I’d say they have it mostly correct…

https://www.bloomberg.com/news/articles/2017-11-21/thanksgiving-staple-is-heading-for-compost-heap-on-u-s-surplus

Here is a link to Spray’s new Organic lineup and their first 100% cranberry juice in a long time.  Glad to see it back in the lineup.  I like the graphics! 

https://www.bevnet.com/news/2017/ocean-spray-introduces-new-beverage-lines

Doesn’t this just tell a story?

Ok so here is the tale in WI at least for us personally. This same bed of Stevens averaged 380 last year. I don’t have a photo of the berry size but they averaged closer to the size of a quarter. Here is a photo of a sample this year. You decide. Great buds. Great set. No sizing.

I’ve heard now from 2 pretty reliable sources that the Quebec harvest is down.  Significantly.  I’ve heard reports of 30% or more.  Quebec did not have any mechanism to enact a volume regulation, but it seems that Mother Nature has dealt them one anyway.  So, for those who are following….Wisconsin is down, how much will be seen, but maybe 15%.  Quebec is down 30%.  Massachusetts may be off a tick, not much.  New Jersey?  Oregon? Washington and Vancouver?  I know you guys read the blog, so how about a report??  

Last year Wisconsin delivered just north of 6,000,000 bbls of fruit and around 290-295 bbls per acre.

Early reports from the first week of the 2017 harvest is that the crop is down from 2016 some 15-20%. Doing a little mental math, a 15% drop gets you to a crop size of 5.1mm bbls. A 15% handler set aside of that number would get you down to what, 4.3mm bbls? That would be a significant tightening of the supply of fruit for the dryers in WI. Combine a down WI crop with a significantly down Quebec crop and I’m thinking old Mother Nature might taken Back a bit. Time will tell.

What are we seeing in other regions??

https://m.youtube.com/watch?v=yM6Qs_KMzBc&feature=youtu.be

Here are a couple of float photos…. mostly HyReds at this point. We will know about the size of the crop when the first Stevens beds come in but early reports are “lots of small berries”. 

So the CMC voted again and split into two separate votes, one for 2017 and another for 2018. The Handler Set aside of 15% for 2017 is unchanged. The Producer allotment of 75% for 2018 was approved with a 2500 barrel exemption for each grower. All districts are included in this regulation, note that previously District 4 was exempted. This re vote split the independents with two voting no. The proposed action was still approved and will be sent to the Secretary of Agriculture for his approval.

Here is the visual on the over supply.  The industry’s last VR was 2000 and 2001.  There were some charts on historical grower prices that I will try to find and post.  Supply in the 40-60% range is the sweet spot.  

I've heard from some folks since the vote in Washington and here are a couple more thoughts.

What did the Independents get?  Why did we do something to support Ocean Spray? Why didn't we just let Spray choke on their fruit? Why didn't we make Spray stop planting?  All good, valid questions.  But the question for ME was what will the independents pricing do if we don't do anything?  The answer?  There is nothing, absolutely nothing to suggest that our prices will go up in the next 5-10 years if we do nothing.  This huge inventory is dragging the whole industry down.  We have history to guide us….a VR in 2000 and 2001 worked.  In fact, the independents prices came up fast than Ocean Spray's.  True, the industry had a hot product in that time frame which was SDCs.  This time I feel that we have the export market.  China is primed and ready to go.  India has a longer path but has huge potential.  The US consumption of cranberries is 2lbs/person/year.  China's is .01lbs/person/year.  

Do I think that Spray epically screwed up the supply?  Yes I do.  Clearly in 2005-2006 when the supply was in balance, they went on a SDC plant building spree and encouraged plantings to fill those dryers.  Did anyone at Spray lose their job over this miscalculation?  Not to my knowledge. Most Spray growers probably think that this planting was a good idea, since they've had a good run of great returns, certainly way higher than the independents. They showed us.  But now the effect of this oversupply is knocking on Spray's door.  They've made some critical errors. They are going to have to make some hard, hard choices in the near future.  Independent growers have already made these choices and on the farm we've cut to the bone, taken second jobs, sold off stuff.  We would LOVE to see $25/bbl returns.  Spray growers fear them but I'm sure they have big bank accounts from the past 6 years to soften the blow.  

John Decas was famously right when he stood up at at CMC meeting and asked "what gives Spray the right to unilaterally increase the supply by 6000 acres?" And "The industry is in balance". So John was right.  But don't forget , that independents planted as well.  Independent handlers increased their SDC capacity.  Spray isn't the only one that increased supply.  

The CMC has the overall data.  The industry reports the sales figures into the CMC so we know if we are in balance as an industry.    The CMC members have known for a while that this train wreck was coming.  The question in my mind is, does the CMC committee have the guts to manage the fruit supply in the future, or are we going to blindly listen to our handlers and ignore the facts?  Did we learn our lesson?  

This morning the U.S. Cranberry Marketing Committee members have voted unanimously for a Volume Regulation on the 2017 and 2018 crops.  This is due to the CMC’s August 2017 estimate of 10,910,000 barrels of inventory carryin.  Inventory as a % of sales is projected to be 115%.  So folks, we have a lot of cranberries in all forms in inventory with another large crop forecasted.  

FINALLY, the CMC is following their mandate to stabilize the supply of cranberries which will allow the industry to clear the decks of excess inventory.  
Both sides, the independents and Ocean Spray came together.  It was a joy to see and no I’m not being sarcastic.  This meeting may be a watershed moment for the industry.  No more “last man standing”.  No more “I win, you lose”.  Compromises were made.  No one got exactly what they wanted.  Apologies were made for previous mistakes made.  Promises were made to listen to each other in the future.  We communicated.  

