Marketing Orders and Horticultural Products
AEC 317
December 5, 2014
Unit 4
Mandated Marketing Programs Marketing Orders: Ag Marketing
Agreement Act of 1937 See
http://www.ams.usda.gov/fv/ for a pdf version of the full 33pg Act
Grower organizations are established to coordinate production and maintain “orderly” marketing.Federal legislation – binds nation
or region○ http://www.blueberry.org/
State legislation – binds only state○ http://www.calstrawberry.com/
Covers many kinds of commodities Milk Fruits Nuts Tobacco
Production quota – (Until recently)
Vegetables Hops Honey bees
Peanuts Potatoes Caneberries
List of Federal Marketing Orders
Marketing Orders
Orderly marketing with perennial crops.
Not as common in annual enterprises where short-term adjustments are easier.
Mandated Marketing Programs Quality Control Provisions
Packaging, sizes, color, minimum maturity
Quantity Control ProvisionsReserve pools, quotas, production
allocation
Market-Facilitating ProvisionsPromotion, market entryInternational market developmentCountry-of-origin labeling
ResearchGrower-funded research on
production issues
Quantity ControlsCanned fruits and vegetables (cherries) – reservepools managed supply and price fluctuations
Potatoes – Acreage buyouts limit overproductionand chronic low prices.
Cranberries – 10 state grower allotment supplyControls (quota)
Quantity Controls
Spearmint – Supply controls in 5 major states83% US production, 50% of world production
Source: Far West Spearmint Oil Administrative Committee, 2011
Quality Controls
Handling requirements for peaches (California only)
Size requirements for grapefruit (FL)
Demand and Promotion Demand expansion, export
promotion, product development, merchandisingUS Highbush Blueberry Council
Washington Apple Commission
Research Florida Tomato Growers Apples, cherries Disease, food safety, pest
management, product development, market research
“…give the pecan industry…marketing muscle to better quantify their crop and research funding”
Mandated Marketing Programs Assessment rates set by growers Subject to periodic review and
grower/handler referendums USDA oversight A note on “commissions” (or
sometimies referred to as “councils”) – used exclusively for research promotion and advertising;Cannot be used for volume or quality
controlsWashington Apple CommissionHighbush Blueberry Council
Georgia Vidalia Onions 10 ¢ per 40 pound carton Order authorizes
Production researchMarket research & developmentPromotions and paid advertising
Governed by 8 producer members
“……programs are active and are designed to improve the marketing, distribution, consumption, or efficient production of Vidalia onions. The order does not authorize grade, size, quality, container, or pack regulations. “
Vidalia Onions
Objectives of mandatory marketing mechanisms
• Maintain farm-level season-average returns above levels that would otherwise prevail
• provide price floors in years of large supplies
• Create seasonal and interseasonal price stability
• Provide quality assurance and consistent packaging to buyers
• Facilitate financing of research and generic promotion
• Facilitate the collection and dissemination of marketing information
Arguments against mandatory marketing mechanisms
• Contributes to food price inflation
• Causes inefficient resource allocation (the subsidy problem)
• Reduces price competition among handlers (low prices weeds inefficient growers)
• Restricts growth and progressiveness
• Penalizes low-income consumers
• Penalizes foreign suppliers (promotion)
• Lead to inadequate public oversight
• Permits inequitable or undemocratic representation of interested parties
U.S. Mushroom Council
Supreme Court Challenge to Mandated Orders
What are the possible outcomes?ReversalConsolidationVoluntary
Orders?Int’l Orders
Washington Apple Commission
Program thrustBrand development - $500 million
spent in building the brandResearchNew market development,
especially exports Order ruled unconstitutional Commission disbanding,
replaced by much smaller promotion efforts by individual shippers.
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