Cranberry supplies trounce demand, sending price down
Trouble has arrived by the bog-ful in Wisconsin's cranberry country.
Supplies of the bright red fruit have trounced demand, sending prices paid to independent growers falling to levels not seen in more than a decade, industry watchers say.
Prices paid to growers have a huge impact in Wisconsin, where more than half of the world's cranberries are grown. The annual value of the harvest in the state is $175 million to $200 million, according to the Wisconsin State Cranberry Growers Association.
"It's the worst time I've ever seen in the cranberry industry," said Kurt Rutlin, president of the Wisconsin Rapids-based Wisconsin Cranberry Cooperative and a second-generation cranberry grower. "It's truly disheartening."
Right now there are simply too many cranberries on the market.
As of late November, cranberries were fetching as little as $10 per hundred pounds. But it costs at least $25 to produce that much, and many independent growers are losing money on every piece of fruit they harvest.
Growers are falling victim to their own success, having produced bumper crops in recent years.
"The crops continue to grow bigger. The inventories continue to climb," Rutlin said. "There's enough fruit in the marketplace right now to last us through next year if we did not grow a single berry" in 2014.
"The cranberry industry is in a truly terrible situation right now," Rutlin added. "Can we fix it? Yes. How long will it take? That is a difficult question to answer."
The situation has been building for years, Matt Lippert, Wood County, Wis., agriculture agent for the University of Wisconsin-Extension, said in an email.
"Cranberry prices have been depressed to below many growers' cost of production for several years now, and with the largest crop ever just harvested here in Wisconsin and, most likely nationally, the outlook is not good," Lippert said.
Industry officials say some growers may not survive the price plunge.
"A lot of growers in the independent market are very, very nervous about what the future holds for them and looking for ways to increase returns," said Tom Lochner, executive director of the state cranberry growers association.
Not all growers are facing the same problem. Certain growers that are part of the Massachusetts-based Ocean Spray cooperative receive better-than-market prices for their crop based in part on the value of the Ocean Spray brand and its associated products, especially its Craisins sweetened dried cranberry product, industry experts say.
Growers who belong to the Ocean Spray Cooperative comprise about 60 percent of the cranberry acreage in Wisconsin, according to research done at the University of Wisconsin-Madison. Wisconsin growers harvest about 18,000 acres of cranberries a year.
"Ocean Spray growers have an established brand," said Tim Feit, executive director of the United Cranberry Growers Cooperative in Wausau, Wis. "Independent growers are kind of off by themselves."
For some, that's a tough place to be.
"You can tread water for a year or two, but it's been at least three, maybe four years that guys have been producing cranberries under the cost of production," Feit said. "It's just been brutal."
"There are a lot of independent growers who are just hanging on by a thread."
Cranberries aren't like other crops, he said.
"If you're a potato grower and the price of potatoes is low, that's a rotational crop so you can plant sweet corn or peas," Feit said. "But with cranberry growers, if they are having a tough time, you're kind of at the mercy of where the market is. You don't have a lot of choices."
Cranberries grow on vines in sandy or peat marshes. In Wisconsin, cranberry marshes are flooded with water to aid in harvesting, according to the state growers association. Because the berries contain a pocket of air, when the marsh is flooded, the berries float to the surface to be collected by harvesting equipment.
Besides the big crops produced in the U.S., our neighbors to the north have contributed to the glut of berries on the market, Lochner said.
"The growth in Canada has been unprecedented," he said. "The market dynamics have shifted quite a bit."
The Canadian province of Quebec has gone from producing no cranberries in the past 20 years to the third-largest producer behind Wisconsin and Massachusetts, Lochner said.
Wisconsin producers are feeling an impact.
"We had a buyer who every year buys 20 semi loads of fruit," Rutlin said. "This year they came back and said the Canadian crop is so cheap right now, that even though we have excellent quality, there's no way we can compete with those prices, and so they took their business across the border."
If there is a bright spot in the situation it is that independent growers are moving to create more markets for their product.
International markets show promise. But there is room for growth in the U.S., too.
The average household in the U.S. purchases one 64-ounce bottle of cranberry juice a year. "If we could get everyone to buy one more, that would potentially double sales," Lochner said. "So, there is potential for growth in that market."
Cranberries also fit almost perfectly into the foodie trend in which consumers are increasingly seeking natural products packed with nutrition.
But making consumers aware that cranberries can be eaten year round and not just at Thanksgiving or as cranberry juice is easier said than done.
Feit said the cooperative he leads is developing a brand along with the co-op Rutlin leads.
The brand, Wisconsin's Best Cranberries, is selling in bulk on the wholesale market. Retail is still a ways off.
"It's such an awesome product," Feit said. "It's just that we are at the infant stage of starting out. It takes a lot to develop a brand and to get it into stores. We're going to be working on that.
"Growers, not just cranberry growers, but farmers in general, they are very smart and they are very resilient," Feit added. "If you give them an opportunity to find a solution to the problem, they'll find it. They just have to have some of the tools to be able to do it and that's what we're doing."
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