By
Paul W. Jackson
Michigan Farm Bureau
The challenge seemed reasonable
and clear.
Without unity in the asparagus industry, it won’t survive long.
said Ron Armstrong, sales president of Honee Bear Canning in Lawton,
Mich. On that point, there was – and is – agreement among
Michigan asparagus growers and members of the Michigan Asparagus Advisory
Board. For too long, they well know, forces that would divide them
have made significant progress, even if unintentional, such as the
U.S. war on drugs inadvertently creating a strong Peruvian asparagus
competitor.
And with polite deference to Armstrong’s assertion that his
vision for unity reaches all of North America while others see only
to the end of Michigan’s asparagus fields, the growers seemed
a bit baffled by Armstrong’s call for unity.
The bafflement was because of one fact: They held in their hands Armstrong’s
letter to Jeff Haarer, manager of the Producer Security Services Section
at the Michigan Department of Agriculture (MDA), dated Aug. 25, that
spelled out Honee Bear Canning’s intention to refuse negotiation
of 2005 prices and terms of trade with members of the Michigan Agricultural
Cooperative Marketing Association’s (MACMA) asparagus division.
“We are opting out now,” the letter said, “so that
MACMA growers have ample time to make their marketing decisions and
that the organization and redistribution of North American asparagus
runs as smoothly as possible for Honee Bear Canning.” That decision,
while legal under terms of Public Act 344 of 1972, effectively divides
Michigan’s growers between MACMA members and nonmembers.
That’s far from his intention, Armstrong said.
“Grower affiliation is no concern of mine,” he said. “MACMA
and P.A. 344 are two different things. Honee Bear has no issues with
MACMA and never has. I’ve educated myself, and P.A. 344 says
either side can opt out (of negotiations). We’re just exercising
our rights under 344, and there’s no other news than that. I
have no idea if I’m busting a union of growers. All I do is
follow the rules of 344 and run this business to the best of my ability.”
Honee Bear has gone to arbitration with MACMA in both 2003 and 2004
(and in previous years) over MACMA pricing and terms of trade. MACMA
is the only state-accredited organization that, under terms of P.A.
344, has the right to negotiate minimum prices of asparagus between
growers and processors.
MACMA, while not officially known as a union, is an organization of
Michigan asparagus growers representing an estimated two-thirds of
the state’s production. By law, MACMA would not have been accredited
unless it represented more than 50 percent of the state’s growers
and production volume.
While MACMA cannot be considered a union as defined by today’s
terms, Honee Bear’s declaration that it will opt out of negotiations
is a union-busting tactic, said Ken Nye, manager of MACMA’s
asparagus division.
“Because Honee Bear is our largest asparagus buyer, they are
forcing Michigan growers to make a tough decision,” he said.
“They’ll have to decide whether MACMA – and the
price floor it negotiates – is worth belonging to or whether
they’ll cancel their MACMA membership so they can sell to Honee
Bear at whatever price they offer.
“This is a particularly bad time to make that decision, because
with Seneca (Foods) announcing that it will not process asparagus
in Washington state after next year, Honee Bear knows it can source
plenty of supply from Washington. That puts everyone in a bad position,
because while other processors may have the processing capability
to handle all the ’gras that Honee Bear is abandoning, they
might not have the markets in place to sell it.”
“Michigan Farm News” left five phone messages at three
Michigan asparagus processing companies to inquire about those potential
markets, but no calls were returned.
They didn’t return the calls, Nye speculated, because they,
too, face a serious decision. With Honee Bear heading into 2005 with
no price floor via a contract with MACMA growers, the other handlers
might feel they are at a pricing disadvantage, even though by signing
a price agreement with MACMA, they will better know the cost of their
raw product well ahead of the asparagus season.
However, under P.A. 344, a company that opts out is prohibited from
buying from MACMA members.
Honee Bear will still have options under the law to negotiate with
MACMA, Haarer said.
“The act does allow the company that opts out to reach an agreement
later,” he said.
That appears unlikely, though, since it’s assumed that Washington
growers, desperate to keep their heads above water when Seneca Foods
abandons processing after 2005, may try anything to minimize their
losses.
“I don’t think Washington growers will plant any new asparagus,”
said Rodney Winkel, a Southwest Michigan fruit and asparagus grower
and chairman of the Michigan Asparagus Advisory Board. “They
may sell for a year in desperation, because when people become desperate,
they’ll try anything to weather the storm. And who knows what
options might develop for them.”
The option for Oceana County grower Gerald Malburg is simple. Either
forfeit MACMA membership or find another asparagus market. The first
option is much more practical, since he sells 100 percent of his asparagus
to Honee Bear
“The handwriting is on the wall,” he said. “Unless
something happens, I may have to forfeit my membership. And I’m
not the only one in this position. I want to figure out what’s
best for me and what’s best for the industry, and I’m
upset that I’m being put on the chopping block. But I’m
tied up with Honee Bear pretty tight. My ’gras has no other
home. But if Honee Bear opts out, who’s to say the other processors
won’t? And if they won’t sign a MACMA contract, it will
be awfully hard to negotiate without any leverage.”
If MACMA were indeed a real union, growers might hold back all their
asparagus for a year, hoping that processors would feel the heat of
unfilled contracts, and give in. But with fierce global competition,
that’s impractical and risky, Nye said.
And while Malburg said he knows that cherry growers who let P.A. 344
negotiating powers lapse wish they had that bargaining power only
a few years later, he also sees a cycle in the asparagus business.
“It seems that every 10 years or so, asparagus prices take a
dive,” he said. “Farmers then take out their poorest quality
fields, the industry rolls back and eventually gets back on its feet.
But out-of-country growers don’t adjust their acres like we
do, so the pressure is there now.”
While many growers feel it is Honee Bear who is applying all the pressure
to the Michigan industry, Armstrong said P.A. 344 is facing pressure
because it’s outlasted its mission.
“It worked real well when the only competition in the asparagus
market was from the United States,” he said. “But today,
in my opinion, 344 does not allow teamwork within the industry. That’s
why the advisory board has to discuss a united industry. Michigan
has a unique role in that industry if it is united. A united industry
means all growers. And if the rules of P.A. 344 puts this company
at a disadvantage, we’ll do what we have to do to survive. Growers
in Michigan, Washington and California all have the same interest,
and that’s survival. Profitability is another thing, and that’s
in the eye of the beholder.”
While falling short of acknowledging that profitability for Michigan
growers means survival, Armstrong said only his company has the historical
experience to understand the global asparagus economy.
He said: “344 works for the state of Michigan, but the marketing
and supply environment have changed dramatically. It’s outdated.
We have a global supply now, and we have to be united as an industry,
not as a state.”
But to hide behind global unity while dividing a state’s growers
is bad for the entire industry, Nye said.
“If Honee Bear opts out and growers go with them,” he
said, “It reduces the ability of all growers to bargain. Remember
that MACMA prices benefit all growers, not just MACMA members. The
ability to bargain creates a lot of stability for both buyers and
growers. Honee Bear’s decision upsets that stability.”
Armstrong, however, insists he’s looking out for the good of
the entire U.S. industry.
“If it was all just about the dollars,” he said, “I’d
go to Peru and forget Michigan. But I have a conscience. And with
the help of the marketing (advisory) board, we’re willing to
build alliances with growers who are willing to adapt to the shared
global opportunities and challenges.”
And if those willing growers are MACMA members?
