The Cherry Industry Administrative Board (CIAB) has set the effective free percentage of tart cherries at 85% and the restricted percentage at 15%, based on USDA crop projections of 218 million pounds.
CIAB, the national marketing order for red tart cherries, held it annual Marketing Policy meeting on June 26 in Grand Rapids, Mich. to determine these preliminary percentages. Final percentages are determined in September.
USDA estimates that there will be 150 million pounds of tart cherries produced in Michigan. CIAB calculated the percentages based on the USDA estimate as required by the Optimum Supply Formula set forth in the marketing order.
Some growers in Northwest Michigan believe the CIAB’s crop estimate (based on USDA’s projections) of 103 million pounds for their region is wrong and predict a crop of 80 million pounds. Coming off last year’s crop of virtually no crop, some growers there want no diversion and to be able to sell their entire crop. The restricted crop can be sold overseas, stored by processors to make allowances for a possible future short crop or left on the ground.
USDA’s estimate of 218 million pounds for the nation is considerably higher than last year but well short of the five-year average of 306 million pounds, according to Perry Hedin, CIAB executive director.
Berne Kroupa, a cherry grower in the Old Mission Peninsula near Traverse City, Mich. said that grower expectations were high for 2003. “There’s a number of debates. We didn’t do an objective yield survey this year so we’re guessing. I think all we can do now is wait for September,” said Kroupa.
Kroupa said there was a perception among growers that the crop was estimated high to require a diversion so some cherries would not be paid for early on. “Growers going into this thought supply and demand was just about in perfect balance for this crop,” said Kroupa.
“I don’t have a problem with what CIAB says. The real issue is lower domestic sales,” said Kroupa. He said that many of the new products in the juice and dried market have suggested that they need a lower cost cherry.
“Those who think it’s 80 (million pounds) feel a restriction is unwarranted, but the problem with that is it doesn’t factor in how a supply formula operates,” said Hedin.
He said that when the past three years of demand are averaged, it results in 180 million pounds nationally. That 180 million pounds was compared against USDA’s estimate of 218 million pounds of production to come up with the 15% diversion. At the Michigan Frozen Food Processors Association Guesstimate on June, the national crop was estimated at 197.7 million pounds. Although some growers believe the USDA estimate is wrong, CIAB board members decided not to make a change to that estimate, as they’re preliminary numbers. “It was imprudent to make a change at this stage,” said Hedin. He stressed that if demand exceeds supply, CIAB can release tonnage to sell on the open market.
Some growers believe that because last year was such an aberration, that sales totals should not be factored in for that year. Net sales last year totaled 138 million pounds, Hedin said. The prior three-year average (excluding last year) was 203 million pounds.
“I don’t think it’s settled out yet. I don’t think there’s enough cherries to go around, “ said Kroupa. He said he believes prices will be good but may not meet grower expectations from more than a month ago. He said his operation has a good, but not a huge crop for tart cherries.
Because of the short crop last year, approximately 31 million pounds of tart cherries were imported from countries such as Poland, Turkey and Chile. Some of these extra imports should be accounted for this year, as it’s possible the domestic market won’t get all of these sales back, according to Hedin.
Besides USDA’s crop estimate and averages, CIAB considered such factors as annual volume of sales of tart cherry products, the carry-in of product into the current year and the desirable carryout of product for the following season.
At the end of the harvest of red tart cherries, CIAB will meet Sept. 12 in Rochester, N.Y. to recommend the final free and restricted percentages, based on the actual harvest.
Because of a short crop in New York, the state will likely be exempt from the restrictions. Other exempt states include Pennsylvania and Oregon while the states of Michigan, Wisconsin, Utah and Washington will be under the restrictions, according to Hedin. Each state is its own district except for Michigan that is broken down into three districts––Northwest, West Central and Southwest.
