Arthur Garrish, "The Orderly Marketing System"

        It is many years since anyone has asked me to speak on anything to do with the fruit industry. The story of the Three Wise Men, Haskins, Barrett, and Hembling, and the tremendous contribution of A.K. Loyd was the stock routine of any previous speeches of talks, and nothing much had changed in the fruit industry and nothing much looked like it would change. The orderly marketing system which had been the product of so much blood, sweat, toil and tears in the thirties seemed to be so firmly established as to be irreplaceable. But changes have taken place, and for over ten years we have had our share of coverage in the news media on the issue of pedlars, fruitleggers, and so on. In addition, charges have been laid under the Combines Act against the British Columbia Fruit Growers’ association, British Columbia Tree Fruits, and almost all packing houses and leading industry officials of conspiring to control the marketing of fruit and restricting the us eof industry facilities. The alleged practices had been carried on since the start of Central Selling under the Natural Products Marketing Act of 1936 which exempted the Marketing Boards from the provisions of the Combines Act.

        What they are being charged with under the Combines Act is conspiring to combine to set prices and that is exactly what the organization is set up to do and had been doing. I have pointed out to some of those charged that the best thing they can do is plead guilty and throw themselves on the mercy of the Court if the Natural Products Marketing Act no longer provides an exemption from the Combines Act.

        Combining to set prices id the whole story of the Fruit Board, B.C. Tree Fruits, and the organization that was built up by the B.C.F.G.A. That’s what it was all about, for setting prices was the only way to protect the position of the producer.

        I know that most of you, if not all, are as familiar as you probably want to be with the story of the organization that took place in the thirties, and how the Fruit Board finally survived the many tests in court, and that out of that came B.C. Tree Fruits, the sole selling agency, all of which was run by the B.C.F.G.A. Many growers have never understood how the set-up was organized or how it operated: that the whole thing has come to pieces at the seams in the last ten or twelve years is, I suppose, not fully recognized even yet by the bulk of the growers who are involved and whose livelihood is at stake.

        There are those who are still thinking of one monolithic authoritative organization such as existed until 1974. That was the B.C.F.G.A. controlling B.C. Tree Fruits, Sun-Rype Products Limited, and also having control over the B.C. Fruit Board. It was a monolithic organization for the purpose of running the show, and it ran the show, I thought, very efficiently. Some growers differed occasionally, but that was beside the point. The main point was that it was being run for the benefit of the whole industry, and allowing for a few who endeavoured from time to time to run a little fruit out and avoid the controls, it worked.

        The sixties by everybody’s standards was a relatively affluent period. It came to an abrupt end for the fruit industry in the 1969-70 crop year. The 1969-70 crop was the signal that something was awry, and the wonderful days of prosperity were not going on the way they should. The advances were made in the fall of 1969 until early December, but from that point on the money flows into the industry dried up and nothing came through to the growers. By February and March we had gone for quite some time with no sizeable amount of money coming down to the packinghouse level to distribute to the growers. The three houses that existed in this end of the valley – Oliver-Osoyoos, Monashee and Haynes – sent a message out to their growers pointing out that we were aware of this situation but we had been unable to get any satisfactory explanation of what was going on. Clearly the growers were becoming very restless because they were used to having regular amounts of money sent out to them and nothing was coming. What had happened, or course, was that we had a sizeable crop, the market had turned down, and competition from other areas had pretty well shut us out of certain of our normal outlets. The money simply wasn’t coming in. This was an unthinkable situation for an industry that had been doing very nicely for the last eight or ten years.

        From that period – the 1969-70 crop – a time of unrest developed. Some of the growers literally were out of business. They didn’t have any reserves and they found the going very heavy. They started the one tactic which in all the years that the control system had been in effect, I think we had all recognized was the area in which the scheme was most vulnerable, i.e. to defy the Fruit Board controls publicly and openly. Those growers who felt that they had little to lose set out to defy the whole structure.

        By 1972-73 the movement was gaining considerable ground and in 1973 a caravan was loaded up with fruit and dispatched to the coast. This move received excellent TV coverage and the defiance of the whole regulated system under the Fruit Board was now a public fact and was being done in broad daylight.

