Record cherry harvest: How sweet it is, isn't
For some Northwest growers, the record haul was too much of a good thing, dropping prices and eating into profits. At least one local farmer decided it was simply cheaper not to pick.
Seattle Times business reporter
MANSON, Chelan County -- The 2012 Northwest cherry harvest, now just about wrapped up, is the biggest ever, eclipsing the previous record for total tonnage of sweet cherries set in 2009.
More than 460 million pounds have been packed by orchards in Washington, Oregon, Idaho, Montana and Utah, with Washington accounting for 80 percent of the total. That's approximately $600 million for Washington's economy.
"I started in this business in 1996. That year we shipped 5 million boxes of cherries, and it was a normal-sized crop, and now 16 years later we're at 23 million boxes," said B.J. Thurlby, president of the Washington State Fruit Commission. The numbers compare with the 2009 harvest of a little more than 20 million boxes, each containing 20 pounds of cherries.
Despite the large harvest, it hasn't been a cakewalk for growers.
"It was a challenging season that had some good moments," said Roger Pepperl, marketing director of Wenatchee-based Stemilt Growers. He said both an oversupply of cherries in July and wet weather dipped into farmers' profits. "That hurt a lot of people," he said.
Similar to the 2009 crop, this year's large harvest pushed cherry prices downward, although not quite as far as in that recessionary year. That's likely because the cherry market is larger now, with new supplies flowing into Asian markets, such as South Korea.
Nevertheless, at least one farmer chose to leave a significant chunk of his cherries on the tree as a result of lower than expected prices.
"I can't afford to pick it," said Scott Sandum, owner of 3Z's Ranch, set in the scenic hills above Lake Chelan in the town of Manson. "That's pretty sad, especially when you look at the quality that's in the tree."
Kirk Mayer, manager of the Washington Growers Clearing House Association, said prices paid to cherry warehouses dropped 18 percent this year. That's a good indicator for what the farmers will receive in the fall when they are paid for their harvest.
For consumers, cherry prices appear to have dropped year over year in grocery stores.
According to the Bureau of Labor Statistics' Consumer Price Index, cherry prices in U.S. cities for July, when Northwest cherries dominate the market, were $2.92 per pound on average. That's more than 50 cents lower than in July 2011. August CPI figures have yet to be reported.
Because of the lower prices for growers, Sandum's sweetheart cherries will cling to his trees until the stems weaken, and the fruit drops to the ground.
But his cousin and fellow Chelan County cherry grower, Bob Petersen, is picking his sweethearts and sending them to the processed cherry market. He estimates he'll make about 35 cents per pound there, compared with just less than $1 a pound in the fresh market in 2011.
Sandum and Petersen, who both also grow apples, will know the exact prices in the fall. They hinge on the amount and quality of cherries packed each week, with July prices expected to be the lowest.
Sandum's decision not to pick 125 tons of the dangling fruit came partly because he thinks he has a better shot at covering the year's expenses with his crop insurance.
That insurance, according to his agent, Tim Hulett of Northwest Farm Credit Services, is designed to guard against unforeseen weather and fluctuations in the market based on a farmer's historical revenue, but it doesn't allow the farmer to "give up responsibilities to grow your crop."
"I'm hoping to make enough money off of my insurance to pay for this year's growing costs," Sandum said. "[Those] are between $25,000 and $30,000."
In contrast to this year, Sandum grossed $350,000 in 2011 from his 20 acres of cherry trees.
Desmond O'Rourke, founder of Belrose Inc., a fruit market-analysis company based in Pullman, said it's unusual for growers to voluntarily not pick their fruit, but notes that it happened in 2009. "If these large crops continue, it could become the norm," he said.
But counting on insurance payouts can be a gamble. The final price, which won't be known for another month, is one of a number of factors determining the amount of insurance Sandum could receive, said Hulett. "It's not a given that he's going to get anything," he said.
Despite this uncertainty, Hulett thinks there will be a large number of farmers who make a claim for that safety net this year, because of the bad weather for tree fruit in general and low prices for cherries. "I'm expecting a lot of claims, from the Tri-Cities all the way up to Scott [in Chelan]," he said.
After 30 years growing cherries, Sandum is clearly frustrated with the direction of the market, as regulations imposed on farmers from large grocery chains increase -- while, according to him, quality is overlooked.
Pepperl also stresses the importance of quality to keep demand strong, but he's more upbeat about the market. Cherries have been marketed well, he said.
"[Cherries were] in the top three advertised products in grocery stores," he said.
Karl Baker: 206-464-2046 or email@example.com