Marketing Orders: A Self-Help Program for Producers
Keywords: Marketing Orders, Onions, Production Area, Name Recognition
marketing orders are voluntary commodity programs initiated by producer groups
and enacted only when approved in referendums in which all producers within
the proposed production area are eligible to vote. They are self governed within
legislation established in the 1937 Agricultural Marketing Agreement Act and
for the most part are self-financed. The policy environment of restrictive budgets
in which the 1995 farm bill will be crafted favors policies that require little
net cost to the federal government. Marketing orders are attractive in this
environment because they carry only modest administrative costs. This article
provides an overview of the most recently issued federal marketing order, the
Walla Walla Sweet onion order, and then offers observations concerning the feasibility
of marketing orders for more widely grown field crops.
Walla Sweet onions have been produced as a specialty vegetable crop in the vicinity
of Walla Walla, Washington and Milton-Freewater, Oregon for over a century.
The soils and climate of the Walla Walla valley have proven suitable for commercially
producing onions having a mild, sweet flavor originally grown by early Italian
settlers. These specialty onions are planted in early fall and over-winter in
the fields before restarting growth early the next spring when temperatures
reach adequate levels. Walla Walla Sweets are generally harvested over a six
to eight week period beginning in the latter half of June. This year, the acreage
of Walla Walla Sweet onions was estimated at 1600 acres by the Washington Agricultural
Walla Sweet onions are widely known for their large size and mild, sweet taste
in comparison to other, more pungent dry storage type onions. Sweet onions are
generally marketed as fresh produce to be used by the consumer within a short
time of purchase. Consumers all across the U.S. have become familiar with the
name and taste of Walla Walla Sweet onions. Insuring this reputation for mild
flavor and name recognition has led producers of the onions to seek opportunities
to enhance the marketing of their specialty product.
group of producers began to explore the feasibility of a federal marketing order
to regulate the handling and marketing of Walla Walla Sweet onions in March
1992. A series of working meetings among growers culminated with the required
formal public hearing on the proposed order in November 1993. An April 1995
producer referendum on the order resulted in 100 percent of the growers who
voted favoring the adoption of the order. A two-thirds majority of producers
voting in the referendum or producers representing at least two-thirds of total
volume marketed is needed to pass any proposed marketing order. The U.S. Secretary
of Agriculture formally issued Federal marketing order 956 regulating the handling
of Walla Walla Sweet onions on May 19, 1995.
The order enables the industry to better characterize the Walla Walla Sweet onion as a separate product, distinct from others in the marketplace. It also provides authority to conduct production and marketing research and promotional activities including paid advertising and establishment of container markings.
most important tool sought by producers was the ability to maintain name recognition
for their product, thereby differentiating it from other onions in the marketing
channels. The order provides this distinction for the Walla Walla Sweet onion
by outlining a definite production region from which onions identified as Walla
Walla Sweet must be grown. The production area defined by the order includes
all the traditional growing areas and is roughly bounded by the Washington towns
of Touchet on the west, Waitsburg to the north, and Dixie on the east and Umapine,
Oregon on the south. The order thereby precludes onions grown outside this area
from being designated as Walla Walla Sweet onions.
first handlers of Walla Walla Sweet onions will be paying the assessment to
operate the order and to provide the advertising support and research authorized
by the program. Thus, if these activities are successful in improving returns
to growers it will be to the benefit of those cooperating producers within the
production region who made such gains possible. Onions grown outside the established
production area cannot be marketed as Walla Walla Sweet onions.
order provides for a 10 member administrative committee, consisting of 6 producers,
3 handlers and a public member. This committee will administer the order in
partnership with U.S.D.A.'s Agricultural Marketing Service representatives from
the Portland field office. Committee members were elected in a grower meeting
in late May.
Although it is too early to determine the success of the new Walla Walla Sweet onion marketing order, some long standing orders have evidently proven their value as a marketing tool for the industry covered. Thus, some policy observers have asked if marketing orders could benefit producers of other crops including the major field crops such as wheat. Substituting marketing orders for federal price and income support programs covering the major field crops has considerable appeal in today's budgetary environment because marketing orders involve no direct outlays from the U.S. Treasury. Other than some relatively small administrative expenses, direct outlays do not show up in the Federal budget, so marketing orders have been called, "farm programs you don't see."
most cases it would be difficult to develop marketing orders that most major
crop growers would agree to because of the diverse production and marketing
conditions for field crops. Most crops covered by marketing orders are grown
by relatively few producers within well-defined geographic areas and are marketed
in few channels. In contrast, field crop production occurs over wide areas of
the country and involves many producers marketing many crops to many different
may undertake efforts to boost farm prices by restricting sales of high-quality
produce to a price responsive markets only when the industry can isolate its
product from other competing suppliers. It is generally easier to isolate markets
for horticultural crops such as Walla Walla Sweet onions than for major field
crops because of the specialized production regions and short marketing seasons
for many specialty crops.
crops producers in other countries compete directly with U.S. producers through
world trade. Any attempt to elevate the U.S. price of field crops via marketing
order activity would likely cause domestic producers to lose export shares.
Even if marketing orders could be used to increase U.S. prices of field crops
above the world price, imports would enter the U.S. market causing domestic
U.S. prices to fall. Furthermore, higher farm prices would encourage domestic
grain users to circumvent the marketing restrictions by producing their own
grain and selling it in a different form. For example, beef feedlots could grow
corn and market it through fed cattle.
their potential benefits for producers of many horticultural crops marketing
orders do not appear to offer a workable alternative to the current price and
income support programs for major field crops.
Thomas Worley is a member of the Western Extension Marketing Committee and is an Extension Economist at Washington State University.
Return to Commodity Specific Studies Index
Return to Marketing Concepts Index
Return to the Western Extension Marketing Committee
This site is hosted
by the Department of Agricultural &
Resource Economics, University of Arizona
Questions regarding content: Russell Tronstad
Send all other questions and feedback to: email@example.com
Document located at http://ag.arizona.edu/ext/wemc/papers/market-orders.html