        This put the newly elected Provincial Government squarely on the spot because it now had to support the Fruit Board in the enforcement of the regulations or see the controlled marketing scheme destroyed. The Government declined to come down with a heavy hand. It was a situation which nobody enjoyed; certainly the Fruit Board had avoided this sort of confrontation situation as far as it possibly could over the years that it had been in operation. It was now being publicly defied and it was up to the Government, through the Attorney General, to decide whether or not it was going to support the Fruit Board in enforcing the regulations. The issue was the right to stop vehicles and search them on the public highway. There was a legal question involved and the Attorney General was not anxious to get into the middle of it.

        The result of this confrontation and of the other activities was resolved only in the summer of 1974 by a deal which was made whereby the Provincial Government went into the field of Income Assurance. We had had Crop Insurance for a number of years, but the Government went into the field of actually insuring the growers’ income. It set up a program of Income Assurance and in exchange for this the B.C.F.G.A., while not agreeing to throwing the Fruit Board out as such, did agree that it would no longer enforce the regulations of the Fruit Board, providing it had an Income Assurance scheme in place of it, and providing that the Income Assurance scheme only applied to those who stayed with the organization and supported it. Now this raised some very big questions. The biggest one was always the question of how to decide who supported the organization and who didn’t: but this was the deal that was made. It was made with the active participation of the Minister of Agriculture who was striving to put together a whole farm program.

        I don’t think the Minister fully understood the ramifications of what we were getting into. At a special meeting in June 1974 in Penticton the industry (whether it understood what it was doing or not) did ratify this deal, whereby in exchange for an Income Assurance scheme that would be confined to members of the B.C.F.G.A. – those who were prepared to stay with and support the marketing program – the Fruit Board would cease to enforce Controlled Marketing. Where it was a little naïve, was in assuming the growers would declare which position they were taking, i.e. to be in the deal or outside it.

        Growers were told over and over again that under the deal, they couldn’t have it both ways – that they couldn’t play the free deal to whatever extent it suited them, and then play the organized side of the deal whenever that suited them. Charlie Bernhard, President of the B.C.F.G.A., repeated it so often that it became known as the Bernhard Doctrine, but he never said (and I don’t suppose he knew) how to make it stick. And of the growers who were told “You can’t have it both ways,” there was a high percentage that said “Who said so?” And that is this situation we moved into, one parallel to the early days of the Associated Growers back in the 1920’s where those who supported the deal found themselves carrying the umbrella for those who either were entirely outside – which was legitimate and accepted – but also for a much larger number who half in and half out. These people had one foot in the organized deal to whatever extent it suited them and one foot in the free deal to whatever extent that suited them. They played it from day to day whichever way was to their best interest. From that day to this, nobody has yet found a way of controlling this situation, and it is still racking every organization in this industry either at the packing level or the marketing level in a whip-sawing effect.

        This is the situation as it stands today and it will continue to stand: that anybody who wishes to do so (providing he has no ethics) can play both sides of the deal to whatever extent he wants. Now the industry is still struggling with the problem of how it is going to stop this, and how it is going to insist that the growers do one or the other, but as of this moment nobody has come up with a better answer than the one brought up in the last ten years, which if it is as serious as they say it is, then the industry had better go back and ask the Government for full authority and co-operation to reinstitute the Fruit Board because nothing else works. The only reason we went to the Fruit Board in the first place was because nobody knew how to cope with this fifteen or twenty percent who wouldn’t co-operate voluntarily. That’s what the Fruit Board was all about. We still have the Fruit Board, a Chairman and two members and they presumably hold meetings and I’m told they even designate B.C. Tree Fruits as the sole selling agents, knowing full well that there are at least twenty others operating right here in the industry, buying fruit, taking it on consignment or doing whatever they want with it.

