Harris, Harold M., Jr.

English

Research Papers in Economics

SOUTHERN  JOURNAL  OF AGRICULTURAL  ECONOMICS  JULY,  1973
DISCUSSION:  PRODUCER BARGAINING:
ITS CURRENT STATUS  AND DISTRIBUTION  OF BENEFITS
H. M. Harris, Jr.
We  should  be  indebted  to  Dr.  Berry  for  his  Still,  the  current  status  of  bargaining
cogent  observations  on  some  key  aspects  of  the  developments  in other fields  deserve  some attention.
producer bargaining  issue. At the same time, however,  Recent  efforts,  results,  and  problems  of  other
I would  be remiss in my role  as discussant if I  failed  commodity  groups,  the  National  Farmers
to  point  out  two  major  shortcomings  of his  paper.  Organization  (NFO),  and  the  American  Agricultural
First,  the  current  status  of  producer  bargaining  is  Marketing  Association  (AAMA)  merit  more than  the
treated incompletely.  Second, and more glaring, is the  cursory treatment  Berry gives them.
complete  omission  of  any  discussion  of  the  The  second  criticism  - that  of omission  of any
distribution of benefits of agricultural bargaining.  reference  to the distribution of benefits of bargaining
It  should  be  mentioned  that  both  these  - warrants more  comment.  There  are three potential
shortcomings  could  be remedied  simply by changing  sources  of  gains,  or  benefits,  from  producer
the title of the paper. For example,  if the address was  bargaining  [4, p. 5] :
entitled,  "Producer  Bargaining:  Its  Present  Status  in  1.  Gains  may  be  secured  from  improved
the  Dairy Industry,"  these  two  criticisms  would  be  efficiency.
largely  unwarranted.  I  must  also  confess  that  if the  2.  Gains  may  be  wrested  from the  bargaining
assigned  roles  of  Professor  Berry  and  myself  were  opponent.
reversed,  he  would  very  likely  be  levying  the  same  3.  Gains  may  come  from  a  third  group,
comments  about  my  presentation.  For  a  complete  generally the consumer.
analysis  of the  assigned  topic  involves  a  Herculean  Obviously,  in the  latter two cases, bargaining benefits
task -- but a task with which we must come to grips in  for  producers  accrue  only  at  the  expense  of  an
the near future.  offsetting COST to another party.
The  first  criticism  can  be  disposed  of briefly.  Taking the dairy example, there  seems tobe little
There  can be  little  quarrel  with the selection  of the  question  that the  producer  gains  cited by Dr.  Berry
dairy  industry  as  an  example  of  the  exercise  of  have  come  from  all  three  sources.  Handlers  and
producer  bargaining  power.  Milk  producers  have  retailers  have  been  quite  successful  at  passing
traveled farther  down  the road toward countervailing  producer price  increases  on  [2,  p. 29] .Berry himself
power  than  have  other  producing  sectors.  Dairymen  mentions  efficiency  gains.  Effects  on  handlers  have
are  the  only  producers  widely  dispersed  nationally  been  "profound"  to  use  terminology  given  in  the
who  have  achieved  substantial  bargaining  success.  most  detailed  study  to  date  of  bargaining  in  the
And  most  important,  researchers  have  examined the  industry,  but  they  have  also  been  "variable"  [2,  p.
bargaining  process  and  its  results  in  the  dairy  29].
industry.  In  fact  several  well-known  agricultural  The  question of benefits and costs of cooperative
economists  have  been  indirect  participants  in  the  marketing  and  bargaining  in  the  dairy  industry
process  through their  advisory  roles with the regional  demands  immediate  and detailed  study. For example,
cooperatives,  cooperatives have recently begun to negotiate variable
H. M. Harris,  Jr. is  assistant  professor  of agricultural economics  and extension  specialist  at  Virginia Polytechnic  Institute and
State University.
45"service  charges"  with  handlers  separate  and  apart  4.  Power  is  exercised  through, and depends on,
from the market-wide  negotiated  premium. But what  institutions.
constitutes  a  service?  To  whom  do  the  benefits  of  5.  Power  is  confronted  with,  and  acts  in  the
services  accrue?  At  what  level  should  they  be  set?  presence of, a field of responsibilities.
Should  they be  administered within the Federal order  Much of what Dr.  Berry has  said ties  directly  to
system?  these  five  Laws  of  Power.  He  has  categorized  the
