Marketer: Crop insurance death of sweet cherries
By DAN WHEAT
YAKIMA, Wash. -- Crop insurance for sweet cherries will be their death, the president of a major tree fruit company says.
Growers keep picking when the market is lower than picking costs so they can make insurance claims, Robert Kershaw, president and CEO of Domex Superfresh Growers, Yakima, said at the 70th annual Cherry Institute of Northwest Cherry Growers at the Yakima Convention Center.
"That's not free market and it won't be the way we're successful," Kershaw warned.
It will lead to only packers making money and growers getting insurance money, he said.
"Many times last year people should have stopped picking because the market was lower than picking costs," he said. "Had they stopped the market would have recovered and people could have started picking again."
"I do hope the insurance program changes because I do think it will be the death of our industry," Kershaw said to applause.
Contacted later, Dave Paul, director of USDA Risk Management Agency in Spokane, said an estimated 76 percent of Washington's cherry acreage is insured against revenue loss. Growers are compensated, he said, if their revenue falls below their historical average or if they have damaged fruit.
Kershaw, Mike Taylor, vice president of sales and marketing at Stemilt Growers Inc. in Wenatchee, and Randy Abhold, vice president of sales and marketing at Rainier Fruit Co. in Selah, were members of a panel at the meeting. Discussion centered on maintaining market viability in an era of large crops.
A record 22.9 million, 20-pound boxes of cherries in 2012 resulted in an average Washington price of $35.67 per box compared with $43.50 in 2011 and $41.77 in 2010, according to the Washington Growers Clearing House Association.
While not regarded as a good year, 2012 is thought by most as better than the bust year of 2009 when the average price was $28.49 for a 20.4-million-box crop.
The magic of cherries is that they're one of the few items for which consumption has increased in recent years, Kershaw said. Northwest production has doubled in the last decade, he said.
But with that has come interruptions in sales momentum from temporary gluts in supply and from rain damage. More cherries are now produced in late July and August when there's more competition from other fruits.
"In my opinion, we are reaching somewhat of a saturation point with North American markets," Kershaw said. "So our quality has to be unbelievable. We have to grow large, firm cherries to export. If we can't, there's no way we can move the volumes that are coming at us."
Growers must aim for quality to generate repeat sales and be willing to pass over fruit that's too small or lacking in firmness and sugar content, the panel agreed.
The goal should be 10.5-row and larger, 350 in firmness and 20 percent brix (sugar content), Taylor said. He called for a minimum size of larger than 12-row. The industry banned 13-row (smaller) cherries several years ago and more recently was evenly split in a survey on banning 12-row.
Accurate information from orchards to packing-shipping-marketing operations is crucial and growers must not be tempted to chose volume over quality, Taylor said. "Huge yields can drive economic models and can be a curse," he said.
Abhold agreed saying, "We're not a hospital. We don't make the product better than when it comes in." He urged growers to honestly evaluate their crops.
"Have the courage to walk past weak limbs. Field sort to 10 percent culls or less. Not all cherry orchards will make it in another five years. Use as many data points as you can and don't pick if they don't measure up to the market," Taylor said.