PMA OFFER TO MERGE IS REJECTED BY UNITED

AMY I. STICKEL

ALEXANDRIA, Va. -- The United Fresh Fruit and Vegetable Association here last week rejected a merger offer from the Produce Marketing Association.

While dismissing PMA's proposal for a merger that would essentially take United's best programs and scrap the rest of the association, Tim Fleming Sr., chairman of United, did propose a joint "SuperProduce" convention. For PMA reaction, see Page 6.

In a letter to Jeff Gargiulo, PMA chairman, Fleming criticized PMA's "pre-emptive and non-negotiable" proposal.

"We are disappointed by your unwillingness to engage in a dialogue about what might be best for our industry," Fleming wrote.

As SN reported earlier, United approached Newark, Del.-based PMA in June with the possibility of a merger that would leave the

produce industry with only one major trade group. Following a meeting of PMA's executive committee in August, which United officials attended, PMA responded with a proposal that would leave itself as that one major trade group. According to United, PMA's non-negotiable positions, which were presented at the meeting Aug. 19, included: PMA's decision not to operate a government relations program; retaining PMA's convention and exposition in its present form, but stripping United's annual gathering of its trade show; continuing PMA's membership ratio of 60% buyers to 40% sellers, and maintaining PMA's headquarters in Delaware.

"In order for our industry to unite under one effective voice, a totally new association must become the successor to both, honoring the legacy of leaders who worked hard to build each group, and providing a warm and inviting home for members of both associations," Fleming wrote.

He referred specifically to PMA's unwillingness to form its own government relations program and rely instead on a coalition. United has long been seen as the industry's voice in Washington, while PMA is known for its retailer and education programs.

"Your proposal to reduce broad produce industry advocacy to an ad-hoc 'play-to-pay' coalition of production interests is woefully inadequate to address the tough, everyday issues that require swift and certain action to prevent escalation into crises; it would guarantee a weak and fragmented produce industry at the mercy of our antagonists into the future, and it would unnecessarily pit producer against buyer interest when we are all truly dependent upon one another's success," Fleming wrote to Gargiulo.

In a separate letter to United members, Fleming repeated United's dedication to the issue of government relations.

"But, you should know, unequivocally, United cannot and will not abandon the full-time critical mission to represent your interests before all levels of government, the media, advocacy groups and other opinion leaders," he wrote to United members.

However, in his letter to Gargiulo, Fleming did propose combining both associations' conventions, as early as 1997.

The new "SuperProduce" convention and exposition would be similar to PMA's "Super Floral Show," which is co-owned by PMA and Meetings & More, a private group based in Scottsdale, Ariz.

"By combining our two trade shows, PMA and United have the opportunity to demonstrate a commitment to helping both associations' member companies cut their costs and most efficiently spend their customer relations/ marketing dollars," Fleming wrote.

Fleming said that a "SuperProduce" show, co-owned by the two groups, would be more cost-effective for members, while producing enough income for the associations. "Today, our associations' competition for trade show income skews what would otherwise be a joint marketing and education success for our industry," Fleming wrote.

By forming one trade show, United may hope to fend off complaints of duplication between the two groups. Members' concerns over duplication of programs and services were formally raised two years ago, and resulted in annual meetings between United and PMA. That continuing concern sparked United's original merger proposal.

Although PMA officials were not available for comment at press time, Gargiulo did tell SN earlier that PMA's proposal speaks for itself.

"We tried to come up with something that will serve as a framework," he said of PMA's proposal. In terms of membership and convention exhibit revenues, PMA claims it is currently the stronger of the two groups. It currently has 2,038 members, while United has 1,374, according to figures provided by PMA. Also, PMA claims that 281 exhibitors have registered exclusively for its 1995 show, while United attracted only 83 exclusive exhibitors to its trade show.

Fifty-five percent of members who belong to United also belong to PMA. According to one retail produce executive, it may be too late for United to back out of a merger proposal, after it has stressed the value of combining services.

"It would be better if one or the other would acquiesce. But I don't think that will happen," said the source. "PMA has the strength of the moment. And that's too bad, because it should be win-win."