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July 13, 2018 CapitalPress.com 9 ‘I would say Bruce Grim is a true grower and industry advocate’ GRIM from Page 1 ily orchard in 1980 upon their father’s retirement. Over time, he increased his holdings to 100 acres of apples, pears and cherries. He learned about marketing in the 1980s while on the board of Skookum Inc. The associations He was board chairman of the Washington Apple Com- mission from 1999 to 2001, when many growers were go- ing broke because of too many Red and Golden Delicious ap- ples, poor fruit quality and the Asian financial crisis. Companies were not meet- ing sales targets. Cutthroat competition held prices down. “We were in difficult straits and needed to do something,” Grim said. In early 2001, the market- ing associations were formed. Grim was drafted as first man- ager and began work June 11. They could share infor- mation under the 1922 Cap- per-Volstead Act, which ex- empts associations from federal antitrust laws. “Theoretically, under Cap- per-Volstead you could agree on a price. We never have and probably never will,” Grim said. “There are too many vari- ables, and members realize there are different marketing opportunities. Some contracts may be at higher prices than some spot markets. It’s not one size fits all.” They talk about price and supply issues, and about market dynamics such as the strength of the dollar, tariffs, trade pol- icies and anti-dumping issues. But they can’t divide up mar- kets or limit the number of trees planted. The goal isn’t a monopolis- tic price structure but greater equity “between retailers and growers to ensure a reasonable return and sustained profitabili- ty for all segments of the indus- try,” he said. How it works Early on, the associations tried setting floor prices. That didn’t work because of differ- ences in markets and quality. Then they agreed to set price ranges that they were not bound to but would try to stay within. On conference calls ev- ery other week, Grim presents shipping data and price averag- es from the Washington State Tree Fruit Association. Market- ers discuss and adjust voluntary price ranges for varieties and grades. The system works. A mid-October freeze in 2009 left companies with a lot of apples with a short shelf life. They lowered prices to move the fruit but not so low that it damaged prices for the rest of the season. 2012 was a perfect storm, a once-in-a lifetime wonder. Washington growers had a then-record 128.8-million-box apple crop. Normally, huge supply means lower prices. But production in New York, Mich- igan, Canada, Mexico and Eu- rope was way down and Wash- ington enjoyed record prices and returns. “By making everyone aware, we helped and encour- aged to push higher. There would have been record prices without us, but maybe not as high. We took full advantage of it,” Grim said. Marketers say the associa- tions have helped stabilize what can be chaos and kept them from being “lone rangers in the dark groping about for what to do.” Information is more trust- worthy, they say, than what they obtain about each other through buyers who play sellers against each other to get lower prices. But there are limits to the as- sociations’ effectiveness. Apple sizes have varied considerably in recent years, Hammonds were charged under a federal anti-terrorism statute HAMMONDS from Page 1 Grim sold some of his or- chard in 2007 and 2008. He planned to keep the rest but eventually sold it after his first wife, Candace, died of cancer in 2009. In September 2008, he be- came the last executive director of the industry flagship Wash- ington State Horticultural As- sociation. It merged with three other associations in 2014 to form the Washington State Tree Fruit Association. The 110-year-old Hort As- sociation educated growers, packers and shippers on horti- cultural and storage issues and lobbied state lawmakers. Being an attorney and grow- er made Grim a perfect fit, but some board members were un- sure about having an attorney, said West Mathison, president of Stemilt Growers LLC, a large tree fruit company based in Wenatchee. “Bruce is one of the few people in the industry that could effectively speak to the governor on a conference call and then line out a crew in the orchard in the next breath. He At the industry’s annual meeting last December, Seat- tle investment banker Michael Butler predicted most small growers and smaller com- panies will die out and six to eight large companies will dominate. Grim agrees there will be more consolidation. The num- ber of apple and cherry grow- ers is shrinking as production grows, while pears are more static and have a better chance of holding small growers, he said. There have always been those in the industry who say they don’t need to be part of collective solutions because they are too big and efficient to fail, Grim said. “Let me suggest in the strongest terms possible that the ‘last man standing’ concept is ideological fool’s gold. The apple segment of the tree fruit industry will survive or fail collectively. There will be no last man,” he said. If knowledge is power, shared knowledge is even greater power, he said. “In many ways, the issues confronting the tree fruit in- dustry that led to creation of the marketing associations 17 years ago are much like today. We need to be thinking in cri- sis mode,” he said. “The in- dustry does not need a ‘heads down, go it alone’ approach. We are stronger collectively and that has been the great value of the marketing coop- eratives. By working together, the future is bright.” Attorneys are arguing expansion decision was within president’s authority and can’t be reviewed in federal court TRUMP from Page 1 In