Jan 5, 2018

USDA: let cranberry industry withhold 15 percent of crop

USDA proposes to let the cranberry industry withhold 15 percent of the 2017 crop to halt a slide in prices paid farmers and handlers.

Cranberries, whole and in juice concentrate, would be diverted to charities, animal feed and other uses that won’t add to a supply that’s roughly twice the demand.

The proposal, published Jan. 3 in the Federal Register, was based on a recommendation by the Cranberry Marketing Committee, made up of growers and handlers. The order would apply to about 1,100 farmers and 65 handlers, mostly in Oregon, Washington state, Massachusetts, New Jersey and Wisconsin.

The marketing committee also has asked the USDA to mandate a 25 percent reduction in the 2018 crop. A USDA spokesman said the agency is still considering the request.

Since the 2017 crop has been harvested, handlers would be charged with disposing of excess fruit. Handlers would be able to meet up to half their obligation by diverting fruit concentrate, a byproduct of making sweetened, dried cranberries.

The marketing order would not apply to organic cranberries, a small percentage of the market. Handlers who receive fewer than 12.5 million pounds of cranberries or dispose of all their fruit also would be exempt.

Cranberry farmers have been producing record crops, but demand has been fairly flat. The cranberry surplus has doubled in the past five years. Without volume controls, the 2017 crop would swell the inventory to 115 percent of the yearly demand of approximately 950 million pounds, the committee estimated.

Some farmers who were receiving 30 cents a pound in 2011 are now getting 10 cents a pound, while the cost of production has risen to 35 cents a pound, according to the marketing committee,

Neither the committee nor the USDA projected how a 15 percent cut in the 2017 crop would impact prices.

Even with the a 15 percent reduction in the 2017 crop, the surplus would remain large. The volume reduction would not apply to about 210 million pounds of foreign-grown cranberries expected to be imported into the U.S.

According to the Daily Astorian, volume reduction is a short-term step to cut the surplus, said Tom Lochner, executive director of the Wisconsin Cranberry Growers Association, whose state produces roughly two-thirds of U.S. cranberries.

“The long-term solution has to be increasing markets to match the supply and demand,” he said.

The USDA said it does not expect volume reduction to reduce consumption. Retail prices have little effect on consumer demand for cranberries, according to the agency.

The cranberry industry, which can’t easily ramp down production in bogs to fit the market, has turned to volume controls before, most recently in 2001. The USDA rejected the marketing committee’s recommendation to withhold a portion of the 2014 crop. The agency said it was concerned the committee was colluding with Canadian producers.

USDA-approved volume reductions are intended to stabilize prices for farmers. Critics, such as the Heritage Foundation, contend volume controls interfere with the marketplace and amount to price fixing.

The USDA will take public comments on the proposal until Feb. 1.

CMC’s officer’s have agreed to schedule a special in-person CMC meeting to discuss the 2017 Handler Withholding proposed rule as published in the Federal Register on Jan. 2.

This meeting is scheduled for Wednesday, Jan. 17 at 8 a.m., in Boston near Logan Airport (exact location to be determined). An agenda will follow early next week. Lodging accommodations will be made for committee members only. All other meeting guests will be responsible for making their own lodging reservation. This will be an open industry meeting.

Visit here to view the 2017 Handler Withholding proposed rule as published in the Federal Register on Jan. 2.