We had a large crowd in Warrens to celebrate the opening of our new plant! Thanks to everyone who joined us. We look forward to the future!
As the harvest winds down in Wisconsin and all over North America, it is becoming abundantly clear that we can grow cranberries. Back in February and again in August, growers and handlers came together at the CMC meetings to contemplate a grower set aside. Even when faced with the prospect of a huge Wisconsin crop and fruit in the freezer the CMC members voted down any grower set aside. Well now I would like someone, anyone to review the wisdom of that decision and tell everyone if in hindsight, it was a good idea or not. I know for a fact that we filled up every inch of freezer space in Wisconsin and parts of freezers in neighboring states with a nice, clean crop that growers worked very hard to grow. The price projections are horrifying to the independent grower and this will indeed move on to OS as well. Why do I think that is true?
In fact, by my calculations and information, Ocean Spray is expecting to receive a patronage crop of 7.2mm barrels, yet according to the notes in their financial statements, they’ve only once (!) in 15 years sold 5mm barrels of patronage fruit in a calendar year and that was 2008. Patronage cranberry barrels sold from 2000 thru 2012 only once reached 5,060,000 barrels. Every other year during that span it was below 5mm barrels. So 7mm barrels will be hard to digest and that doesn’t include the 100,000s of barrels that OS takes in from non members. How do they deal with it? A company the size and complexity of OS needs crop in reserve, by their own estimation 4mm barrels. So, some overage is ok, but their supply has been growing and growing. Only they themselves know how much they have over and above what they need. But they handle the situation by extending the length of their pools and the cost of holding the fruit has to depress the return in the pool. A more efficient way might be to, hey, decrease the amount of fruit they grow. In coordination with the rest of the industry. And Canada. Oh, that’s right! We have such a mechanism, it is called the CMC.
Please CMC members. Get some facts. Correct me if I’m wrong. And this isn’t all about Ocean Spray. We will all do better if we manage the size of the crop.
We need to take a hard look at a marketing order at the February meeting. And while we are at it, lets look at that Webb Pomerene act again.
I missed the CMC meeting in Bellingham due to a family wedding….but then again most of you that know me, know that I swore off CMC meetings back in February when our elected representatives neglected to vote for a set aside when we clearly had a bunch of fruit sitting in the freezer. Here we are in August, set to deliver a pretty good crop and What? our surplus is growing? You would think that the CMC would do SOMETHING, ANYTHING to solve the problem. After all, they are the only people with the responsibilty to do such. Yup, you guessed it: they decided to study it some more…form a committee…argh!
Being the eternal optimist, I believe that finally, in February 2014 the truth will be obvious to everyone and enough members will vote to with hold fruit. Quebec growers are getting on board with the US growers, so that will go along with the Vancouver growers who already can enact a set aside. We CAN and WILL manage the crop people! In the meantime we need to sell, sell, sell and tell the world about our amazing red berry.
On a side note, it WOULD be nice to exempt, say, the first 5000 barrels (or whatever the right number is) of each contract’s production. This way, the smaller growers who “didn’t expand” could be hurt less from a set aside. It shouldn’t be too hard to figure out the right size to exempt. In effect, the largest growers would be disposing of the most fruit. The smaller growers will be protected. I know this would take formal rule making, but if it is possible, lets get on it, or something like it.
Some interesting filings in the lawsuit:in this first filing, OS asks the judge to throw out some arguements, and have an oral arguement on others. the second tab lists the attachments for OS’s filing
This is the plaintiff’s response to the OS request.
I have to say, this is why there are judges, lawyers and lawsuits. Both sides have their points, both sides refer to a bunch of legal cases that prove their case. I’m sticking to blogging.
Ok, so in the ongoing lawsuit between Ocean Spray and independent growers, plaintiffs (independent growers) finally got their amended complaint in and filed. Phew! It was amended a few times. Ocean Spray has responded “hogwash” and wants the judge to throw most of the complaint out. I have to say, a lot of what Ocean Spray says makes some sense. Now the judge has to rule whether to let the case go forward or not. ***remember*** I’m not a lawyer, nor do I even attempt it. When my computer starts working and will let me post actually open an adobe file, I will post the link. Very interesting reading. The OS attachments include some interesting historical reading…re..the “severe” shortage of crop in the 2008 Annual report and the efforts they made to get planting going. They left out that they told all the indedepents to “keep on planting” and here we are in 2013 with a impending huge supply of cranberries. Everyone. Who wants to bet at their upcoming Annual Meeting that all blame for the supply situation will fall on the independent growers? Just saying.
Well, it is time to head to the CMC meeting in Orlando. Usually everyone arrives on Sunday and the actual meeting is on Monday and Tuesday of this coming week, February 25, 26. I have to say that this is a wonderful time to leave WI, with snow falling. A year ago we were almost growing cranberries by this time! Yikes. Oh, and everyone was expecting the independents to make $35-40/barrel. Seriously.
So, what to expect from the CMC? Let’s start by reminding everyone that I am not a member or even an alternate. I go to these meetings to learn and try, try, TRY to figure out what is happening in the industry. The CMC has two main functions as I can tell. First of all, they take our $.28/barrel assessment and use it to generically advertise cranberries overseas and secondly, they can vote for a set aside to manage the size of the crop when we are over supplied. They also are the vehicle for numbers and reporting…can’t forget that part!
I think they really have a handle on the promotion part. Our international sales have steadily increased over the past 10 years…and I’m sure our efforts there have helped.
When it comes to volume regulation, EVERYONE I’ve talked to agrees that we have way too many berries in the freezer. Both Ocean Spray and the independents have too much fruit. Quebec and British Columbia had great crops and the projections are that additional new beds will be harvested this fall. What to do? The good news is….everyone is oversupplied. This means that maybe, maybe we can figure out how to deal with the situation. The US and BC have a marketing order, Quebec and Eastern Canada does not. We must figure out how to get Quebec into being part of the solution on this. All the US handlers are dropping their prices. Juice companies are searching around for low priced concentrate. The SDC prices are slipping. All around is bad news for growers…but yet…is it?
Say your sales history is 30,000 barrels and the set aside is 15%, so you can deliver 25,500 barrels. Without a set aside, the prices are going to be low, $15? What if, with a set aside we could get $25?
30,000 barrels x $15 = $450,000
25,500 barrels x $25= $637,500
Now, clearly I don’t know the prices, etc, etc…so don’t get all over me. I’m not the economist. I know that as an industry, we know how many barrels we sold last year, we know how many we took in and we can project how many barrels we can sell this year. It is math people! If we don’t continue to over supply the market, the prices will come up. Pure and simple.
Let’s come together in Orlando. We will have visitors from Canada and all the handler groups represented. Lets keep our egos in check and have a meaningful discussion. We can start with what we agree on: we delivered a lot of berries in 2012. If we can agree that by taking some fruit off the table in 2013 our prices will go up…then the only thing left to discuss is how and how much. Are you with me?