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PMA/United Merger-Mention Stirs Emotions

Jim Prevor’s Perishable Pundit, October 31, 2006

The question of whether PMA and United ought to merge seems a hot button issue for many industry members. We raised the issue here and dealt with some initial response, both pro and con, right here.

Now we have a thoughtful response from John McClung, who is currently the President of the Texas Produce Association. John and I have what might be called a “history” together as he directed United’s government relations efforts during a time when the Pundit was very involved with United, working with staff members such as Anne Day and Debbie Moss as well as then President, George Dunlop, on a daily basis. John has some issues with what we wrote in the context of a discussion of the possibility of a PMA/United merger:

I generally agree with you about most things. I agree that the industry should once again seriously contemplate a merger of United and PMA. I’m not at all sure such a merger would be found to be in the overall interests of the industry, but it should be considered. But I could not disagree with you more regarding United’s effectiveness as a government relations instrument. In fact, United has become one of the more successful agricultural lobbying entities in Washington, and finally has the requisite technical staff to compete in the slow, inexorable trend of many years toward a technocracy-based system.

In fact, United has been politically effective going back to before the time I ran the government relations program there. But in my day, and before, the association lacked the financial strength to really muscle up and play in the big leagues. Tom Stenzel has gone a very long way in remedying those shortcomings, and he has pulled together a thoroughly professional team.

I have heard criticism like yours of United’s government relations program for as long as I can remember. But interestingly, I never heard such broad criticism from anybody who knew what they were talking about. I never heard it from the political pros within the DC beltway. I never heard it from the staffs on Capitol Hill, who probably have the best day-by-day take on the performance of the many agricultural organizations. I never heard it from the other non-produce association lobbyists who, it might be noted, are endlessly competitive and quick to criticize given the flimsiest reason. I did sometimes hear issue-specific criticism from other knowledgeable produce lobbyists who took issue with something United did — or didn’t do.

Perhaps the controversy over Country-of-Origin Labeling is the most dramatic recent example, but that now has resulted in an industry-endorsed legislative proposal that seems entirely reasonable to me; we’ll have to see what the Congress does with it. And in any event, the regional/commodity groups, including mine, have their own agendas and their own interests to pursue, and sometimes we’re more interested in “looking good” to our own members than we are in having United look good.

That isn’t to say United does everything perfectly. They make mistakes. They fail to communicate. They misread the tea leaves. They get sideways between legitimate competing interests. And when they do, I and my colleagues in the regional associations and commodity groups are quick to bring them to heal. As are you, and rightly so. But only a naive pundit from outside Washington could misconstrue an occasional stumble for a weak government relations program. And only someone who’s never played the game could be so certain of the validity of his perceptions on influencing government. And only someone playing favorites would have written the piece you wrote.

Do you really believe the day will ever come when the regulatory agencies, FDA or any others will turn to an industry association in the heat of a crisis for guidance on what must be done to protect the public? For facts and details and insights, yes. But for policy direction, not a snowball’s chance. Do you really think they should? Come on, Jim — that’s just plain dumb. It’s foolish of you — and Stenzel, for that matter — to suggest that any industry government relations program will, or should, ever have that kind of authority. The difference is, Stenzel is saying it for industry relations reasons, knowing full well what the realities are. You aren’t.

There are a number of reasons the produce industry struggles on occasion with government relations. For one, we don’t have a federal subsidy program to protect. If you take a close look at the big agricultural lobbying machines in Washington, they are from the industry sectors with multi-million dollar subsidies underwriting their members — dairy, food and feed grains, cotton, etc. We don’t have a federal sugar daddy to take care of.

Secondly, most of the produce industry’s mass is in a handful of states. Fortunately, they are among the most politically significant states, but still it is difficult to have much influence in the Midwest, the Northeast, the Midsouth, etc. This limitation is particularly vexing when the supply side of the industry, represented by United and the regional groups, is in conflict with the retail side. There are grocery stores in every town in every political district in the country.

Third, we aren’t really an industry at all. We’re a bunch of little industries loosely cobbled together who have some objectives in common but who lose interest in working together in a heartbeat when we think the threat is pointed at somebody — anybody — else. So, although food safety risks are universal, it’s difficult to get the Texas onion industry fired up about an outbreak linked to California spinach. Or the Florida tomato industry to care about apple imports. Or the Pennsylvania mushroom folks to care about much of anything not having to do directly with mushrooms. I could go on and on and on with these examples, but I’m sure you’d rather I didn’t.

