August, 1995

Fruits of Thought

The Walls Tumble Down

In the produce industry, lately, there has been a confluence of battles going on. Each, individually, might mean little, but, taken together, they point to the crystallization of a line of thought that, in its modern version, has been brewing since the 1950’s. The switch in the ideological currents, manifest in the Republican takeover of Congress, has important implications for how individuals and companies need to approach their business problems.

Marketing orders have been a fixture of the produce industry for as long as I can remember. Yet suddenly, they are being found unconstitutional. It is not really surprising. Many conservative legal scholars have long questioned the constitutionality of these orders. Some argue on free speech grounds – questioning the right of government to compel people to pay to fund advertising that they may not support. An even more common critique has centered on mandatory assessments as an unconstitutional delegation of the government’s power to tax.

The current battle over the Market Promotion Program is also a result of changing ideological currents. A coalition with participants ranging from Ralph Nader to the Teamster’s Union wants to kill this program which provides funds to assist in the overseas marketing of U.S. food and agricultural products. This is not a new challenge and, in fact, is part of a movement that has been gaining strength for years. In part, the criticism from these groups may focus on efficiency – the question of whether MPP actually delivers higher export sales and, even if so, whether those sales are a greater economic advantage to the country than what would have been done with the money in the absence of the MPP program.

But the opposition to the MPP program is also an expression of the resentment against government writing checks to big companies to fund activities from which those companies profit. In many ways, the opposition is really part of a different way of thinking about these issues. Instead of looking at efficiency, or even how companies make out, the opponents of MPP are saying it is just not right to tax a middle income woman in Kentucky to promote pecans in Peru.

The battle to allow Mexican avocado imports to the U.S. also follows the ideological shift. The belief in free markets as a tool of prosperity has not had an eternal and universal acceptance. But this whole package of beliefs, with its very high priority on human freedom, thinks it important that consumers have the right to buy products they wish to buy from whomever produces them. In other words, the analysis shifts from what is best for the producer to what is best for the mass of consumers. Even the battle over PACA, at base, arises in the wake of ideological change. Sure the specific disagreement may have been between the retail industry and produce vendors, but retailers could bring up their resentments and be credible in their threat to eliminate PACA because the world has changed. For many of the new breed of Conservative Congress people, all they have to hear is that PACA is a law requiring anyone who opens a decent size grocery store to go to the Federal government and get a license and they will stand in determined opposition because the law offends their desire for limited government.

I think the most important thing is not so much that any of these specific issues have been raised. On the four issues I mentioned, no change may come for a long time, if at all. Marketing orders are likely to continue pretty much as is for some time as legal cases work their way through the courts. MPP may survive, perhaps with a cap preventing large companies from getting the funds. The avocado industry will fight hard to, at least, delay avocado imports. A PACA compromise has been reached and, most likely, will become law.

The significance, though, is in the change of ideological climate that all these things, taken together, represent: namely, a massive shift toward limiting government and liberating economic action. This has an effect on business because it changes the environment in which we do business and so requires new approaches to solving problems.

It is important to remember that every one of the programs mentioned above, and thousands of others, came about because business people asked for them. In the late ‘20’s, when disagreements arose between shippers and receivers, someone thought that a good solution would be for government to regulate the disagreements, and so we have PACA. Another business wanted help promoting overseas, and so we have MPP.

Ideas have a long half-life, and for the foreseeable future when one has a business problem, it is probably not going to be very effective to search out a governmental solution.

It is tough to think “outside of the box” – to think in ways inconsistent with the conventions we have grown to accept. But it is that kind of thinking that will make for success in business in the late 1990’s and beyond into the 21st century. It means seeing an industry and, a world, not merely as it is, but as it could be. And, very much, it means creating that new world through private initiative.

The changing political climate bodes well for the produce industry and for produce industry people. This industry is so fast paced that everyone has to be pretty sharp and hard working just to make a go of it. So, whatever the problem may be, produce industry members are likely to do just fine at fashioning their own solutions.

This new type of independence is entrepreneurial in the finest sense of the word. It means battling competition without government interference. It means negotiating your own deals without government to provide special regulation.

So look sharp about you in the conduct of business, for the world it is a-changing and success is there to be grasped by those who comprehend the new order.  pb