Jul 31, 2014

Cranberry industry buoyed by dried fruit market

As U.S. cranberry growers and producers struggle with low prices and a saturated market for their products, a promising new venue for distribution is appearing at the nation’s schools.

In collaboration with USDA’s Agricultural Marketing Service (AMS), the U.S. Cranberry Marketing Committee (CMC) and industry representatives, effective in July, schools have the option to purchase dried cranberries from the Foods Available List (FAL) as part of the USDA foodservice procurement program. Previously, only cranberry sauce had been available through FAL, the USDA resource list of commodity food products.

Scott J. Soares, CMC’s executive director, said the program should continue to pay dividends for the industry.

He said that since February, USDA has purchased $29.2 million in cranberry products, including cranberry juice concentrate, cranberry-apple juice, sauce and sweetened dried cranberries, which amounts to 234,000 barrel equivalents – or 23.4 million pounds of cranberries.

Among these purchases were 234,496 cases of dried cranberries, equivalent to 629,000 pounds of cranberries.

“It’s really been a success and worked out well,” Soares said.

The addition to USDA’s list comes at a time when cranberry growers continue to battle steep surpluses and declining prices, along with increased competition from Canadian and overseas producers.

“We hope it improves fruit utilization and sales and that our growers will see increased returns,” said Tom Lochner, executive director of the Wisconsin State Cranberry Growers Association (WSCGA). “This is one of many areas we’re trying to grow. The industry is putting quite a bit of resources into developing domestic as well as international markets.

“Most people on the marketing side see tremendous opportunities for us overseas,” Lochner said. “We’ve gone from exporting about 5 percent of the crop 15 years ago to exporting 30 to 35 percent of the crop today.”

The long-term efforts to expand globally are not bringing short-term market improvement, according to Lochner, who said the industry “still faces those challenges” of recent years, “and it may be even a little bit more severe for this year” in light of last year’s record-breaking crop and disappointing sales results.

To stem the downturn, a grower withholding mechanism through the industry’s federal marketing order is being put in place this year, through a CMC recommendation to USDA. The impact will see growers delivering 85 percent of their normal crop, through attempts to cut back production and the supply of cranberries, Lochner said.

“The action the marketing committee took for the 15 percent reduction, along with efforts to increase sales, hopefully gets us started in the right direction,” Lochner said. “There’s a lot of fruit in inventory, and we don’t want to add a great amount to it at this time.”

Lochner said Wisconsin growers, who harvest an ample supply of the Stevens variety that is conducive to dried fruit processing, could benefit significantly from the new placement on USDA’s FAL.

“Schools and students are a good market for foods,” he said. “So we looked at it as a market opportunity. More importantly, one of the things we wanted to make sure we did is to enable the Food Available List to include healthy and nutritious products that can be consistent with efforts to improve the diets of people. Dried cranberries give them that option.”

Charles Parrott, AMS Fruit and Vegetable Program deputy administrator, said in a news release that the FAL list has been modified extensively in recent years, with the goal to improve the nutritional options available to the nation’s children. As a result of new guidelines, dried fruits, including cranberries, are considered creditable.

“AMS is committed to working with the industry to expand market opportunities for our nation’s cranberry growers and processors,” said AMS Administrator Anne Alonzo. “We are very pleased that dried cranberries are joining the growing list of healthy, high quality, domestically-produced fruits that AMS purchases for schools across the nation.”

Soares said the effort to place dried cranberries on the FAL list was extensive and involved USDA, cranberry industry organizations and school nutrition and foodservice groups, including the School Nutrition Association. In the end, the process USDA indicated would take two years was accomplished in six months.

In March 2013, USDA revealed an interest to include foods such as dried cranberries on the FAL list, but it was important to verify a market existed for the product through the schools.

Subsequent outreach to school groups confirmed an interest in making the purchases. A key CMC strategy, Soares said, was the creation of a cranberry nutrition toolkit and new recipes. The campaign was given an award from the Public Relations Society of America.

While cranberry sauce had already been on USDA’s FAL radar, Soares stressed the importance of shedding the image of cranberry products only being attractive for the holiday market, pushing the year-round consumption of the dried fruit as an option.

“More utilization of cranberry products is critical right now,” said Soares, who has concentrated on expanding markets since he joined CMC two years ago. “With the growth of production here and abroad, more competition from Canada and growing competition in Chile, we need to increase the demand.”

He said making the school list “is important to the grower community. The school foodservice groups have access to a group of future customers early in their life that can be familiarized with the different forms of cranberries in order to get greater use and utilization throughout the year. These new uses expose us to 55 million students across the country. It gives the industry and product much greater opportunity to be top of mind and be recognized as a fruit for all seasons.”

He said larger cranberry handlers such as Ocean Spray, as well as independent entities, would benefit.

“Ultimately, there are 1,300 growers across the U.S. Of those 1,300, they move product through about 50 handlers. Some of those handlers are completely integrated with sauce, concentrate or dry,” Soares said. “Any increase in demand, especially with school foodservice, provides a new generation of cranberry consumers.

“What we’ve learned through this exercise is despite what has been suggested, it’s safe to say there certainly is an opportunity to expand in the domestic market,” Soares said.

Paul Kindinger, executive director of the Cape Cod Cranberry Growers Association, was pleased about the USDA effort.

“Our improved growing techniques, coupled with some exceptional harvests the last few years, means that we are in a great position to diversify into new sectors,” he said in a news release.

“The first thing that growers need to do tap into this market is become an approved vendor,” said an AMS spokesman. “Potential vendors must be approved by USDA before they can submit bids in any USDA solicitations. The process of becoming an approved vendor involves the submission of a vendor approval package and an assessment of the potential supplier’s financial and technical capabilities.”

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– Gary Pullano