GAC Produce Co., Inc., An Arizona Corporation - Page 43




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         harvesting, and packing costs are the main services that caused               
         commission rates to be on the high end of the range.  Dr. Cook                
         further stated that some U.S.-based distributors also offered                 
         extensive technical assistance in the form of production methods              
         to their Mexican growers, and many had field staff operating in               
         Mexico.  She asserted that where those costly services were                   
         provided, they were reflected in the commission rates, sometimes              
         reaching 10 to 12 percent.  According to Dr. Cook, when a                     
         distributor does not provide grower financing, the range is more              
         likely between 5 and 10 percent; and when production-related                  
         technical assistance is not involved, the range tends to be                   
         between 5 and 8 percent.  She stated further that volume, i.e.,               
         the overall size of the deal, also significantly affects the                  
         rate.  Dr. Cook stated:                                                       
              In this case, it was SCP/Dole that funded advances to                    
              the Related Growers and thus bore the cost of tying up                   
              this capital.  In addition, the SCP Deal was a large                     
              volume deal and economies of scale were applicable.                      
              GAC provided no production technical assistance or                       
              field personnel; while Dole itself performed part of                     
              the marketing services, via loaned salesmen and trade                    
              advertising.18  Given these factors, GAC would not be                    
              expected to receive a commission at the upper end of                     
              the industry range.  Rather, it is my opinion that                       
              given the large expected volumes and unique character                    
              of the SCP Deal, if a percentage commission rate would                   
              have been utilized, it would likely have been on the                     
              lower end of the typical range observed in Nogales,                      
              approximately 6 percent.                                                 
              18Dole provided one to two salesmen that worked at GAC's                 
              office in Nogales selling produce for GAC.  These salesmen               






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