Sunkist Under Attack by One of Its Own : Agriculture: Fighting federal charges of violating citrus quotas, the giant cooperative now faces accusations from within.
Sunkist Growers Inc., struggling to defend itself against federal lawsuits for allegedly violating sales quotas, now faces similar charges from within and is entangled in a bitter boardroom fight that threatens to dismantle the 100-year-old citrus cartel.
For the first time, a Sunkist director has accused management at the Sherman Oaks-based cooperative of condoning abuse of sales quotas. The director’s claims support the U.S. government’s suits and increase the likelihood that federal sales quotas will be permanently abolished--which would drastically erode Sunkist’s control over citrus prices and could lead to some lower prices for consumers.
Sunkist, the nation’s largest citrus cooperative, was accused in August by the Justice Department of shipping a volume of lemons in violation of sales quotas set by the federal government. Sunkist and its members have also been accused of over-shipping millions of dollars of navel oranges in numerous other suits by the federal government and private growers.
The suits have hurt Sunkist’s image in its centennial year and created disarray in its boardroom and dissent in its member ranks. Sunkist, which has 6,500 member growers and packers and represents 65% of the citrus production in California and Arizona, has repeatedly denied any wrongdoing.
But last month, Berne Evans, a Sunkist director and one of California’s biggest growers, alleged in a suit in Los Angeles Superior Court that Sunkist management was aware of and gave tacit approval to quota abuses by its member packinghouses. Evans is trying to block an attempt by Sunkist management to settle the federal suits, saying it would unfairly cost innocent Sunkist members who did not reap windfall profits by violating federal quotas.
Volume quotas for oranges and lemons are among 42 so-called federal marketing orders intended to prevent food gluts that could lead to price wars and hurt farmers. But the quotas date back to the Great Depression, and many have criticized the system as outdated. Partly because of the alleged Sunkist violations, the U.S. Department of Agriculture canceled federal quotas for lemons and navel oranges in January.
Analysts say that if Sunkist is found guilty of cheating, it could lead to the permanent termination of citrus quotas. Sunkist has been a leading advocate for quotas, but independent growers say quotas allow Sunkist to control prices in Arizona and California, which produce most of the fresh oranges and lemons sold in supermarkets.
The cancellation of quotas and bumper crops in California and Florida have driven down citrus prices.
