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Tart Cherry Industry Cautiously Optimistic About Coming Season

By Karen Gentry Associate Editor

Tart cherry industry representatives are cautiously optimistic about the upcoming season. A reduction in carry-in of tart cherries from last season, increased publicity about the health benefits of tart cherries, recent USDA purchases, increased yields and industry wide cooperation were cited as factors for being positive.

“The pre-market carry-in of cherries should be down significantly,” said Don Gregory, a grower of nearly 1,000 acres of tart cherries in Traverse City, Mich. “We’ve also had the largest government purchase of cherries we’ve had in a long time,” he said. Gregory said that although tart cherry prices aren’t all that great tart cherries are a lot better off than a lot of fruit.

“It still looks better than apples and possibly sweet cherries,” said Gregory. “We should see the 2001 crop flow through the market quickly,” said Gregory. Less inventory means faster flow of money back to growers.

“We’re definitely expecting a better year this year than what we’ve seen last year,” said Gregory. Fred Tubbs, a grower of 150 acres of tart cherries in Hart, Mich., is worried about a large crop, which could mean more cherries on the ground because of the marketing order. “I think it will be a fair year,” he said.

Growers view the Big Three - the Cherry Industry Administrative (CIAB), CherrCo and the Cherry Marketing Institute (CMI) as vital for the continued viability of the tart cherry industry. Gregory said that although most growers have payment and pricing issues, they are generally happy with the stabilizing of the industry with CIAB, CherrCo and CMI.

Growers and tart cherry industry representatives look back to 1995 as a bellwether year when prices dipped to five cents per pound. Tubbs said prices have ranged from 18 - 23 cents per pound in the last three to four years.

“Without CherrCo and the marketing order, the last three to four years would have been a disaster,” said Tubbs. “It hasn’t been great, but it’s better than it would have been.”

“Tart cherries probably have the brightest looking future of all the crops in Michigan right now,” said Tubbs. He also grows apples and asparagus, which are both facing increased imports. Tubbs grows primarily the Montmorency and will continue the same amount of acreage.

CherrCo update
Jim Jensen is a veteran of 40 cherry harvests and president of CherrCo, the super cooperative viewed as one of the three pillars that support the tart cherry industry.

CherrCo now includes 28 grower cooperatives across North America including four new members from Ontario. CherrCo represents 75%-80% of the market for frozen and #10 canned tart cherries, not fresh or specialized products. CherrCo establishes prices in the market for frozen and canned processing products. All product is then sold based upon the agreed upon price. Members are charged a fee based on sales.

“We’ve moved prices up to a level, certainly not what everybody wants,” Jensen said. CherrCo’s role is to manage inventories, invoices, collect funds and disperse funds back to members.

“We’ve had a very positive improvement on cash flow for a lot of people in our business,” said Jensen. “1995 was so abysmal it was really a slap in the face,” said Jensen. CherrCo began in 1997 and is currently into its fifth crop year. Since its inception CherrCo has added new members, improved market share and met all of its goals regarding stabilizing of prices and met some of goals for increasing product sales, Jensen said.

“We have not been real successful at expanding sales,” Jensen said. However, with industry cooperation Jensen believes sales can be increased.

“The USDA purchase is one of the most significant things we have done,” said Jensen, regarding cooperation between CherrCo, CIAB and CMI. Jensen hopes there can also be better communication to growers in the future.

“Things are not perfect. I’d love to be able to pay more to growers, processors. This is still the best time we’ve had in the tart cherry industry overall. The outlook is positive,” Jensen said.

With the cautious optimism and positives in the industry Jensen knows “ it’s still a tough time for growers, a tough time for processors.”

CIAB update
Unusually high purchases of tart cherries by USDA totaling 53.2 million pounds helped reduce the carryover of cherries, according to Perry Hedin, executive director for CIAB. He said an average of 17 million pounds is typically factored in for USDA purchases. He said 30 million pounds of carry-in is predicted for the upcoming season, compared with 87 million carry-in last year.

“A lot is presumed on projection of sales,” he said. “If we have an average size crop we can deal with it effectively,” said Hedin.

Growers participate in the federal marketing order with CIAB through their processors, according to Hedin. His organization’s main task is volume control.

The first season for the marketing order under CIAB was 1997 after a previous marketing order had been voted out of existence. There was huge turmoil in the industry because of buyers who were able to pit processors against each other to undercut prices, Hedin said. He said growers realized the need and importance of a marketing order to help make the industry profitable.

The CIAB board met March 20 in Grand Rapids, Mich. and unanimously approved two recommendations for the Secretary of Agriculture including allowing export of tart cherry juice and concentrate to expanding markets such as Europe, Japan and Southeast Asia and a quality control element for a percentage of their restricted tonnage.

The 18-member board recommended that tart cherry juice and concentrate can be sold to the export or “secondary” markets and these sales can come from the restricted tonnage. Already tart cherries and unfinished juice stock cherries can be sold to the export markets with the exception of juice and concentrate, Hedin said.

In the other unanimous recommendation, the board voted for a quality control element for the restricted crop. In an effort to improve the quality of cherries processed, a quality control component would slightly decrease the amount of restricted tonnage processed each year by a varying percentage, not to exceed 7%. As all cherries on the trees are counted, there has been less incentive by growers and processors to not process poorer quality fruit.

With this quality control element in place, processors could then work with growers and tell them what part of the crop not to bother delivering, saving on harvest and delivery costs, Hedin said. He said he expects both recommendations to be approved by the USDA shortly as they were filed as emergency provisions.

Next season the tart cherry crops from Washington and New York will be restricted after reaching the 15 million pound threshold. Washington and New York will add approximately 30 million pounds to the restricted base. Using last year’s production figures, this would result in a 6% decrease in the restricted percentage, according to Hedin.

Over a three year period, the tart cherry producing states of Michigan, Utah, Washington, Oregon, Wisconsin, New York and Pennsylvania produced an average of 292 million pounds per year and the diversion from the marketing order has varied from 40-50% of the crop, according to Hedin.

CIAB meets in June to recommend the percentage of the tart cherry crop that should be considered “free” and that which should be considered “restricted” under the terms of the marketing order. These percentages are calculated using the USDA’s estimate of harvest as required by the Optimum Supply Formula (OSF), the formula set forth in the order.

When figuring the percentages of free and restricted, CIAB considers the projected national crop, average annual volume of sales of tart cherry products, the carry-in of product into the current year and the desirable carry-out of product for the following season.

Free tonnage is production of the current year that can be marketed without any restriction by handlers of tart cherries. Restricted tonnage is that which must either be retained by handlers in inventory or diverted by handlers into other market opportunities.

Michigan produces 75%-80% of the tart cherries nationwide. Nationwide acreage jumped slightly from 39,900 acres in 1999 to 40,680 acres in 2000, according to Gary Keough, statistician for the Michigan Ag Statistics Service.