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PMA And United
Cease Merger Talks

To every thing there is a season,
and a time to every purpose under the heaven.

— Ecclesiastes 3:1
King James Bible

And the time for merger between PMA and United is not now.

That is the comeuppance of announcements sent by each association to its members. PMA sent this note:

To: All PMA Members

Re: Discussions with United Fresh Produce Association (UFPA)

On behalf of PMA’s Executive Committee (names listed below), we are writing to give you an update on the outcome of our discussions with UFPA.

For the past six months, a group of PMA volunteer leaders has been in discussions with UFPA leaders to explore the feasibility of a merger between our two associations. As with all PMA leadership groups, the members involved represented a cross section of our supply chain, including grower/shippers, processors, distributors, as well as retail and foodservice buyers.

UFPA and PMA representatives met in March and July to discuss the potential merger as well as the feasibility of a formal structural collaboration. During the discussions, it became apparent to us that UFPA’s and PMA’s core competencies and cultures are different, and that each association carries out its mission in distinct ways. After careful deliberation at our recent meeting, the Executive Committee determined that at this time, it is in our members’ best interests to have the two separate associations continue to focus on the unique value they each bring to the industry.

While the merger talks have been discontinued, please rest assured that both organizations will continue working together in a spirit of allied industry partnership on issues such as food safety, traceability and more. As in the past, PMA will also collaborate with UFPA and others to ensure your perspective is well represented in public policy debates. PMA will continue to participate in government relations and public affairs activities when such participation is in the best interest of our members across the supply chain.

We know both associations are committed to providing future services and value to their members under the leadership of their Boards of Directors, and pledge our continued cooperation in areas of mutual interest. We look forward to seeing many of you at Fresh Summit in Houston next month.

Peter Goulet — Chairman of the Board
Janet Erickson — Chairman of the Executive Committee

Members of PMA’s Executive Committee are:
Janet Erickson, Chairman of the Executive Committee
Peter Goulet, Chairman of the Board
Bruce Taylor, Chairman-Elect
Dave Corsi, Secretary/Treasurer
David Gill, member at large
Rob Robson, member at large

While United sent this announcement and news release:

Dear United Fresh Members,

I want to share with you a press release that our association is issuing today, simultaneously with a similar release from the Produce Marketing Association. As you may know, our two organizations have had recent talks to determine whether we might share a common mission and values that could lead to potential formal collaboration or merger of our efforts. The release below describes our recent meetings, and reports the conclusion that our two associations did not reach an agreement to go forward with talks of potential collaboration.

Our successful experience in bringing together the International Fresh-cut Produce Association and United Fresh Fruit and Vegetable Association in 2006 led us to support a serious look at the pros and cons of potential collaboration with PMA. When IFPA and UFFVA joined forces, the two Boards came together in common purpose to greatly expand expertise and member value in technical affairs, food safety, government relations, value-added produce solutions, international markets, retail and foodservice trade relations, and more. Similarly, we thought it was responsible to explore whether our industry might be served by combining potentially complementary services of PMA with the expertise and value our association delivers today. However, in our discussions with PMA’s leaders, it became clear that they did not share a similar vision at this time.

As discussed below, we will continue to work cooperatively with PMA, as well as many other allied organizations, whenever it is in the best interest of our members. As your Chairman, I will continue to lead our Board’s and staff’s commitment to promoting the growth and success of our entire produce industry, while delivering the unique value that companies can only receive as members of United Fresh. Please let me know if you have any questions or suggestions about ways in which our association can continue to help you grow your business.

Emanuel Lazopoulos
Senior Vice President, Del Monte Fresh Produce
Chairman of the Board, United Fresh Produce Association

PMA, United Fresh End Merger Discussions

The Produce Marketing Association and United Fresh Produce Association have announced that the organizations are ending any further discussion of potential merger at this time, but will continue to cooperate in areas of mutual interest to each association’s members.

A joint exploratory group of six Board members from each association met together twice in the last six months, in March and July, to explore potential areas of common interest and collaboration. During those meetings, the two groups expressed a variety of views on the potential value of merger or some formal structural collaboration, and discussed candidly the pros and cons from each Board’s perspective.

Following the July meeting, each association agreed to make a determination of whether to continue talks on potential merger, or suspend further consideration. Although the two Boards did not come to an agreement on proceeding with further discussion, both expressed their commitment to working together on common issues in a spirit of allied industry partnership, while recognizing that each organization has its unique views about its mission and mandate in serving the industry.

“United Fresh has long been committed to being the strongest possible association advocate and essential expert resource for our industry,” said United Fresh Chairman Emanuel Lazopoulos, Del Monte Fresh Produce. “We have built an association environment in which all sectors throughout the supply chain can come together as real partners to develop solutions that best meet industry needs. That mission has driven strong annual growth in new membership, revenues, expertise and services now for many years, with expanded programs such as our new crisis management/recall training program just announced.”

“One of our core values at United Fresh is to always be open to partnerships and cooperative relations that might best serve our industry, and thus we’ll continue to work with PMA and other allied partners in areas of mutual interest. But United Fresh will also continue to grow our unique expertise and services to the fresh produce industry, providing an essential value to produce companies, retail and foodservice partners, and allied suppliers across the total supply chain,” he concluded.

