November, 1995

Fruits of Thought

Money Is Your Compass

The question of what kind of government relations the produce industry, or its various parts, might need and value lies at the core of the most recent discussions regarding the possibility of merger or joint trade show between the United Fresh Fruit and Vegetable Association and the Produce Marketing Association. Although the merger/joint trade show approach seems dead for now, the fundamental issue – the nature of the trade’s government relations efforts – is a discussion that will be ongoing.

I have written before about the problematic nature of produce industry government relations efforts. The basic dilemma is that the different segments of the industry – grower, shipper, wholesaler, broker, retailer, etc. – all have very conflicting interests. A national, unified, produce government relations effort may make sense on a few basic issues, efforts to increase produce consumption, for example.

On many issues, however, there is enormous conflict between segments of the trade. This conflict was brought out clearly during the recent debate over PACA. PACA, after all, is fundamentally a law to define the obligations of different segments of the industry.

To try to represent both segments, say, shippers and receivers, is inherently a conflict. No law firm, for example, would accept being retained simultaneously by both shippers and receivers to represent their interests in producing a PACA bill.

Of course, no matter what an association calls itself, nor which group it claims to represent, generally speaking all associations follow a variant of the golden rule. Namely this: He who has the gold, makes the rules. That is why the issue of financing government relations is crucial.

In the end, those who are willing to pay to support government relations will dominate the nature of the government relations efforts. People in the produce industry, of course, know this, and it explains why a group of wholesalers, all loyal United members, felt the need to form a separate association, the National Association of Perishable Agricultural Receivers (NAPAR), to represent their interests. They did this not as enemies of United, but as friends. The NAPAR founders knew that trying to get United to adopt pro-receiver positions, when those positions conflicted with grower-shipper interests, would destroy United.

Many of the issues of financing and representation have been glossed over in recent years by the way in which United has funded its government relations effort. The association basically operates a business, in the form of an annual trade show, and uses the money to fund government relations. The problem with this approach is it eliminates the natural check on government-lobbying actions that come from having to consciously raise money for a specific purpose.

It is important for the produce industry to understand that most trade groups with substantial government relations efforts do not depend on registration fees and booth sales to fund a government relations effort. It is not uncommon for supermarkets, other food industries, even magazines, to pay annual dues in the sum of hundreds of thousands of dollars in order to support associations and, particularly, their government relations efforts.

The truth though is that, as of now, few companies in the produce industry value national government relations enough to really fund such an effort. In fact, a great myth has arisen in the produce industry regarding all communal endeavors. The myth is that the industry efforts are supported by a few big players and that the problem we have is getting smaller guys to chip in. It is usually expressed by people saying things like this: “We need to get more people out pulling the wagon rather than getting a free ride.”

The plain fact of the matter, though, is that the large players, through their low-level financial contributions, are telling us they don’t really value industry government relations efforts or any other communal efforts. No players are leaping to contribute a quarter of a million or a half a million dollars a year to a government relations effort. Yet, if it is not worth a quarter of a million dollars to a giant who might account for, say, five percent of total U.S. produce sales, then how much, exactly, should a small broker in Philadelphia contribute?

Government relations efforts exist on a large scale in a particular set of circumstances when big companies decide it is more advantageous for them to lobby before Congress and the executive branch as an industry, rather than on their own. In the magazine industry, for example, large magazine publishers want to have small publishers appear before Congress urging lower postal rates, and so they are willing to hire a few less lawyers on their own and, instead, use the money to fund a national association.

The question for the produce industry is: Does a similar set of circumstances prevail? Do enough big concerns care about government relations and feel it is advantageous to rely on, and financially support, a national association for representation?

I think this is the crucial question, and I think it points out the great weakness of using a convention and trade show to fund government relations. Having an independent source of financing that people support for marketing and business reasons dissipates the force of direct persuasion.

I don’t blame any company for not supporting government relations adequately. Each is in business and needs to support what it thinks is in its interest. I do, however, think it incumbent on those who urge support of government relations to run a program that is worthy of support and then demonstrate to companies why it is worthy.

That is why direct funding – through dues – of government relations is the right course. Knowing that it must raise money by justifying its existence will cause people involved in a government relations entity to create a more tightly focused and affective program, one both worthy of support and capable of attracting backers on its merits.  pb