

One other point worth making: Here at the Pundit we have had the opportunity to work pretty closely with both national associations, and we do not perceive the failure to merge over the years as being in any significant way a function of egos.

It is a function of different perspectives — one leaning toward the production end and the other toward the procurement end of the business.

It is a function of different purposes — one driven by government relations and one by marketing and supply-chain management.

It is a function of different memberships — if there was 100% overlap between PMA and United, the problem would be easier to solve.

Because retailers and foodservice operators contribute little in a financial sense, the two associations frustrate big producers as — one way or another — they pay to support both associations. But on a functional level, the two associations have always been different enough that a merger would have always meant a loss for somebody. Which is why it has never happened.

What we don’t currently know is how the insiders at United view United’s financial future — do they see the FMI situation as a big loss of revenue? Do they believe that WGA will eat into United’s membership as it promotes its new DC presence? If so, and PMA is respectful, then United may make a deal.

If not, then nothing is likely to happen in these current discussions.

Many thanks to Harris for his thought-provoking contribution.

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