First it was the retailers, as grocers began swallowing each other up to the point that now six mega-chains control 60% of the U.S. market. Then it was the grower-shippers, especially in Northwest tree fruit, where the largest 10 to 12 marketing organizations are now responsible for more than 90% of sales. Now, some of the Washington tree fruit organizations may follow suit.
“What’s been happening in the tree fruit industry in the last 20 years?” rhetorically asks Bruce Grim, executive director of the Washington State Horticultural Association (WSHA). “The obvious answer, in a nutshell, is consolidation.”
The four organizations, whose top administrators and board chairmen formed a committee and have been meeting to discuss a possible merger, are: the Washington Growers Clearing House Association (WGCHA), the Wenatchee Valley Traffic Association (WVTA), the Yakima Valley Growers-Shippers Association (YVGSA), and the WSHA. The options on the table, says Grim, run from standing pat to combining all four associations into one. Grim favors the latter.
Not A New Idea
The idea of consolidating some of the many organizations that serve the tree fruit industry was first broached publicly at the WSHA’s annual meeting in December 2011 by the outgoing president, West Mathison, head of Stemilt Growers, Inc. Mathison argued that consolidation would not only eliminate redundancy, it would help tree fruit growers politically to speak with one unified voice.
Grim says there’s no question there’s duplication of effort among the four groups, each of which was formed decades ago. For example, the other three organizations all are involved in gathering pricing data, i.e. how much of a certain variety was sold at such and such a grade. “We definitely see some redundancy in those activities,” he says.
Another example is that both WSHA and YVGSA have their own lobbyists at the state capitol in Olympia. Grim says the lobbyists work together, but there is no doubt that there is duplication of effort there too, not to mention creating some confusion. As Mathison noted, it would be better to speak with one voice, says Grim. “Olympia asks ‘Who represents the tree fruit industry?’ Streamlining and consolidating organizations will make it clear to Olympia who represents the tree fruit industry,” he says.
The task force made up of the heads of the four organizations, which was appointed last year, elected to hire a facilitator to sound out the industry. Growers and shippers were contacted to find out what they liked and disliked about the current set-up. They were asked whether or not the task force should continue exploring the idea of consolidation, and the consensus was to go ahead.
No action will be taken in the immediate future, however, said Grim in early July: “Half the task force is up to their eyes in cherries right now.”
However, the task force has already overcome one major stumbling block. Actually it’s something larger than a stumbling block; in fact, this obstacle might have prevented the merger from ever getting legs: Self-preservation.
If the administrators of the four organizations were younger people who weren’t about to give up their jobs, the proposed merger would have been difficult to say the least.
A good example of that is the proposed merger of two national fruit and vegetable organizations, the United Fresh Produce Association and the Produce Marketing Association (PMA). A merger of the two has been proposed more than once over the years, but it hasn’t happened. Even though many members favor a merger for the same reasons as those in Washington — to cut costs while at the same time packing on political muscle — the two organizations could never come to an agreement. Many say the loss of jobs is the chief factor. Interestingly enough, the facilitator for the most recent merger talks between United Fresh and PMA is the same one that is working with the Washington organizations.
Three of the four Washington administrators are looking to retire soon: Charlie Pomianek, manager of WVTA; Kirk Mayer, manager of WGCHA; and Grim. Jon DeVaney, executive director of YVGSA, is, at 42, the spring chicken of the bunch. He agrees the timing for the process is fortuitous. “It’s a lot easier to discuss these things when people’s jobs aren’t threatened,” says DeVaney, “but it shouldn’t be about the staffs.”
DeVaney says the talk should be about the function and structure of the organization, and staffing questions should only be answered later. Asked if he would take the helm of any new organization, DeVaney says he would certainly consider it, but such talk is premature. “It’s really about the members,” he says, “how to best serve the members.”
Grim says he agrees that what should be decided next is an organizational chart. The task force, which will likely resume deliberations after apple and pear harvest, will look at what the function of the organization should be, and how to finance it. The task force will likely present an update on where they stand at the WSHA’s annual meeting this December in Wenatchee, and a clear path should emerge by next spring.
Through the entire process, Grim says the task force will keep one guiding principle in mind: “If you were serving the industry today, you wouldn’t create four separate organizations to do the job,” he says. “That’s kind of our North Star.”
Even before becoming the executive director of the Washington State Horticultural Association (WSHA) several years ago, Bruce Grim thought there was some redundancy among the various tree fruit industry associations.
“Industry consolidation is why I took the hort job,” he says. “The main reason to take it was to show we could do consolidation.”
Grim was showing he could do it because at the time he was already manager of the Marketing Associations. That’s the term given to the family of marketing cooperatives created in 2001 in compliance with the Capper-Volstead Act which gives agricultural producers, their handlers, and sales agents the legal ability to discuss market information that they would otherwise be unable to discuss. Interestingly, at the time the Marketing Associations were created, Grim told Western Fruit Grower they were necessary in the wake of all the consolidation that was happening on the retail end among the grocery chains.
Four separate associations were created: the Washington Apple Growers Marketing Association (WAGMA), the Washington Pear Marketing Association (WPMA), the Mid-Columbia Pear Marketing Association (MCPMA), and the Northwest Cherry Marketing Association (NWCMA). Each association is a separate legal entity governed by its own board of directors.
By melding the staffs of the Marketing Associations with the WSHA, some positions could be eliminated because of overlap. But it did take time for some people to come around. “It was a change — getting people to embrace it is not an easy thing,” says Grim
The reaction changed, however, when Grim noted that employing fewer people would result in saving about $300,000 annually in executive salary. “Hey there,” he recalls the consensus reaction, chuckling, “I think consolidation makes sense.”