Clement Pappas lead the way a couple of weeks ago and increased their base for the 2011 crop to $30/barrel. I just heard that Cott/Cliffstar has followed and raised their base price for the crop delivered last year to $30. Hooray! It looks like prices out their have increased enough to warrent paying the growers more and hopefully it will bring everyone to breakeven and keep us from taking money out of savings (or borrowing from the banks) to grow this crop. We can only hope!
The second reporting cycle for the CMC is just out and under review, but it still shows plenty of cranberries for everyone, so I think the price for this next crop will depend a lot on the size of the crop. I’m hearing of some side shooting in Wisconsin but otherwise a good crop. What is everyone else seeing, hearing?
Did it ever occur to you that if growers didn’t join the Ocean Spray B pool and /or didn’t sell them independent fruit, that OS wouldn’t have any fruit/concentrate for the auction? You don’t see them selling their A pool fruit for that low a price! Something to think about as everyone on the B pool waiting list just got their notification of the new rules for the waiting list, which include a $350/acre fee. As United Cranberry is taking the steps to become a handler, maybe growers should consider all their options. Call us!
So Lassonde bought Clement Pappas last year and here is their earnings report, released today:
Seems to me that they are saying that gee whiz, the costs all all ingredients are going up, and then they specifically mention apple and orange concentrate. In the next sentence they say that they sure are glad they bought Clement Pappas because they really boosted our lackluster earnings. Hmmm. How does it make the cranberry growers feel that delivered to Clement Pappas and received a price below the cost of production? Atta boy, good job. Bring us your crop next year. Come on Pappas, you can do better.
After attending the Cranberry Marketing Committee meeting last week, I’ve been thinking about our supply and demand situation, which by the way seems to be tightening up. At the CMC, we mostly talk about cranberries after they are grown and delivered to handlers and we spend hours talking about too many or too few. It seems to me, that we ought to talk about how to plant more efficiently. If our current crop is 10,000,000 barrels and our usage is growing on average 2-3% a year that is 200,000-300,000 more barrels needed every year. Thank goodness we are in a growing industry.
So if we need 200-300,000 more barrels every year, some comes from current bed renovation, about 150,000 barrels. That means we need another 100,000-150,000 barrels from new plantings. Divide that number by 220/barrel average, we need to plant 450-680 new acres, to handle the average increase in demand. That is all. Worldwide. But we have to do it every year. Seems to me, we do 25% at one time, increase supply too fast, crash prices and then stop planting, recover and repeat. Isn’t there a better way? I’m hoping that by discussing these things, growers will decide to plant SLOWER. I know it may be more efficient to plant all at one time, we have been guilty of it personally, but knowing what I know now, I think we would do things differently. Maybe others will too. Slower planting will lead to more stable prices. What do you think?
So, Cott made a bunch of money in 2011 and the Cliffstar purchase really seems to be working for them, as it is a huge part of their profits. Any chance that they will pay more for their cranberries, just to keep their growers afloat? Not a chance. They won’t pay more than they have to.
Just received a copy of the quarter ended 12/31/2011 on the cranberry crop from the CMC. This is the first quarter in the crop year, and shows the delivery of the crop.
What I find interesting, if I am looking at this correctly is that the increase in sales in the first quarter of the year is about 5.8% over the same quarter last year! Great news!
***edit*** ok, so this number was “total sales and shrinkage” , not total sales. A good portion of this is shrinkage…what is that? I heard that the crop had some rot and low color. Does that affect shrinkage? So, yes, our overall sales, without shrink, were up, but only about 2%. Apparently the crop “shrunk” about 3%. So maybe the rest of this original post isn’t as great as I thought. ****
This follows a 7.93% increase in sales in 2010 and a 4.33% increase in sales in 2009. Look at the last page of the report for these numbers and do your own calculations. If these are indeed the correct numbers, we are seeing more sales and usage of our cranberries. We are “absorbing” in the increasing crop we are delivering. Indeed the 2011 crop just delivered was the second largest US crop in history, behind 2008, and only smaller by 131,654 barrels. Our overall inventory remains high, but can I say…manageable? with our increased sales.
I’m certainly not the CMC numbers expert. Call your CMC representative or Michelle Hogan at the CMC if you have any specfic questions.
Overall though, I think these numbers are good. They show that our sales and usage is increasing. Certainly, this is due to the low prices of cranberries and processors are finding new ways to use cranberries. This is better than the alternative (meaning the prices are low and processors can’t figure out how to use them) So, I call this a win. Now I’m off to find out how all of the above figures into the auction prices. The OS concentrate auction is today. Stay tuned.