May 2, 2018
15 percent of cranberry crop restricted; 25 percent proposed for 2018

Cranberry handlers in most states will have to move 15 percent of the 2017 crop away from U.S. consumers due to a rule finalized by the USDA in April, and the Department of Agriculture has also posted a proposed rule restricting the amount of crop that large growers could deliver after their next harvest.

USDA stuck with the 15-percent restriction rule despite letters from Ocean Spray and the Cranberry Marketing Committee (CMC) requesting that the restriction apply to only 5 percent of the crop.

“During the last few years, demand has remained relatively flat, and has not kept pace with the increases in supply,” according to the USDA’s published rule. “This has led to increasing levels of inventories. Ending inventory levels have increased from 5.8 million barrels in 2012 to 9.7 million barrels in 2016.”

Higher cranberry inventories create “downward pressure” on cranberry prices, according to the USDA.

“With the cost of production estimated at approximately $35 a barrel, for many growers returns have fallen below the cost of production,” the department wrote.

The rule will result in an estimated 1.1 million barrels of cranberries being removed from inventories, according to the USDA. The berries can be diverted to charity, foreign countries except for Canada, research and development, and any nonhuman food use.

About 1,100 growers and 65 handlers are affected by the rule. There are exemptions, including those for organic cranberries, small handlers who process less than 125,000 barrels, or handlers who won’t have carryover inventory at the end of the 2017-18 fiscal year.

The Cranberry Marketing Committee in August 2017 had at first recommended a 15 percent restriction but in January 2018 changed its suggestion to only 5 percent, due to cranberry harvests coming in lower than had earlier been estimated.

Grower co-op Ocean Spray was among those urging the USDA to use the lower-percentage restriction.

“We urge USDA to heed the call of CMC to adjust the restricted percentage downward. At 5 percent, in combination with an unexpected 11 percent crop reduction, we believe that cranberry growers will gain the benefits of a more stabilized market, while avoiding the shock of an overcorrection that could come from leaving the restricted percentage at 15 percent,” wrote then- Ocean Spray President and CEO Randy C. Papadellis. “With Mother Nature having done much of the work to regulate the marketable quantity of cranberries from the 2017 crop, USDA’s final rule should be adjusted accordingly, consistent with the CMC’s recommendation.”

A total of 186 grower comments ran the full spectrum from agreeing with the higher 15 percent restriction, to categorically disagreeing with any restriction at all.

“I do not support a handler dump,” wrote Theresa Allen Hubka of Allen’s Cranberry in Wisconsin. “The real issues need to be addressed, such as growers adding more acreage and renovating beds with hybrids for higher yields. Let’s see this for what it really is. … This is a Band-Aid to much larger issues and a nail in the coffin of already-suffering independent growers.”

Austin Pitlik, a grower from northern Wisconsin, wanted the full 15 percent restriction.

“While the 2017 crop was lower than predicted estimates, I feel the combination of a marketing order with a down crop will further accelerate increased price returns to growers,” he wrote.

Michelle Hogan, executive director of CMC, said that while “nobody likes volume regulation,” the rules are meant to boost growers’ profitability.

The Cranberry Marketing Committee had suggested a 25 percent restriction for 2018 that would apply to the producers rather than handlers. Under the CMC’s suggested rule, each producer would get an allotment certificate allowing them to deliver 75 percent of their average, plus 2,500 barrels.

In its own proposed rule, the USDA took a different tack.

“After much consideration, USDA determined the recommended grower exemption of 2,500 barrels should be revised,” according to the rule published in the Federal register April 27. “Consequently, this proposal does not include the exemption of 2,500 barrels for each grower and instead proposes to exempt handlers that processed less than 125,000 barrels during the 2017–18 fiscal year, or handlers that did not have carryover inventory at the end of the 2017–18 fiscal year. Accordingly, growers delivering their fruit to exempt handlers would not be subject to the allotment.”

Organic growers would be exempt from the proposed rule. Handlers would have the option to process up to 50 percent of the excess cranberries they receive above their growers’ allotment, provided they divert an equivalent amount of 2018–19 cranberry processed products to non-competitive uses.

Interested parties are allowed to make formal comments on the USDA’s proposed rule for 2018, but written comments must be received by May 29, 2018.

Post comments concerning the proposed change at regulations.gov.

Comments may also be mailed to Docket Clerk, Marketing Order and Agreement Division, Specialty Crops Program, Agricultural Marketing Service, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; or fax them to (202) 720-8938.

Stephen Kloosterman, FGN Assistant Editor

Photo: Stephen Kloosterman

 





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