Brined cherries face challenges
Even with tight supplies of cherries for brining, don't expect grower prices to rise much, says a cherry processor.
Reduced supplies of U.S. brining cherries and restricted supplies of imported brining cherries are making it hard for the U.S. cherry-brining industry to meet demand. But strangely, there has not been a significant price increase paid to growers that reflects the short supplies.
Historically, it's taken around 50,000 tons of cherries to satisfy and sustain the brined cherry industry, said Josh Reynolds of Gray and Company, a privately owned Portland, Oregon, company that's been making maraschino cherries and glacé fruit since 1908. Reynolds, the company's vice president and general manager, shared trends and challenges of the brined cherry industry with growers during the Cherry Institute meeting held in Yakima, Washington, in January.
"The brined cherry is the processed cherry with the stem on," he said, "and it's a rare commodity right now, which is the reason we are importing product."
Production of cherries used in brining in the United States is volatile, with volume going up and down like a roller coaster. Reynolds noted that in 2004, about 64,000 tons of cherries were sent to the brining processors, 44,000 tons in 2005, and then nearly 60,000 tons in 2006. The 2007 crop was back down to around 48,500 tons. With such volatile domestic production, cherry brining processors have had to rely in recent years on imported cherries to supplement the U.S. pack.
Italy, Chile, and Turkey are the major import suppliers. In 2006, 8,500 tons of cherries were imported for brining; 6,500 tons were brought into the United States in 2007.
With strong demand for the maraschino cherry, Reynolds said that the amount required to sustain the industry is creeping up, and now may be around 55,000 tons instead of 50,000 tons.
"That's a good thing," he said, but added that it is also why imports play such an important role in today's brining industry.
Although demand for brined cherries is up, the weak U.S. dollar is restricting the brined industry when it comes to imported supplies, Reynolds said. "The weak dollar plays havoc on U.S. producers who are trying to develop a reliable product stream."
He projects that the amount of imported product will decline in 2008 because imported cherries cost too much, challenges with imported product
are too great, and the increased costs are too difficult to pass on to the consumer.
"A lot can go wrong with imported product, including the level of pits in the cherries, stem retention, bureaucratic delays, freezing during transport, differences in varieties, and handling issues," he explained.
When the weak dollar is combined with import product challenges, Reynolds said that it makes the imported product even more risky.
"With today's currency exchange rates, I can't build a sustainable business around imports," he said.
But with fewer imports coming in, will there be enough domestic supply to sustain the industry?
Reynolds pointed out that there was plenty of domestic supply in the 1980s and 1990s. However, their Oregon growers in The Dalles and Willamette Valley began shifting to the fresh market in the 2000s when processors were paying around 30 cents per pound for brining cherries. Growers couldn't sustain their business at such low prices and began pulling out Royal Ann, the brining variety, and replanting orchards with fresh-market varieties.
Domestic prices have risen steadily in the last few years due to domestic shortages, he said. Prices in 2007 in the Pacific Northwest peaked around 54 cents per pound for No. 1 grade, handpicked, stem-on cherries. Prices for cherries without stems have been more volatile due to larger crop swings and a Midwest buyer that pulled out of the market to leave a surplus going into the 2007 Michigan crop.
Prices in Michigan and Oregon are generally similar for the same grade and picking method (stemless versus stems, hand harvest versus machine), he said, although there is sometimes a discount in Michigan because of the transportation differential for being close to the majority of the U.S. market. But he noted that Washington and Oregon prices are not the same due to different grades and varieties. Washington has little acreage of Royal Anns, with nearly all of its acreage devoted to fresh-market varieties.
Why not 60 cents?
With restricted import supplies and increased consumer demand, one would think it would lead to higher field prices, he said. "So, why hasn't the field price for hand-picked cherries gone to 60 cents per pound?"
Reynolds said that it is unlikely a higher field price would lead to expansion of acreage for brining cherries.
"The field price is more a matter of wood," he said. "At the end of the day, 60 cents per pound to the grower would not put any more cherries in the ground. Within a few years, we'd be right back where we are now."
He believes that by the time new orchards came into production, currency exchange rates would be different than they currently are, making long-term planning difficult for growers. In the short term, Reynolds is optimistic about the cherry-brining industry, though he is concerned about meeting growing demand with limited supplies. "We still need cherries out of Washington and our cherries from Oregon. But for the long term, there's a lot of uncertainty."