The short fruit crop in the eastern United States last year had a dramatic impact on research and promotion programs organized under state and federal market orders. These programs are funded by checkoffs collected on a per-pound basis, so income plummeted with the reduced crop size.
In Michigan, where the Michigan Apple Committee normally collects about $2.1 million each year, revenues will come in at about $200,000.
“Drastic cuts had to be made to all our activities,” said Diane Smith, executive director.
Since there was only about 10 percent of a full crop and fewer apples to market, all the account managers who would normally call on retailers were laid off, and administrative staff took unpaid time off through furloughs.
“Luckily, 2011 was a good crop year,” Smith said. “We saw early in 2012 that there was a very small crop coming, so we decided to conserve funds for startup next fall.”
Most apple growers and marketers are gearing up for what they think, and hope, will be a good crop in 2013.
A normal crop for Michigan is about 24 million bushels, but production has been erratic during the last decade. Last summer, the Apple Committee reduced its budget based on an expected crop of 3 million bushels, but recent numbers from USDA estimate the final crop at 2.7 million bushels.
Normally, the Michigan Apple Committee allocates $250,000 to $300,000 to support research at Michigan State University and elsewhere.
“We met with Michigan State University administrators to ask them to allocate Project GREEEN funds so our projects and researchers doing them could be supported during this unusual year,” Smith said.
Michigan growers pay a per-hundredweight checkoff of 51 cents for fresh apples, 27 cents for processing apples, and 11 cents for juice apples. Of those amounts, 4 cents go for research, 2 cents to the U.S. Apple Association, and the rest for market development, grower and consumer education, and administrative costs.
The tart cherry story
The story is similar at the Cherry Marketing Institute, where executive director Phil Korson said “a pretty serious adjustment” had to be made in the face of huge revenue reduction.
In a normal year, $800,000 to $1.2 million will be generated from the $10-per-ton checkoff under the federal market order. Those revenues will fall to only about $50,000 this season.
While both Utah and Washington had good crops of tart cherries, Michigan is the biggest producer with about 70 percent of the crop, and that was mostly lost. The Michigan crop was 157 million pounds in 2011—but only 11.6 million in 2012.
“We’re trying to skate through,” Korson said. “We’re applying for grants and looking for partners to support production research. Normally, we allocate $135,000 to $150,000 for that, but we have zero for research this year.”
In recent years, the Cherry Marketing Institute has allocated about $300,000 to research on the health benefits of tart cherries. It will spend nothing this year. “Luckily, we had a lot of good science already in the pipeline,” Korson said.
As with the Apple Committee, the institute was able to see early on there would be virtually no crop and curtailed promotions last year. The promotion budget is usually about $600,000, but Korson said that contracts with Weber Shandwick, its advertising and promotion agency, and with chief marketing officer Jeff Manning, are all conditional on revenue.
“Our administrative costs are low and going lower every year,” Korson said. Just he and administrative assistant Julie Gordon are on the staff at headquarters in DeWitt, Michigan, and everything else is contracted.