two cases pending in Washington, D.C., attor- neys for the Trump admin- istration are now asking a federal judge to deny that request, arguing the ex- pansion decision was with- in the president’s authority and can’t be reviewed in federal court. The government has yet to reply to a similar mo- tion in the third lawsuit filed in Oregon. Even if the expansion can be challenged in fed- eral court, the plaintiffs have “misconstrued” the O&C Act because that law “does not require the agen- cy to manage every tree on every acre of O&C lands for timber production,” the government’s attorneys said. The Trump adminis- tration’s arguments are similar to those made by environmental groups that have intervened in those cases — the Soda Moun- tain Wilderness Council, Klamath-Siskiyou Wild- lands Center and Oregon Wild. Cascade-Siskiyou National Monument expansion Area in detail Original monument boundary Newly expanded boundary Medford 238 JACKSON 99 140 KLAMATH Aspen Lake 5 Ashland Range “The deep state is alive and well in these agencies,” she said. The notion that Obama de- clared a “war on ranching” is contradicted by the amount of grazing on public land during his term, which remained sta- ble, said Weiss of the Center for Western Priorities. The Hammonds, mean- while, were convicted of a “very serious crime” that shouldn’t be brushed aside, he said. The nonprofit would not have objected to Trump simply commuting the Hammonds’ sentences and setting them free, Weiss said. A full pardon grants broad- er absolution, which undercuts the dangerousness of setting fires and indicates that public land can be burned without consequence, Weiss said. Militants who occupied the Malheur National Refuge and previously confronted feder- al agents at the Cliven Bundy ranch in Nevada will also see the Trump administration as sympa- thetic to their aims, he said. “We think this sends a very dangerous message that will put America’s park rangers, law enforcement officers and public land managers at risk,” he said. Other achievements Industry outlook Cascade While many of the Ham- monds’ supporters didn’t ap- prove of the takeover, they saw the Obama administration’s pursuit of longer prison sen- tences as vindictive. That sen- timent was echoed in Trump’s pardon announcement, which called the appeal “overzeal- ous.” “I think the president rec- ognized they’re good and de- cent men and got a raw deal on the sentencing,” said Nathan Jackson, a rancher and presi- dent of OCA. “The wheels of justice turn slowly but they do turn. ... These guys were railroaded and now they’re getting out, and that is what is right and just.” The Hammonds were charged under a federal an- ti-terrorism statute, which caused many in agriculture to question the judgment of the prosecutors. “Farm Bureau was shocked by the minimum five-year sen- tence the Hammonds faced,” said American Farm Bureau President Zippy Duvall. “Even worse was the Justice Depart- ment’s decision to use anti-ter- rorism laws to prosecute them. We could not be happier this ugly chapter in governmental overreach has come to an end.” For some critics of the Obama administration, the Hammond case served as an example of a federal persecu- tion of ranchers to bolster en- vironmental aims. The pardons will hopefully make it clear that federal man- agers are not free to put ranch- ers out of business and take their land, said Dave Duquette, national strategic planner for Protect the Harvest, an agri- cultural and hunting nonprofit. “It will send a message to the lower-level bureaucrats,” he said. “If it doesn’t, then they’re not paying attention because the Trump adminis- tration is not going to take that kind of stuff.” The federal government’s approach to the Hammonds reflects “prosecutorial miscon- duct” that’s evident in other cases, said Ramona Morrison, daughter of deceased Nevada rancher and “Sagebrush Re- bellion” icon Wayne Hage. “It’s a little spooky that’s how far they will go,” she said. “It’s the same tactic they’ve used across the West.” Morrison is less optimistic about the Hammond pardons changing how federal business is conducted on the ground, however. creating “marketing head- aches,” making it harder to set price ranges and stay on critical shipping targets, Grim said. There are also times, as was the case with cherries in July of 2009 and 2017, when there was simply too much fruit and too short a sales window, he said. “Too large a volume in too compressed a marketing peri- od. It breaks down. No ques- tion. Price is the only mecha- nism to move the fruit,” Grim said. Price ranges go out the window, and it’s every compa- ny for itself. Another limitation is that less than a majority of compa- nies belong to the associations. But, he said, there is a signif- icant volume of production from those who do. N 66 10 miles CASCADE- SISKIYOU NAT’L MON. Ore. Calif. yo Siski u M . tns r Grim was born in Wenatchee and grew up on the family orchard 20 miles north in the small town of Entiat. “My parents were products of the Great Depression with no opportunity for higher ed- ucation,” Grim said. “So Dad gave my brother (Doug) and I every dirty job in the orchard as enticement to go to school, like cleaning out the chicken house in July.” It worked. Both brothers be- came attorneys in Oregon and practiced law there until Bruce returned to run the 40-acre fam- Dan Wheat/Capital Press Bruce Grim picks a Rainier cherry. He’s held four key industry leadership posts during his career. From its commercial begin- nings in the 1880s, Washington tree fruit has grown into a $3.3 billion-a-year industry. Grim says the industry’s greatest challenges are, first, the in- creasing cost and shortage of labor and, second, trade. “We’ve