Finally, perhaps most important but also most difficult to characterize, the segments of the fresh fruit and vegetable industry simply don’t have the tradition and history of activist political involvement. Individuals in the industry don’t see the need to get their hands dirty in Washington — or their state capitals, for that matter. They don’t think they can play the game; they don’t know how and they don’t want to learn. They think if they approach their members of Congress on some issue, all that will happen is they’ll get donation solicitations for the rest of their lives. And, they think lobbying is what they pay United, the regionals, and recently maybe even PMA to do.

I’ve often said that lobbying for the industry is like being a proctologist: your clients know they have a problem and need your expertise, but they want you to get in fast, get out fast, tell them as little as possible about what you saw, and keep the bill to a minimum. The problem with all of this is that real political strength comes from the proverbial grass roots. The industry’s hired guns, including United’s staff, play a key role in educating Congress and the regulatory agencies, and — whether one approves or not — in making timely campaign contributions from the various Political Action Committees. But at the end of the day, the best lobbyist is good old what’s-his-name from the Congressperson’s home district.

For you to suggest that PMA’s lobbying capabilities rival United’s is simply specious. I have the greatest respect for PMA’s staff, but they just don’t have the capability to date to be a full service government relations force. They’ve never claimed that role. My personal opinion is that PMA stuck its toe in the government relations pool in response to United’s partnering with FMI in their convention/trade show. Whether I’m right or wrong, it is not in the industry’s overall interest to have competing national organizations. It well may be in the industry’s interests, however, to have two organizations complimenting one another in crucial matters where there is a shared objective, and going their separate ways where there are differences in goals. My suspicion is that the former would be much more commonplace than the latter. That said, United remains largely a grower/shipper-driven organization, and PMA remains largely a retail-driven organization, so there will be disconnects in the future.

To tell the truth, I think it’s amusing the way both organizations bend over backwards to accommodate one another, at least in public, and maybe in private for all I know. I’m not so sure the perceived affection is altogether genuine. But I am sure that for the staffs and boards of both, it is in response to an overwhelming desire on the industry’s part to avoid destructive competition and to merge strengths. Whether this will ultimately lead to a merger of organizations remains to be seen.

But until that happens — or doesn’t happen — the industry is well represented before the national government by United, with help from us geniuses in the field. And, Jim, it would be even better represented if you’d understand that no association wins all its battles, any more than any pundit gets all his opinions right. Moreover, for major issues such as immigration reform, farm bills, country-of-origin, PACA, rewriting of the food safety laws, and the like, it is often a multi-year effort with a kiss-your-sister compromise at the end.

In Washington, victory usually means agreeing on middle ground. As for the spinach meltdown, no association, no team of lobbyists, no big-bucks consulting or law firm, could have caused FDA to behave substantially differently than it did. Nor, at the risk of enraging some industry folk, should we be able to. Stenzel and Bryan Silbermann understand that, regardless of what they said at the spinach session, and so should you.

John’s missive is thoughtful and we appreciate his critique. Since we’ve been getting chewed out by people passionate about both organizations, we must have been fairly even handed. Still, let me clarify a few points in the original piece.

First, several PMA partisans complained about the line where I said that from a PMA perspective, a merger would “… bring the scientific and technical competency [of United] into PMA …” as they thought this was implying that PMA has no technical competency. In the context in which we were writing, we thought it was clear, and it was certainly our intent to confine our remarks to scientific and technical competency in regard to food safety and microbiology.

United, after its merger with IFPA, now employs both Dr. Jim Gorny, Vice President, Technology and Regulatory Affairs, and Dr. David Gombas, Vice President, Technical Service, both experts in Plant Science, Microbiology and Food Science. There are no PhD’s on the staff of PMA at the current time and, even during the industry conference calls, PMA President Bryan Silbermann would often defer to these experts when technical issues came up.

This being said, PMA has certainly been the leader in dealing with technical matters in the marketing chain, going back to PLU and UPC codes and now dealing with RFID, RSS and GTIN. But this is not what we were talking about in this article. It might be worth mentioning that the Board of Directors of PMA seem to also have perceived this as a weakness, as after the spinach/E. coli crisis they allocated funds to boost PMA’s scientific and technical staff in the food safety area.