        I thought that it might be of interest just to explain to people that the Fruit Board still exists and the B.C.F.G.A. still holds its annual convention and B.C. Tree Fruits gets its name in the papers from time to time even if only in connection with this Combines case. It really is a shell game; all that is left is the shell. The façade is there, the names are still there but somebody took the guts right out of the thing about ten years ago, and it has been trying to operate that way since, and it hasn’t been doing too well. You may say “The growers haven’t suffered too greatly.” True, some haven’t. The ones who have played it both ways have done very nicely. Even the ones who have had an ethical problem and have stayed with the deal and lived up to its terms, in due course, under the slow workings of the Income Assurance Program have, by and large, received enough to keep them reasonably solvent. In fact, a side effect that is most interesting is that it has brought into the picture the Federal Government to a degree which it never would have done before. Until the Provincial Government definitely went into the field of what boiled down to Price Support, the Federal Government had no great interest in price stabilization in horticulture.

        It is a redistribution of funds that is all part of the social structure that we have today. The Provincial Income Assurance Programs, where they were instituted – and British Columbia was in the forefront – forced the Federal Government to reconsider its position and to participate much more directly and much more actively than it had been prepared to do.

        Gene Whelan wasn’t terribly happy about this and we have yet to find out what the new Minister of Agriculture will think about it. That is one of the problems he has inherited from these changes, which are not confined to the fruit industry. The role of the marketing boards in society is being given another look and many think the whole issue will be re-opened. In connection with this re-examination, they can re-examine us all they like; there is nothing left to change. The valid question is, how long is the government going to be prepared to use the institution of the Income Assurance Scheme in lieu of a regulated marketing program. Both levels of Government may find it far more convenient or cheaper to go back to regulated marketing than to support the industry through an Income Assurance Program. These are issues that are going to have to be resolved over the next four or five years.

        As we stand at the moment, and to summarize the whole controlled marketing scheme that we are so proud of (and I make no bones about that), I think the industry as a whole was proud of the set-up. I think the industry took a lot of credit for something that was possibly largely due to a combination of geography and history. It took credit for having accomplished these things that other people hadn’t been able to do. But then not everybody lived so far away from their markets as we did, and had as few methods of getting their fruit to market as we had. In fact, this historic building (the restored C.P.R. Station in Oliver) we are in at the moment has its main claim to fame the fact that it was one of the key points for the enforcement of Fruit Board regulations, because anybody at this end of the valley who attempted to ship fruit out independently in defiance of the regulations was only able to do so through the C.P.R. All the Fruit Board Inspector had to do was to go down each day and see who was doing what. He had the whole record right there. This fact of geography had much to do with the ability of the industry to obtain control of and to regulate our affairs to the degree that it did. The end was in sight when the Hope-Princeton Highway was opened and the truckers could run back and forth at will, and certainly the one thing that really tore the whole deal wide open was the opening of the Trans-Canada Highway. There was a great influx of Alberta and Saskatchewan people in here to see what we had, and there was a tremendously improved ability for people to get back and forth in all manners of vehicles – trucks, campers, trailers and everything else – all of which could carry fruit. Possibly all that happened was that we anticipated the inevitable. As of this time we are in a situation were we have the form, and we still go through the rituals of a system that is almost totally gutted. What is going to be the outcome of the Combines investigation time alone will tell, because it will be next spring when this matter will formally come to trial.

        For thirty odd years it was accepted that a scheme such as the one operated in the fruit industry or in the egg deal of whatever, was specifically by law exempted from the provisions of the Combines Investigation Act.

        It was recognized when both Acts were passed, back in the thirties, that the two principles were in conflict. The principle of the Combines Investigation Act was very simple – it was to stop people entering into a combine to gouge the public, whereas the other principle was that the state of unregulated marketing so disastrous and so impossible to live with, that the only solution was to embark on a program of regulation under legislation. Of course the two were incompatible, and were not applicable to each other. Now we have the situation where, in fact, charges are laid and the case is pending. If it goes against the industry then, of course, it will have its application to other forms of marketing control in other industries.

        I hope that my message is not entirely negative, but having extolled the virtues of the Orderly Marketing System built up by the fruit industry in British Columbia to many groups over the years, maybe it is time to get up and admit that the system is not here anymore.