An oversupply of small cherries last season hurt growers financially. Fifty-six percent of the Pacific Northwest’s fresh sweet cherry crop was in sizes 11 to 12 row, compared with only 45 percent in 2005. While the percentage in 2006 was similar to the 2002 crop, the difference was that this was a much bigger crop, Mel Omeg, a cherry grower in The Dalles, Oregon, told growers at the north central Washington Stone Fruit Day in January. The 2006 fresh cherry crop was close to 15 million boxes, up from only 8 million in 2002.
“This was the first time we had a serious oversupply of 11- and 12-row cherries,” he said. “That impacted a lot of people’s income from their orchard because that volume of small cherries resulted in really low prices.”
B.J. Thurlby, president of Northwest Cherry Growers, said that the volume of fruit shipped during the first 40 days of the 2006 season was in line with preseason estimates, but the volume shipped during the last 35 days was about 40 percent greater than forecast. Shipments in July are becoming heavier. The Washington cherry industry shipped 3 million more boxes in July 2006 than in July 2005.
The big drop
Omeg said f.o.b. prices for Bing cherries dropped significantly on July 1, and the drop was the most drastic on smaller sizes. For example, the average f.o.b. price for 12-row Bings shipped before July 1 was $1.04 per pound. After July 1, it averaged only 20 cents per pound, which represented a loss of 57 cents per pound to the grower after picking and packing costs are deducted.
“What didn’t drop was the cost to grow the fruit, harvest the fruit, and the cost that you paid to have that fruit packed,” Omeg said. “Who was the loser? Each one of you, as growers. We paid the price for a disaster in the market.”
Omeg said he knew of one grower who went 14 days without querying the marketer that was selling his cherries, and at the end of the season he had a bill from the packing house for $200,000. “That was a shock,” he said. “It was a shock to me not to be asking questions of your fieldman all through the season.”
Another grower had all the profit he made on cherries packed before July eaten up by costs of packing the fruit he delivered after July 1. “He didn’t make a dollar,” Omeg said.
He urged growers to analyze the packout reports from their warehouses as soon as they receive them and to talk to their field representative and marketing people daily about their packouts and what’s happening in the market. “If that’s not happening, you’re taking a high risk,” he warned.
In any season, a grower who produces large cherries will earn higher profits than a grower producing small cherries, even if the total volume is less, Omeg calculates. Based on average prices from 2002 to 2005, a grower producing only 4 tons of 9-row cherries would make more profit than a grower producing 10 tons of 11.5-row cherries. The advantage of producing larger cherries is even more dramatic if last season’s post-July 1 prices are used.
“The times have changed with the huge crops we’re moving into, and you can no longer take the risk of growing large volumes of fruit and not making a profit,” Omeg stressed. “We need to change. The market does not want those little cherries.”
He predicted that one out of every five cherry growers in the Northwest will go broke growing cherries within the next few years because of increased production and labor shortages, and he offered the following tips for staying profitable in the coming years:
• Analyze your daily packout reports immediately.
• Analyze the annual cherry pool closing report from your packing house.
• During harvest, maintain daily contact with your field representative and packing house.
• During harvest, make daily notes for each block on fruit quality for later reference.
• Develop a written horticultural plan.
• Include a pruning plan covering detail and renewal cuts.
• Establish a complete nutrition program and consider using fertigation.
• Use a professional irrigation monitoring service to avoid stressing the trees.
• Establish a block replacement program with the best varieties and rootstocks for your site.
• Discuss this plan with your field representative.