As a follow-up to recent discussions concerning management of seasonal surpluses of fruits, vegetables and other perishable farm products ("Banana glut a sign of bad planning," Oct. 31, page 8; "Forget the bananas; It's the farmers that matter," Nov. 1,page 8), I would like to share some of my knowledge of the practices in the US.
The goal of market management is to stabilize farm price and income and maintain the long-term sustainability of the farming sector through orderly marketing of the products.
This entails two key aspects: 1) Regulating the quantity, quality and timing of product flow to the fresh market, and be a reliable supplier to the domestic and export markets; 2) Keeping surplus and off-grade products off the fresh market and diverting them to processing plants for canning, juicing, drying, pickling, jamming, etc., as appropriate. Farmers are usually paid a weighted average price calculated from a pool of revenues from all sources.
The market management scheme requires institutions to do the overall coordination. To be effective, an institution must have a dominant, if not total, share of a particular farm product. In advanced market economies, producers join together to form cooperatives (marketing associations) for the purpose. In the US, a cooperative is allowed by law to have such a dominant position as long as its main business is in marketing the farm product(s) its members produce (the Capper-Volstead Act of 1922).
Familiar brands such as Sunkist, Ocean Spray and others are long-time success stories. A more recent example is the United Potato Growers of America, formed in March last year. By coordinating and managing supplies, the cooperative has succeeded in bringing order to the fresh potato market. Instead of being price-takers, its member-growers have been paid decent potato prices for the last two seasons, and the contract prices for next year have been promising. The cooperative's successes inspired the organization of United Potato Growers of Canada in February.
In addition, there are around 40 marketing agreements and orders of fruits, vegetables and specialty crops that are administered by committees of growers and public members and monitored by authorized government officials. They may regulate flow of products to the market and/or oversee research, promotion and market development.
Marketing agreements and orders are authorized by law (the Agricultural Marketing Agreement Act of 1947, as amended). They are promulgated following public hearings and are binding on all production of the particular products if approved by eligible producers.
These comments are sketchy and simplistic at best and are intended to stimulate more creative thinking by people who are on the ground doing the hard work of producing and marketing Taiwan's wonderful farm produce.