Will A PMA/United Merger Be The New Imperative?

September 2020 – Over at the Perishable Pundit, we’ve been having a dialog regarding the future of the two large national produce trade associations, the Produce Marketing Association (PMA) and the United Fresh Produce Association (UFPA). Should they merge? Should the Produce for Better Health Foundation be considered in this decision?

This discussion is nothing new. We’ve written about these associations and their roles in the industry since we launched Produce Business magazine at the PMA convention in 1985.

However, the situation is new. PMA recently laid off substantial numbers of long-tenured staff members. With the cancellation of this year’s physical PMA Foodservice Conference and Fresh Summit, this is not surprising. United also took a bit of a hit when its live event was cancelled earlier this year.

Although both associations replaced the live events with virtual events and, not surprisingly, most of the industry has supported these events, the feedback we’ve been getting is that most industry exhibitors have not found the results satisfactory. So if the pandemic continues or if the world comes to be challenged by similar events, it is not clear these programs are sustainable.

Still, PMA has substantial reserves and owns substantial real estate; it doesn’t have to change much. But should the industry itself demand change?

Not long ago, there were extensive discussions about the possibility of a merger – but it never happened. PMA was never that excited. United did not have any substantial financial resources to contribute, and the United Board saw it not as the merger of equals that it wanted. Personal relationships interfered heavily with developing a consensus, and short term issues – such as whether the CEO of the merged association would be Bryan Silbermann, then CEO of PMA, or Tom Stenzel, CEO of United – came to dominate the discussion. Can the industry be more strategic this time around?

Bruce Peterson, a former Chairman of PMA and founder of Wal-mart’s produce program, contributed to the discussion by posing these questions… and issuing a warning:

“So two questions beg to be asked: What are the pressing industry issues today? And where is the leadership that has the clout to make things happen?…

What is needed from an association standpoint to serve broad industry initiatives? These can be marketing issues, food safety/traceability issues, trade issues, or regulatory issues. But these issues need to be identified, prioritized, and communicated.

And who pays for it?…

The point of strategic dialogue is to keep choices in FRONT of you. If the industry doesn’t have serious discussion of the future of trade organizations and how they are funded, I fear that decisions will be forced upon them. And that is NEVER the best outcome.”

The key issue is what are we, as an industry, trying to accomplish, and what institutions are best suited to accomplish these industry goals. Perhaps we can add one more wrinkle: If the world evolves where the funding for these associations has to come not from the associations’ operating businesses, such as trade shows, but from dues, what would industry members be willing to pay for?

The truth is that the future of vertical associations is unclear. In our discussions with retail executives above the produce level, we find more and more resistance to high level involvement with trade associations. As these companies grow larger and national, they increasingly fear antitrust attention that might be drawn to meetings with competitors.

They also question the need. Back when the VP of produce, such as Dick Spezzano at Vons or Bob DiPiazza at Dominick’s, decided to get deeply involved in PMA, the industry needed regional retailers, which is all there were, to work together to pull through important issues. Now that is not so clear. Precisely which industry initiative does Walmart or Aldi or Costco need to get what they want?

Associations and non-profits tend to have a life of their own. The March of Dimes was founded by Franklin D. Roosevelt specifically to find a cure for, and help, people with polio. He was memorialized on the dime coin specifically to ensure the memory of a connection between President Roosevelt and the March of Dimes.

It was fantastically important and successful organization. Both Jonas Salk and Albert Sabin were given grants by the organization. They actually cured polio, a horrid disease that damaged the lives of more than 35,000 people each year and led to countless more being afraid to allow children to go outside in the summer when the virus seemed to peak.

Yet the March of Dimes organization didn’t declare victory, close up and urge people to donate to other valuable causes. Today on its website, there is a “Mom and Baby COVID-19 Intervention and Support Fund” appeal. The institutional imperative rolls on long after the cause was won.

Terrible losses have been caused by COVID-19. Loss of lives, loss of businesses, loss of employment. We don’t actually know the future of the foodservice segment of the industry. But determining what we want our industry associations to do in response to this new era — and how they should be structured — is a new imperative. If we act wisely, our decisions may come to be seen as one of the positive things to come from this horrid pandemic moment.       pb