moved heavily into H-2A (foreign guestworkers), which is very costly. There are some real challenges in main- taining a labor supply in a cost-effective manner,” Grim said. The minimum wage for H-2A workers and domestic workers in the same orchard is $14.12 per hour compared to the state minimum wage of $11.50. H-2A employers also have to provide housing and transportation between the country of origin and the orchard. Labor costs increase 5 to 10 percent annually and are the largest part of production costs, Grim said. He questions how that is sustainable. “At the warehouse (pack- ing and shipping) we’ve used mechanization to reduce labor costs, but in the orchard we’re not there yet,” he said. After 11 years of working on immigration reform there’s still a need for “a guestworker program that allows workers to come and go home at a cost that doesn’t drive growers out of business,” he said. The minimum H-2A wage is based on the state’s wage profile, which is high because the state’s minimum wage is tied to the Seattle Consumer Price Index, Grim said. “The cost of living in dif- ferent areas of the state isn’t what it is in Seattle. So it only assures the cost of labor goes up, margins go down and we lose more growers,” he said. After labor costs, the in- dustry’s biggest challenge is the Trump administration’s apparent move away from free trade agreements, Grim said. “There is every likelihood that NAFTA (North American Free Trade Agreement) won’t be renewed and Mexico and Canada are our two biggest export markets for apples. We export 34 percent of the apples we grow,” he said. If exports decline, more fruit will be forced on the domestic market, driving prices down, he said. Another challenge is the marketing of Cosmic Crisp, a new Washington State Uni- versity variety headed toward becoming the new state apple with an unprecedented fast ramp-up of market volume starting in 2019. The cost of planting 12 mil- lion new trees in three years is estimated at $275 million to $550 million. Cosmic Crisp could be very profitable, but it all depends on whether con- sumers embrace it and whether it seamlessly replaces older va- rieties. The industry is betting consumers will love its sweet, tangy flavor more than Honey- crisp, which is one of its par- ents. “We probably know more about Cosmic Crisp from a research standpoint, horticul- turally and storability than any managed variety we’ve come up with,” Grim said. “What we don’t know is how it will trans- late into the marketplace.” It’s more a matter of hoping demand follows supply than supply following demand and “absolutely is a big risk,” Grim said. “But it’s an acceptable risk. A lot of smart people think so.” ive The beginnings Labor and trade Cosmic Crisp R th Association, Mid-Columbia Pear Marketing Association and Northwest Cherry Mar- keting Association have oper- ated in Wenatchee since 2001. They’re commonly referred to as “the marketing associa- tions.” That they still operate is evidence of getting over “a trust hurdle” and figuring out “a way to do business to have critical mass to make them fly,” Grim said. It took time for him to build trust with the major pack- er-shipper-marketers. They shared information with him, some of it sensitive and pro- prietary, that he was allowed to share anonymously with all of them for the good of the whole. He did it without betraying confidences. “I would say Bruce Grim is a true grower and industry advocate. His tireless work in establishing and leading the marketing associations was and is a bold attempt to raise grower returns by bringing to- gether a competitive industry,” said Mark Zirkle, president of Zirkle-Rainier Fruit Co., a large tree fruit company. “His ability to gain consensus and people’s trust made him an ideal inau- gural marketing association chief.” Grim’s successor, Brian Focht, general manager and past domestic sales manager of Oneonta Starr Ranch Grow- ers of Wenatchee, is anxious to make the associations even bet- ter, Grim said. Focht, 55, has been with Oneonta for 17 years. He has previous sales experience with the Dovex and Northern fruit companies. “Bruce has done a great job. I hope to continue and bring a little different perspective since I’ve been directly involved in sales with all the major retailers for the last several years,” said Focht, pronounced “Foaf.” He said he will bring an “up- to-speed vision” of what’s go- ing on in the marketplace and doesn’t think he’ll have any problem gaining the trust of those who have been his com- petitors since he knows them all. was a great steward of our great industry,” Mathison said. Under Grim’s leadership, the Hort Association created a food safety audit program to help small growers comply with the new Food Safety Mod- ernization Act. The association was also successful in applying for and helping other organiza- tions apply for federal specialty crop block grants, newly creat- ed in 2006. 5 Kl a m a Ore. Calif. Alan Kenaga/Capital Press It’s unclear what the Trump administration’s legal position portends for a possible reduction in the monument’s size by ad- ministrative action, said Lawson Fite, AFRC’s gen- eral counsel. “I don’t think this filing rules it out, but it’s hard to say,” Fite said. The Trump administra- tion is probably defending the Obama-era decision to “defend the presidential prerogative” and preserve the “power of the execu- tive,” he said. Legal challenges to monument designations and expansions haven’t been successful in the past, but the current litiga- tion is different due to the unique aspects of the O&C Act, which requires a sus- tained timber yield, Fite said. “Our view is they don’t have as much discretion as they say they do,” he said.
