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Farm Co-Ops Raised a Crop of Problems : A Bouquet for Coverage

October 20, 1985

Regarding "State's Almond Growers in a Bind" (Sept. 29), farmers are in deep yogurt, among them those in California who grow almonds, walnuts, grapes and citrus. For many reasons, economic soundness may not return to California agriculture for some time.

Chronic overproduction of nuts, tree fruit and grapes, among many crops, stems from farm investments made by non-farming money flowing into agriculture.

In the 1970s particularly, this situation was rampant, with many agricultural professionals eagerly ready to manage farming operations and investments for absentee investors. Pulling this along was the enticement of high grower pay-outs pushed competitively by the major processors of such crops as almonds, as they vied with one another in the expanding marketplace.

Economists tell us that the dollar was terribly undervalued at the time, but the success was attributed to the marketing ability of those involved. Little of this would have taken place however, it if were not for the tax avoidance opportunity . . . almost every physician in Los Angeles can attest to this.

Inject this tax mechanism into the atmosphere created by the legislation empowering agricultural marketing orders, which rolled out in the 1930s, and the mischief began. This has culminated in the current oversupply.

Marketing orders have specified goals and performance criteria, which should arrive at the Agriculture Department's nirvana called "orderly marketing." But practically speaking, most of the crops involved continue to ignore the basic precept that "parity" return to the farmer be achieved. Almonds don't come close to parity.

Marketing orders can do good things for the value delivery to consumers; however, they have a fateful provision allowing the boards or committees administering the regulation to set volume controls and minimum pricing for the crop.

This seems innocent, but in fact most of the marketing orders are controlled by agricultural co-ops, whose well-being lodges not in performance but in developing a rationale for the tonnage each is faced with that will satisfy the members of the co-op itself.

There are many excellent, outstanding co-ops in Bakersfield. Co-ops did a good job for the small farmer during hard times prior to World War II, gaining thousands of members who faithfully continue to believe the "message."

Co-ops always try to control the workings of the marketing order by ensuring that they have a majority of growers or tonnage in a crop, which in turn sets up the voting routine resulting in the composition of the board. After that, the wishes of the co-op are the rule of the land for that particular production.

Next, when the going gets tough and results in such things as overproduction, the stage is set for installation of "reality avoidance" measures such as "reserves," "set-asides," surplus requirements and other nomenclature for holding production out of the market.

After this comes a carry-over of the old crop, which begins to pile up and must be "disposed of." The California raisin industry is the embodiment of this chain of events, with about two years' volume sitting in the warehouse while the new crop is now being processed.

These tactics closely parallel the fuzzy thinking that has resulted in the butter and cheese that is around.

Witness the excellent article on the almond deal: The co-ops are generally astute in the use of public relations and politically oriented operations and of late have heightened their preaching about the culprit(s) that have caused the present dilemma:

- Banks that lend money.

- The strong dollar.

- Corporate farming. (This is a specific favorite, usually headed by "Big Oil," a key monster, eating up the family farm, etc., when in fact the farming costs for the big operations are much higher than the small farms. Corporate behemoths account for at least 3% of the tonnage in question.)

- Dissident independent growers (anyone not a member of the co-op).

Co-op almond growers receive the dollars left over from the annual operation of the non-taxpaying co-op whose unit cost of handling almonds despite massive volume increases. These outfits made money last year and will this year--good money.

What should be done is to check with representatives of the 40% of the almond crop that is not in the co-op and find out if any good U.S. food company has 50 representatives in Japan.

Finally, what is the return to the farmer for the almonds that wind up in almond butter? Maybe a test market could be arranged in which 25 of the representatives currently working the Japanese beat could be diverted to selling the likes of McDonald's, Burger King, Wendy's, et al. on adding sliced almonds to their fish and chicken sandwiches (instant mahi mahi and/or nutty chicken).

Better yet, let's interest companies such as Philip Morris to buy in and use their proven skills with these fine California crops, along with the General Foods items they'll now accelerate.



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