Second, and more to the point of John’s letter, the juxtaposition of two things in the initial piece led some, including John, to think I was implying that United did a bad job at government relations and that United and PMA have equivalent government relations efforts. We did not intend that inference to be drawn from what was written, as we do not believe either of those things are true. Here is what we wrote:

The spinach/E. coli crisis impressed many with three ideas:

1. There is a need for the trade to have a single front in Washington.
2. There is no clear distinction between what PMA and United are doing in D.C., and there is a lot of duplication and waste between the government relations efforts of the two associations.
3. Whoever is doing government relations hasn’t been successful in building the kind of relationships that are crucial for the industry to create and maintain.

Number three is probably the most important. When United’s President Tom Stenzel indicated (at PMA’s town hall meeting on the spinach crisis, which we dealt with here) that he thought the key to understanding the FDA’s actions was understanding that they didn’t have faith in the produce industry and our products, the obvious question is: Whose fault is that?

The intent was to say that the industry divides its government relations expenditures amongst several organizations: United, PMA and WGA were most prominent in this crisis, but plenty of other groups also play a role, from the Florida Fruit and Vegetable Association to the Texas Produce Association to the Northwest Horticulture Council, plus many more organizations.

There is no clear distinction between what PMA and United are currently doing. In other words, it is not as if it has been agreed that PMA will handle regulatory matters and United will handle lobbying or that United will handle the effort on immigration and PMA will handle food safety. It is in this sense that there is no distinction between their efforts.

Of course, United, with its Washington Public Policy Conference, its D.C.-based location, its staffing levels and lobbying focus, runs a significantly more extensive government relations program than United. Indeed, for United, government relations is its raison d’etre. PMA could stop doing government relations and many would still want to be members. If United stopped this work, it is not clear that many would choose to support the association.

In saying that there is no distinction between what the associations are doing, I was stating that there is no clear divide by function or by issue — not that there was no distinction in staffing levels, approach, effectiveness, etc.

In addition, when I said “Whose fault is that?” I regret the juxtaposition with Tom Stenzel’s name. It was not my intent to imply, as it is not my belief, that it was Tom Stenzel’s “fault.”

I praised Tom Stenzel in our report on the Town Hall Meeting on spinach when I wrote that “…Tom Stenzel seemed the one most willing to, at least obliquely, challenge the decisions of the regulators…”

However, Tom was the one who identified the problem at the core of the crisis as being a lack of trust in the produce industry. And the overreach of the regulatory authorities urging people not to eat spinach from New Jersey, Colorado, Maryland and other places completely unaffected by this issue is a strong indication that Tom is correct.

A plane crashes and the FAA’s inclination is that the planes are basically safe, the air traffic system is basically sound, the pilots are basically well trained; so they treat it as an aberration unless given extraordinary reasons to think otherwise.

Our interpretation of Tom’s remarks was that we have to build up the confidence of the regulators in the produce industry so that they will react the way aviation regulators generally react.

Now John says to the Pundit: Do you really believe the day will ever come when the regulatory agencies, FDA or any others, will turn to an industry association in the heat of a crisis for guidance on what must be done to protect the public? For facts and details and insights, yes. But for policy direction, not a snowball’s chance. Do you really think they should? Come on, Jim — that’s just plain dumb.

Dumb like a fox. There was a famous wheeler-dealer by the name of Meshulam Riklis, a famous buyer and seller of companies (and, for a while, the husband of Pia Zadora), who did his business under a massive sign that said: “You can name the price, if I can name the terms.” Our take is that if you are the one the government turns to for facts, details and insights — you are, de facto, pretty influential in setting policy.

As to the substantive issue of how effective United’s government relations efforts are… as with most things in life, the answer is mixed. The fact that they were able to get the United States Secretary of Agriculture to come to their convention and give a speech shows great strength. However, the fact that the speech he gave last May had so little to do with our industry that it could have been delivered to the Farm Bureau shows that United still has plenty of work to do.

The truth is that history and circumstances have given United a raw deal. Its focus on government relations is not remunerative for the association. The industry has, over the past 15 years, shown a willingness to pay more in dues to support the effort, but it is meeting resistance now.

The Pundit raised the issue of a merger because it was raised by many top people at the PMA convention but, in time, the bigger issue may be financial. In the middle of its annual convention, the produce industry was flummoxed when, in a startling surprise, FMI announced that it was making shift to doing a trade show on alternative years.

This whole issue may be moot if United can’t generate additional income.

If so, the industry will have to confront many of the issues John raises. The Pundit thinks we do a service by encouraging us to think about them now.