Analysis: Spud contract negotiations not always smooth

Dave Wilkins

Potato growers see value in collective bargaining despite its tumultuous history

Analysis

By DAVE WILKINS

Capital Press

The potato industry has a long and rocky history of using collective bargaining to settle contracts with processors.

Each year -- usually in late fall or early winter -- a bargaining committee of growers sits down for separate negotiations with each processor. The contracts include a base price for each spud variety and adjustments for quality defects, long-term storage and other variables.

It goes back at least to the early 1960s in Idaho and to the early 1970s in Washington state, industry officials said.

The negotiations usually result in a contract settlement. Occasionally they don't.

A blowup in negotiations in 1996-97 led to the eventual dismantling of Potato Growers of Idaho. The group still exists, but only as a political action committee.

A collapse in the process in Washington state in 1987-88 led to a reorganization of the growers' bargaining effort and creation of Potato Growers of Washington.

Despite its troubled history, collective bargaining can still play a valuable role, officials said.

"It isn't just for the growers," PGI Executive Director Keith Esplin said. "The bargaining process is a valuable tool for the processors, too. It works both ways."

Collective bargaining provides transparency so that processors know what their competitors are paying for raw product, PGW Executive Director Dale Lathim said.

"We provide as much of a service to the processors as the growers," he said.

The key is for growers to keep the playing field level and to treat processors as a customer, Lathim said.

"We treat the processors as our customers because that's what they are," he said. "We have gone away from a confrontational view of them and look at it as if we're all in this together."

While industry officials see collective bargaining as a valuable tool, there are fewer and fewer growers for bargaining associations to represent.

In Washington state, for instance, there were about 360 process potato growers in 1996. Today there are about 70 process growers in the state.

One factor driving consolidation is the trend toward joint venture agreements.

Such agreements are typically multiple-year deals between a processor and a farmer -- usually a larger grower -- and are reached outside the collective bargaining process.

Some in the industry lament the loss of smaller, independent growers and the rise of large joint-venture operations.

"I think you can get too big," Esplin said.

Lathim sees the trend as more of a natural evolutionary process, although painful for some.

The economic forces driving farmers toward slimmer profit margins favor larger operations, he said.

"Everybody's scrambling to find their niche, their role in the industry," Lathim said. "It will weed out a lot of the inefficiency in the system, and unfortunately that means a lot of smaller growers."

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