Cherries — too much of a good thing
The Pacific Northwest sweet cherry industry finally had the year of its dreams in good weather, but maybe the year of its nightmares in pricing and returns.
Stellar weather this year led to record cherry volume. The crop of around 27 million, 20-pound boxes was well above the old record of 23.2 million in 2014.
But the record crop caused wholesale prices to tumble below $16 per box, making it unprofitable. Early grower returns were good, but post-Fourth of July returns, not fully known until mid-October, are not expected to be good. Some picked fruit was dumped.
So the big question growers, packers, shippers and marketers will grapple with over the next several months is whether the industry can expand market consumption enough to handle 27 million-box and larger crops.
Or are the crops too much of a good thing?
The answer seems obvious. Supply exceeds demand. Cut supply. But it might be more complicated than that.
There are lots of variables that shape any given season. Weather is one of them. Rain, hail, excessive heat or poor pollination usually hold down crop size, but that didn’t happen this year.
“The reality is every cherry season is different, and this one played out in a manner that is unacceptable to me, my growers and shippers,” said B.J. Thurlby, president of Northwest Cherry Growers in Yakima, Wash., the industry’s promotional arm.
Next year, the market might respond differently and there may be more demand than supply, he said. The key is repeat consumer purchases, and this year “our retail partners saw our core consumers did not make as many repeat purchases as we needed,” Thurlby said.
“We had two-and-a-half months of sustaining huge volume, competing with lots of other summer fruit. California had a lot of cherries before us at good pricing and good volume. Why it tanked for us was just supply and demand,” said Denny Hayden, a Pasco, Wash., grower.
It was a tale of two seasons for the Northwest. Pre-Fourth of July brought “good to moderate” prices, and post-Fourth of July brought too many cherries and prices at $16 a box and lower, Hayden said.
“The problem was not having enough sales for it. We couldn’t move out packed fruit,” he said.
PNW cherries were the No. 1 advertised item in retail produce departments for four weeks. They were in the top three for seven weeks against more than 800 other items on average, Thurlby said.
“You hope we picked up some new consumers, which is part of the necessary growing pains we go through in producing larger crops,” he said.
Consumer-friendly retail pricing and good displays were the norm in most stores as major chains focused on cherries for over two months, he said.
More than 500,000 boxes per day were shipped for 42 straight days — an “unbelievable” amount, he said.
Northwest Cherry Growers began new programs in the Philippines, Myanmar and Cambodia and the industry exported more than 8 million boxes. More than 3 million of that went to China. The previous export record was 7.5 million in 2014. Last year, 1.8 million boxes went to China.
“To me the bottom line is there are just too many cherries planted. There’s not enough infrastructure to get them packed. Until the huge supply drains away, it isn’t a good market. It’s a good market early and in the end but not in the middle until we reduce the amount of fruit being picked,” said Norm Gutzwiler, a Wenatchee, Wash., grower.
Brenda Thomas, president of Orchard View Farms in The Dalles, Oregon’s largest cherry grower, said people talk about growing markets but she’s not sure where that is because “certain retailers reached a lot people with low pricing and it still didn’t create enough demand.”
“We packed all our fruit and sold all our fruit for very poor pricing. There was little or no demand for cherries in general. It was that way all season long except right at the beginning,” Thomas said.
Small growers will get squeezed out first if supply is reduced, she said, adding she does the best she can for her growers.
Orchard View packs for a couple dozen growers. Beyond that, it grows 80 percent of what it packs.
Charles Lyall, a Mattawa, Wash., grower, said it’s tough to make a profit this year on $20 per box at a 30 percent cullage rate.
Small growers, particularly 5- and 10-acre growers, are likely to get out of business first because they can’t handle food safety compliance and other regulations as efficiently as large companies, Lyall said.
“I would like to increase markets but if you can’t increase markets fast enough to take care of the volume and can’t sell at a profit, then you have to start looking at reducing production,” he said.
A short-term solution, he said, is heavier pruning to reduce crop load and produce larger cherries. The next option is removing less productive trees and varieties, which he will start doing this winter or next, he said.
Big companies have increased a lot of cherry acreage in the Mattawa area in the past 30 years and a lot of that, with some ups and downs, has been fueled by good prices, Lyall said.
“We’ve been riding that train. We might be back to a point where we’ve overproduced and it’s going to have to go back to lowering volume,” he said. “You tear out Bing at 6 tons per acre and plant Skeena that averages 10. The day of growing small fruit that doesn’t get packed is trouble.”
New varieties that produce large cherries would be good, he said, “but I’m afraid there’s more of these years ahead than in the past.”