Jun 22, 2007

Cherry Industry Administrative Board Sets Restricted Percentage at 45

The Cherry Industry Administrative Board (CIAB), which administers the federal marketing order governing red tart cherries, recommended that the free percentage be set at 55 percent and the restricted percentage at 45 percent.

The decision was made at CIAB’s annual marketing policy meeting June 21 in Grand Rapids, Mich., following USDA’s estimate of the crop size that morning. Percentages are calculated using the USDA’s estimate of harvest. USDA released its official crop estimate projecting a national crop of 294 million pounds of red tart cherries.

Final percentages are determined in September.

The final decision on the recommendations is made by USDA Secretary Mike Johanns.

The board used the Optimum Supply Formula (OSF) as set forth in the order, according to CIAB administrator Perry Hedin.

The board considers such factors as crop size, the three-year average annual volume of sales of tart cherry products in the United States, the carry-in of product into the current year and the desirable carry-out of product for the following season.

Last year, following a predicted crop of 256 million pounds, the board set the restricted percentage at 33 percent. It later adjusted the final percentage to 38 when final estimated crop size rose to 263 million pounds. This year’s crop is 11.4 percent larger.

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

Three-year average sales in the domestic market averaged 173 million pounds, Hedin said. When a 10-percent “market growth factor” was added, the estimated size of domestic market demand for the 2007 crop was pegged at 193 million pounds.

Other adjustments were made based on an estimated 94 million pounds of cherries in processor inventories.

Last year, Hedin said, processors sold 68 million pounds of “restricted” cherries – 28 million pounds to the USDA’s domestic feeding programs, 10 million pounds into export and 30 million pounds into new and expanded markets.

The restriction number does not apply to growers directly. Processors and their ability to market products, and their willingness to put fruit into inventory, affect how many cherries they will buy from growers – and thus affects how many tart cherries will be shaken from the trees and destroyed. Growers may also sell cherries for fresh use.