The Washington State Fruit Commission’s budget for 2006-2007 reflects a 30 percent increase in foreign market program funds and a larger cherry crop. But the $5 million budget is less than the previous year’s budget due to pear assessments no longer being funneled through the commission.
Reorganization last year of federal pear marketing orders changed the procedure for collection of pear assessments. Now, pear industry groups collect all pear-related assessments, including those for fresh and processed Bartletts that the Fruit Commission earlier received.
The proposed budget, submitted to the state’s Department of Agriculture for approval, is based on a 125,000-ton cherry crop for the four-state partners (Utah, Idaho, Oregon, and Washington) of the Northwest Cherry Growers, up from last year’s budget based on a 120,000-ton crop. The crop budget numbers are not a crop forecast.
The budget is based on cherry assessments of $22 per ton, which includes $4 per ton forwarded to the Washington Tree Fruit Research Commission. That is the same rate that was in effect last year. Processed cherries will be assessed at $9 per ton, with $4 per ton sent to the Research Commission. Soft fruit assessments for peaches, nectarines, and apricots are expected to remain the same at the previous year’s rates of $13 per ton, with $1 per ton sent to the Research Commission. However, it is anticipated that assessments of $12 per ton, with $1 per ton for research, will once again be collected on prunes and plums after a two-year hiatus.
The Fruit Commission also submitted names nominated to fill three producer positions and two dealer positions on the board to the Washington State Department of Agriculture. Two names are submitted for each position, with appointments made by the department in April.
As the cherry crop continues to grow in size, strong promotions after the Fourth of July holiday are needed to help move product. In the last ten years, the Northwest cherry crop has grown by 700,000 boxes, according to David Severn, promotion director for the Fruit Commission.
The domestic retail promotion program for cherries, budgeted for $715,000, takes the biggest bite out of the domestic fruit program. It includes the retail advertising incentive program for retailers who run multiple cherry ads, in-store radio advertisements, field representatives, and an ad-tracking service. About $15,000 more will be spent this year on the in-store radio ads, which were well received by retailers and are believed to be a good way to also reach consumers.
New this year is an ad-tracking service that will enable the commission to provide timely ad information to the major retailers.
Severn noted that market research conducted last year for the Fruit Commission is expected to pay off this year by providing commission staff with retailer information to share about how to grow the cherry category.
“A key finding of the research was that retailers need to promote cherries five times during the season to maximize the category contribution,” he said. “We now have the data to show why retailers should be promoting cherries after the Fourth of July.”
The 2006-2007 domestic program also includes $70,000 for market research that will be used to develop best practices for retailers regarding promotion, pricing, and display sizes and types. The commission wants to learn more about cherry consumers, such as what factors trigger impulse buys. For example, consumer research data shows that consumers who purchase cherries spend an average of 10 percent more in the grocery store than noncherry consumers.
Also, the commission is working with the Produce for Better Health Foundation this year to develop a single health/ nutrition message that can be used by retailers and shippers in point-of-sale materials and on consumer packages without worry about legal issues.
China and Hong Kong, South Korea, Japan, Taiwan, and Southeast Asia are targeted for cherry foreign market promotions in 2006, along with Australia, Mexico, and the United Kingdom.
More than 50 percent, or $891,000 of the $1.6 million slated for foreign promotion expenditures, will come from the federal Market Access Program. The federal MAP funds for cherry export promotion increased nearly 25 percent in 2006 from the amount received last season.
Other export promotion money received by the Fruit Commission includes $70,000 from the Northwest Fruit Exporters for cherry promotion activity in Japan, and $15,000 in grant monies from the Washington State Department of Agriculture.
The majority of the foreign promotion funds are spent in the Asian markets where cherry exports are strong. Increased efforts will continue for the second year in South Korea, a market considered to have great potential.
Consumer education about fresh cherries is needed in the Korean market, noted Keith Hu, international marketing director for the Fruit Commission. “Consumers have money to spend, but they don’t know what fresh cherries are. They know about maraschino cherries in whiskey drinks, but not fresh cherries.”
The Northwest shipped 120,000 boxes into Australia last year, a market that opened up to Northwest cherries three years ago. Hu believes the Australian market can grow 10 to 15 percent this year. Industry officials think the market will reach 200,000 boxes of cherries from the Northwest within the next few years.
The United Kingdom represents a challenging market, he added. With the current mix of imported cherries from Turkey and Spain, the fresh cherry market in the United Kingdom is much more competitive than in years past. However, the Northwest still has an advantage with late-season cherries. The Fruit Commission will continue to implement a full-fledged promotion program there.
Promotion efforts in Latin America will be scaled back this year, with Mexico receiving the full promotional force. Nearly 39,000 cherry cartons were shipped to Latin America last year, with the majority sent to Mexico. Northwest cherries will team with Hershey chocolates in Mexico to promote a “season of love” program combining cherries with chocolate Hershey Kisses.