Jun 27, 2011CIAB sets ‘free,’ ‘restricted’ percentages
The Cherry Industry Administrative Board (CIAB) met June 23 and set the preliminary “free” and “restricted” percentages for this year’s red tart cherry crop. The “free” percentage was set at 41 percent, while the “restricted” percentage was set at 59 percent.
The CIAB, the national marketing order for red tart cherries, sets the percentages using the Optimum Supply Formula (OSF) set forth in the marketing order. “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.
The tart cherry industry adjusts the “restricted” percentage by the volume of cherries that is released back to handlers to satisfy a provision of the order known as the Market Growth Factor. This provision requires that 10 percent of the average demand be released to handlers to help build market opportunities for tart cherries. The CIAB also made an adjustment of 30 million pounds to reflect the anticipated market conditions for the upcoming year. After adjusting the restricted volumes for these two factors, it is projected that there will be an effective “free” percentage of 60 percent of the crop and an effective “restricted” percentage of 40 percent.
The board considered numerous factors concerning the supply of and demand for red tart cherry products for the upcoming season in making the determinations. The CIAB also considered such factors as the 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.
These percentages are calculated using the USDA’s estimate of harvest as established by the OSF contained in the marketing order. The USDA released its official crop estimate on June 23. Of the 266.1 million pounds of its estimate, USDA projected that 210 million pounds of cherries, or 83.2 percent of the total, will be produced in Michigan and the balance will be produced in the other states subject to the marketing order.
This year’s estimate of production is considerably larger than last year’s actual production of 189 million pounds nationally. The difference between this year’s estimate and last year’s production figures again underscores the variability of the national tart cherry crop. The CIAB was created, in part, to assist the industry in dealing with this variability by providing the industry with tart cherry products to be carried from one year to the next to offset this variability.
Upon the conclusion of harvest of red tart cherries, the CIAB will convene to recommend the final “free” and “restricted” percentages. These will be calculated using the actual harvest of red tart cherries rather than the estimate of the cherry harvest. Final percentages are calculated in September and recommended to the Secretary of Agriculture.