The real clincher for me was Dr Richard Sexton’s presentation about the effectiveness of our marketing programs contained an supply and demand review.  His estimates that for every 1% reduction in supply that the price to grower should increase 2% regardless of which type of cranberries, whole frozen, finished goods or concentrate are disposed of got my attention!  Dr Sexton, UC Davis is a pretty big deal in the world of agricultural  economics.  That being said…will it work?  Time will tell.  There is a lot of work to be done with the staff at the CMC and USDA.  The market has to work.  There is a discussion that we may increase assessments to do more international, generic promotions.  Our work to date has been successful, but any increases need a very good plan and implementation.  

Key items:  2017 will be a handler withholding of 15% and 2018 will be a producer allotment of 75%, meaning that growers can deliver 75% of their CMC average deliveries.  There are some exemptions and the Ag Secretary has to sign off. 

 If I get a chance I may post some additional info. If you want details, go to the CMC website as I am sure they will put up the details.  

A week from now the industry will be in Long Beach for the summer CMC meeting.  On the docket is a proposal for a 15% Handler set aside for 2017 and a 25% Producer Allotment for 2018.  Everyone is counting votes.  Contrary to popular opinion, one side can’t make this happen without the other.  It takes 10 votes if the Public member doesn’t vote.  Spray has 7 and the independents have 6.  Do the math.   If you growers have an opinion, now is the time to contact your representative and let them know where you stand.  Call your handler and ask questions.  Be informed.  

A few growers are taking the opportunity during this critical oversupply period to renovate beds. Pretty sure they aren’t planting native varieties! If you think a volume regulation on its own will correct the situation, think again. We need to really think this through people.  And please before anyone jumps on me for singling out these growers, I’m not. I don’t know whose marsh these photos came from so don’t ask. Growers are out to efficiently grow cranberries, that is what we do. Renovating a poor bed and putting in hybrids is going to happen, and can make a lot of sense.  Question is, are we asking for a VR at the same time we are encouraging, or in some cases incentivizing, renovation??

Looking back at my New Years post and my pre-CMC February post, it seems that I was right on…huge crop and we did nothing about it. Now here we are in July talking about a handler set aside of 25% for this years crop. We could have saved a lot of growers a lot of $$ if we had that vote in February.   

Growers please post here or email me if you have a thought on this issue. We need to get this right and have our concerns heard. Oh and BTW, I’m hearing and thinking that we will need another 25% producer allotment on the 2018 and 2019 crops as well.  Yikes!  I have to say that I’m glad we are finally talking about it, but go back and read my previous posts…..I can’t see how independents can support this while a certain large handler keeps allowing their members to plant new hybrids. We ALL know that in a producer allotment year, growers will take advantage of the situation to renovate beds. That will just prolong and accelerate the supply situation. Comments anyone?

It is that time of year again when I grapple with the thought…should I stay or should I go..to the CMC.  It always seems like such an exercise in frustration.  

My question for this year?  Why do we report frozen berries, finished goods AND concentrate?  Why don’t we just report frozen whole berries in the freezer? I’ve never seen where the corn guys report how much is in ethanol inventories, or how much is in corn chips in the warehouse.  We don’t break out organic, or seeds.  When producers have so much varied finished products with so many different processes and yields, I think we need to keep it simple.  

 I realize that the inventory of frozen fruit keeps going up, but it is the only thing that we growers actually grow.  We don’t grow concentrate and we don’t grow SDCS or seeds.  Those are all manufactured goods by some 20 handlers.  Reporting their finished goods inventory just doesn’t make sense to me.  And I actually think it gives one handler an edge on the rest of the handlers.

So I’d like to talk about that at the CMC.  I know there is a reason why we do this and how we got to this place, so please someone fill me in.  Thanks!

What will the new year bring to the cranberry industry?  We growers delivered one heck of a crop to our handlers…the final numbers will be delivered shortly.  The CMC will have a look at these numbers in February.  Their consideration of a grower volume regulation or hander set aside will probably be discussed as we, in all likelihood have a full year’s supply of cranberries in the freezer.

I could support a volume regulation in a couple of situations.

Planting and renovation of beds into hybrids has to stop.  I don’t know how to make that happen, but I suspect lower prices will curtail that activity for most everyone.  Almost all independents don’t have the cash to build new beds, buy hybrids vines or take an existing bed out of production.  I can’t imagine the need for any new bed construction as most growers could renovate an old bed.  And I can’t see the need for more cranberries, so renovations aren’t necessary.  I can hear the yelling from growers as I type! What? You can’t keep me from renovating?  No, I can’t.  But with the size of the crops that we produce, I think that all growers should hit the pause button for a few years until we catch up with sales.  Handlers that have too much fruit should reach out to those with too little and move some fruit around.  Lets use it up and move it out.  

I’d like to see the auction of concentrate either include every ounce of concentrate produced OR ended.  Again, I don’t know how that happens.  I had a concentrate customer tell me that every time he bid at the auction his price went up.  He learned very quickly to stay out of the auction and buy afterwards.  If this guy figured it out, others have as well.  It seems to me that customers use the auction as a weapon…and unless a customer has to go to the auction, they won’t. So, could we consider an industry wide auction?  Or eliminating it all together?

I’m thinking too, if we did a regulation that we do it with whole fruit, not some concentrate equivalent.  I’m not sure that across all handlers we have an equal playing field when it comes to equivalents.  So, for that reason I’d do whole fruit, and I think too I could support a grower regulation so we don’t (in theory) grow them and incur all those costs.  

Those are my thoughts.  What are yours?  Many of the CMC members read this blog, so your thoughts will be heard!(Disclaimer: I am not, and never have been a CMC member, so if I got the terminology wrong, my apologies.)