QUEST FOR THE PERFECT STRAWBERRY
A Case Study of the California Strawberry Commission and the Strawberry Industry: A Descriptive Model for Marketing Order Evaluation
by
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Introduction
This case study of the California Strawberry Industry from 1945 until 2004 is an historical update of a previous book, History of the Strawberry From Ancient Gardens to Modern Markets, published in 1974. In addition, this study presents a descriptive model for evaluating the agricultural research and marketing aspects of the California Strawberry Commission (CSC) and provides a blueprint for analyzing all federal and state marketing orders (See appendix). The blueprint for analysis is necessary for all marketing boards in order to be accountable to growers, much as an annual financial statement.
Beginning in 1945, the development of the university varieties,/i>, Lassen and Shasta, created a tremendous expansion in acreage, yield, production, and farm value until 1957, when a setback was caused by growers’ “irrational exuberance” and plant disease. The rapid industry decline that followed, due to disease, inferior fruit quality, and excess supply, created the economic necessity for a revolution in pomology, horticulture, and marketing. Thus the stage was set for the grower, shipper and processor to create an industry organization or commodity board, the California Strawberry Advisory Board (CSAB), which later became the California Strawberry Commission (CSC), to finance and coordinate expenditures on pomology, horticulture, and marketing, and to establish a plan for the future. Table 1 illustrates this rapid growth, disastrous decline, and continuous industry expansion from the depth of economic despair. All tables provided herein describe the historical record in figures with the “rest of the story” to follow in narrative form.
The California strawberry revolution, illustrated above, resulted in the competitive destruction of all regional strawberry growing areas in the United States and established its world preeminence in strawberry pomology and horticulture.
In addition to the historical perspective and update, this study will evaluate the CSC, utilizing a CSC-university model for measuring the effectiveness of its pomological and horticultural expenditures on the supply of strawberries, production per acre and cost of production, total per acre returns, as well as the demand effect of quality improvements from new varieties. The effectiveness of the CSC’s budget for marketing (advertising, promotion, public relations, food/health research, etc.) will be evaluated by incorporating those functions into a descriptive model (Rauser) to study the relationship between the demand for fresh strawberries and those variables affecting demand. The central question is whether the CSC’s mandatory check-off programs, or assessments, have caused demand to increase and whether that increase has had a positive effect on the welfare of California strawberry growers. The information developed from my descriptive model will be used to understand the strawberry market and to describe the basic features and internal functioning of the system. The model explains the role of the CSC, its relationship to the private sector grower-shipper and the separate and joint measurable effects on growers’ welfare. In order to assess the variables that effect demand, there is need for some tangible asset (Blaylock) to justify supporting a marketing order, for example, an increase in fresh and freezer price, retail ads, changes in attitudes and behavior, and quality improvement of new varieties, better packaging, and refrigeration. Thus, barometers for evaluating expenditures are essential and helpful in measuring or describing the effect of a program or programs. These barometers will enable the measuring and describing the quantitative or qualitative impact of price changes, promotional-advertising programs, public relations, varietal and horticultural advances and other variables effecting demand for strawberries. In a later chapter, the history of the CSC, and its research on many advertising and promotional programs, will be evaluated using barometers such as number of ads compared to prior years, sales dollar contribution per store, strawberry consumption by light and heavy users, strawberry market share compared to other fruit, and strawberry category contribution to total produce sales dollars. A further example of measuring the effectiveness of CSC’s varietal and horticultural expenditures would utilize average nominal and real prices, total sales, production, yields per acre, costs per acre, and total returns per acre, as well as the previously mentioned barometers. This model could be the basis for further study of the CSC and other Boards.
The major problem facing agriculture today is excessive production with one of the remedies being the development of federal and state marketing orders and commodity boards. The relative inability to solve overproduction through marketing orders has led to producers’ skepticism regarding the role of commodity boards and marketing orders. This grower reluctance to continue funding apparently ineffective programs (no tangible asset) has progressed into the courts where, as one example, a 2005 Florida Court of Appeals ruled in support of the citrus growers’ argument that free speech rights were violated by the tax or mandatory assessment. Subsequently, the constitutionality of the state’s box tax is under review by the Florida Supreme Court. Prior to this, the 2002 United States Supreme Court ruled that a national mushroom marketing order could not conduct generic advertising on behalf of that industry, because of the violation of the grower’s right to free speech. Since the CSC is no longer involved in generic advertising, and emphasizes only research, the free speech question may not arise to jeopardize the CSC mandatory assessment. However, the 2005 Supreme Court decision on the beef marketing order ruled that grower free speech was not infringed upon by the mandatory marketing order assessment, because government was considered to be the speaker, since this was a federal marketing order. In the future, government may become more involved in marketing order advertising and promotion programs in order to insure that message attribution be government sponsored or approved, and therefore not subject to grower challenge. I hope this ruling, although Orwellian, does not infringe upon the independence of state and federal marketing orders.
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About the Book
"Baum's book provides a wealth of heretofore unavailable information on marketing in the strawberry industry. It contains invaluable insights by an insider gleaned from many years of experience. It is required reading for anyone with an interest in the industry."
-Dr. George Tolley, professor emeritus, University of Chicago
"Quest is an important resource for anybody involved in production and marketing of strawberries. [It] provides a needed analysis of commodity board marketing plans, but it also chronicles much history of California agriculture by recording the development of the strawberry industry from a localized, fragmented small farm economy into a corporate age production system."
-Tom Am Rhein, strawberry grower and Vice President of Operations, Naturipe Berry Growers
"The history of the California strawberry industry, captured by Herb Baum, must be studied to appreciate the economic dilemma of California farmers and the seemingly inadequate support of commodity boards and university research programs. Ten years from now, as a new generation becomes farmers and industry leaders, Quest will be even more important."
-Larry Galper, retired strawberry grower and industry leader/activist
About the Author
Herbert Baum comes from a third-generation produce family in Fort Wayne, Indiana. With an MA in economics from the University of Chicago, he led Naturipe Berry Growers for thirty-three years and served four years as chairman of the California Strawberry Commission.