Moreover,  the  distribution  of bargaining  gains  power  void  that  spurred  the  rise  of  bargaining
WITHIN  the  producer  sector  demands  attention.  To  organizations,  particularly  in  the  dairy  industry.  He
what  extent  have  non-members  benefited  by  has  alluded  to  the  philosophy  of  self-help  and
cooperative  activity?  How  much  do  distributional  cooperative  action  in  American  agriculture  that  has
gains  vary  with  size  of  producer  or  geographical  fostered  the  thrust  for bargaining  power.  A genuine
location?  What has been the impact on manufacturing  contribution  is his  recognition  of the fact that power
grade producers?  in  bargaining  is  largely  PERSONAL.  In  the  dairy
The general  public may have been  at first mildly  industry for example,  power rests  not in the regional
supportive,  or  at  worst  apathetic  about  dairy  cooperatives  and  cooperative  federations  as
producer  bargaining  efforts  - despite  the fact  that  it  organizations,  but  in  the  hands of a tiny handful  of
is the  consumer  who  often pays  for bargaining gains.  aggressive,  intelligent  and dedicated producer  leaders.
Extremely  low  incomes  in dairy farming  were  public  The implications of this recognition are manifold.
knowledge.  With recent  overall  food  price  increases  Berry has  commented  on the institutional setting
and  rapidly  rising  incomes  from  dairying,  public  as  a  factor  in  bargaining  success,  and its importance
support  may  become unlikely. For example, it is easy  cannot  be  underplayed.  There  are  several  questions
to  understand  why  the  public  might  support  regarding  institutions  that will be keys  to bargaining
bargaining by poverty  stricken  grape  pickers,  even to  success  in the  1970's. Among them are:  What type of
the  extent  of  supporting  an illegal  boycott.  Yet  the  bargaining  legislation is needed? How far is the public
public  is  indignant  when  baseball  players,  including  willing  to go  in granting  bargaining  power? What  are
super-stars  with  salaries  in  six  figures,  exercise  their  the  absolute  limits of cooperative  power  under  the
right  to  strike.  While  the  fragmented  consumer  antitrust  statutes?  In the dairy industry particularly,
movement  may  exert  no  direct  impact,  the public's  what  are  the  legal  and  equity  issues  involved  in
impact  on  the  institutional  framework  in  which  national  and  cooperative  supply  management
bargaining occurs is enormous.  schemes?  Does  the  industry  want  a  system  of
It  is  laudatory  that  an  economist  writing about  administered  prices or the right to bargain?
bargaining  power should  refer,  as Dr. Berry has done,  The  final  Law  of Power  states  that  in power is
to  the  never  equaled  "how-to-do-it"  power manual,  vested responsibility.  With  few exceptions, the power
The  Prince by  Machiavelli  [3].  It  seems appropriate  cliques  in  agriculture  have  recognized  this
that  the  discussant  should  turn  to  a  more  recent  responsibility,  both to producers  and to society.  But
treatise  on the  same  subject to cast  a  different  light  in  the future,  this issue will become more  critical.  A
on  some  of  the  observations  in  his  paper.  Adolph  final  example  in the  dairy industry  serves here.  Who
Berle's  classic volume, Power, lists five Laws of Power  will be the beneficiaries  of the recently initiated trend
[1].  They are:  of  regional  dairy  cooperatives  to  integrate  forward
1.  Power invariably  fills  any vacuum  in human  into  large-scale  fluid  milk  producing  - comsumers,
organization.  producers,  co-op managers, or nobody at all?
2.  Power is invariably personal.
3.  Power  is  invariably  based  on  a  system  of
ideas or philosophy.
REFERENCES
[1]  Berle, Adolf A.,Power, New York, Harcourt, Brace & World,  Inc.,  1969.
[2]  Knutson,  Ronald D., Cooperative Bargaining  Developments in the Dairy Industry, 1960-70 -- With Emphasis
on the Central United States, USDA, FCS Research Report No.  19,  1971.
[3]  Machiavelli,  Nicollo,  The Prince, London, Oxford University Press,  1935.
[4]  Special  Department  of Agricultural  Economics  Committee,  Group Bargaining Power for Farmers, Purdue
Univ. Coop. Ext. Service Mimeo EC-214,  1961.
46

DISCUSSION: PRODUCER BARGAINING: ITS CURRENT STATUS AND DISTRIBUTION OF BENEFITS

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