We would not be telling the truth if we said that we were shocked. This issue has long been debated in the trade, but when this particular set of talks heated up we published a special Pundit article devoted solely to the issue and entitled, An Industry Discussion: Pros And Cons Of A PMA/United Merger.

The piece contained an exhaustive inventory of reasons both positive and negative for why the associations should or should not merge but, in the end, we said this:

Still a merger will be hard to pull off. The United board is likely to seek a “blank sheet of paper” approach in which everything is on the table.

The PMA board won’t find that realistic. In real world mergers, a much larger organization with a successful business model becomes the dominant partner defining the terms of a merger.

And that is pretty much what happened. This process was driven by United. United’s board wanted a merger of equals. PMA’s board wanted to protect its successful business model and unique culture. And that was pretty much that. As Emanuel’s letter states in our discussions with PMA’s leaders, it became clear that they did not share a similar vision at this time.

And why would they? PMA looks at a merger and asks why?

Will PMA get more members? No, there are very few members of United who are not also members of PMA.

Will PMA’s trade show get much larger and more successful? No, almost all the exhibitors at United’s show already exhibit at PMA.

Will there be enormous industry savings? Not likely. Closing down one trade show would reduce expenditures but, presumably, exhibitors and attendees feel they get positive value from United’s show or they wouldn’t exhibit and attend — so that is not a savings. As for the rest, if PMA were to maintain a DC lobbying office and beef up to continue valued United programs, the administrative savings would be quite small.

Will PMA expand in service to the trade? Perhaps, but in a problematic way.

Our sense in talking to PMA board members is that they are more convinced now than they were when the process started that taking on the areas such as Washington, D.C. lobbying would make it difficult for PMA to focus on other areas — such as international issues.

So, really and truly, our sense is that PMA board members believe the industry is best served by two separate organizations, each focusing on its core competencies.

Yet, despite the decision to end the talks, our sense is that the issue is not done yet. United’s board came into these talks aware that about 18 months from now something will change: FMI, which has been United’s trade show co-locater for 4 years, has decided not to have a show in 2009. United hasn’t made any announcements but it seems that the inclination of the board is to continue with an annual show. Whether this will be a success or not is unknown.

United conducted these negotiations from a condition of viability. It raises enough money every year to run its programs, so it didn’t need to merge.

And PMA’s answer was thus: Great, you don’t need to merge, so let’s not merge, let’s each keep doing what we do well. We don’t want to risk our business model — or your business model — on a merger. After all, it is hard enough to do two or three things well. How many organizations could take on the five or six functions PMA and United do separately and do them all with excellence?

Except the decision to end talks did not assure United’s future ability to raise funds. If an independent show were to fail, if a bunch of mid-sized grower-shippers on the west coast decided to drop United membership thinking WGA is adequate to represent their interest in DC, then the issue might have to be revisited again.

If United was to become incapable of funding a government relations effort one day, it is doubtful the PMA Board would simply allow the industry to do without a lobbying arm.

In fact, the greatest issue now for the trade is what actions will United take now that a PMA/United merger is off the table.

  1. Will United explore merger with someone else? The National Association of Perishable Agricultural Receivers or NAPAR is now a part of FMI. FMI has been struggling because the core grocery business has been migrating to other channels. Is there a possibility that FMI and United might merge?

    It might work from a marketing point of view, but how could United’s government relations efforts proceed if the ultimate boss is a board of supermarket CEOs?

  2. Will United expand? Many feel that for United to attract dues-paying members to support its government relations efforts, it needs many other programs to reach out and “touch” the industry. Could this lead to an aggressive expansion effort for United?

    In an earlier series of talks between PMA and United, Bob Carey, the long-time President of PMA, urged the PMA board to be generous. He reminded them that there was a day when PMA pleaded with a much larger United to merge and PMA was rejected. PMA didn’t go out of business; it rebuilt its business and became the market leader.

    United is an old association and its leadership a proud one. It may yet find a way to restart aggressive growth at United. This could create more conflict between PMA and United.

The industry owes a special thanks to both boards for the seriousness with which they approached this effort but, especially, the trade owes a hat tip to United’s board and more particularly, its Chairman, Emanual Lazopoulos. It takes a certain kind of bravery to try something, and the fact that it didn’t work out this time doesn’t mean it wasn’t an effort worth making.

Success cannot be measured by merely “coming to an agreement” but must be found in the substance of an agreement. Sometimes no agreement is the best agreement that can be obtained at that moment in time.

Many a man weaker than Emanual would have hesitated to start negotiations, knowing that some would blame his leadership if the effort didn’t succeed.

Yet our sense is that in a real way the effort did succeed. Both boards understand each other in a far deeper and more incisive way than they did before. There is also an appreciation for each other’s sincerity and competency that did not exist before.

That is a major win for the industry and will pay dividends aplenty down the road.

Surely members of this industry, more than anyone, should know that we need to praise the planters of seed, for seeds grow and blossom, then bear fruit… often long after the planter has passed from the scene.

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