U.S. cranberry growers expect to reap another large crop and as an unwelcome result start rebuilding a price-depressing surplus the industry spent the past two years reducing.
The USDA predicts farmers will harvest 904 million pounds of cranberries, only the second time the crop has topped 900 million pounds.
The Cranberry Marketing Committee has a lower estimate, 884 million pounds. The committee, nevertheless, projects the surplus will grow to 57% from 50% of annual sales.
The over supply was 100% two years ago. Farmers and handlers halved the surplus by withholding berries in 2017 and 2018.
The marketing committee, made up of growers and handlers, voted against asking the USDA to renew volume controls for this year and next. Without controls, the surplus is expected to resume its upward trajectory.
Washington cranberry farmer Malcolm McPhail said volume controls reduced the surplus, but the sacrifice was uneven. The USDA exempted a majority of handlers from withholding requirements because they took in too few berries.
“It makes no sense in doing withholding because it only affects Ocean Spray,” said McPhail, a member of the Ocean Spray cooperative.
The cranberry industry has been plagued by too many berries for many years. Domestic consumption has been flat, while U.S. cranberry growers, led by Wisconsin farmers, have become more productive. Canada, particularly Quebec, has grown over the past decade into a major producer. Chile also grows cranberries.
Cranberries also are a frequent target for retaliatory tariffs.
A tariff imposed more than a year ago has nearly wiped out gains the industry made the previous year in selling dried cranberries in China, said Terry Humfeld, executive director of the Cranberry Institute, a trade association.
“There was a lot of momentum created in building that China market,” he said Monday. “It’s only going to get worse.”
About 100 million pounds of cranberries were diverted from the marketplace by volume controls in 2018, according to the marketing committee.
Even with fewer berries, the average price dropped to 25 cents a pound from an already low 30 cents a pound, according to the USDA.
The value of the 2018 U.S. crop was $222.4 million, compared to $252 million in 2017 and $292.2 million in 2016, according to the USDA.
Foreign sales were essentially flat in 2018, but they had been on an upward trend.
The European Union has put a retaliatory tariff on cranberry juice. Through the first six months of this year, U.S. exports were 82% lower than the same period last year, according to the USDA’s Economic Research Service.
China makes up about 5% of the foreign market, but the country has been the focus of the industry’s overseas promotions.
The industry has started investing in cultivating demand in India, but it’s a tiny portion of overall exports.
“It’s the next huge market that’s going to be tapped,” Humfeld said. “That’s going to take years.”
Cranberry growers are eligible for tariff relief under the Trump administration’s Market Facilitation Program.
The USDA calculated in August the cranberry industry has lost $28 million because of retaliatory tariffs. Payouts equal 3 cents a pound, and the maximum a farmer can receive is $250,000.