Bigger crops, promotable prices expected - The Packer

Bigger crops, promotable prices expected

05/23/2014 09:58:00 AM
Tom Karst

YAKIMA, Wash. — Big volume and big demand should characterize the 2014 Northwest cherry crop.

Northwest growers expect the cherry harvest to begin in early June, with promotable volume by late June and big shipments for the Fourth of July holiday through most of July.

Several shippers reported investments in new optical sorting lines that promise to deliver better consistency, size and quality, and nearly all report continued movement toward the high graphic pouch bag.

Output is expected to far exceed the 14.3 million boxes shipped in 2013 — when rains hampered production — and perhaps rival the 2012 record of 23 million boxes.

Early estimates put the crop at 20 million to 21 million boxes, said B.J. Thurlby, president of Northwest Cherry Growers.

Northwest cherry marketers could ship 7 million boxes in June, 12 million to 13 million boxes in July and up to 3 million boxes in August, he said.

“So far, so good — as long as Mother Nature decides to stay away from heavy rains in June and July, we are headed for a great year,” said Scott Marboe, director of marketing for Oneonta Starr Ranch Growers, Wenatchee.

“It could be the biggest crop in history, which would be great: lots of cherries for lots of happy consumers,” he said.

Early growing areas had a little bit of frost, but the middle of the season crop had very good pollination conditions, said Tim Smith, Washington State University extension agent.

He said tree fruit experienced a great winter with sufficient chilling hours and the crop is projected to be earlier to market than the past four or five years. Water for irrigation also is plentiful, Thurlby said.

“We’ve had really good weather, lots of bees flying and blooms opening in a uniform manner throughout the districts,” said Loren Queen, marketing and communications manager for Domex Superfresh Growers.

From the beginning of harvest, there should be fruit size to address all customers’ needs, said Keith Mathews, chief executive officer of FirstFruits Marketing of Washington LLC.

 

Sales opportunity

The short California crop will set the stage for a terrific start to the Northwest cherry season, said Steve Lutz, vice president of marketing for Columbia Marketing International, Wenatchee.

With the start of Washington cherry volume, consumers will have their first real opportunity to purchase cherries at a competitive price.

The average f.o.b. price for Washington cherries in 2013, for all varieties and packs, was $38.02 per box, according to the U.S. Department of Agriculture.

That was up strongly from an average of $26.13 per box in 2012 and slightly above the 2011 average of $34.04 per box.

“From our perspective up here, (California’s short crop) creates a really strong opportunity for retailers to come in hard and selling aggressively when the Northwest season starts because they will have a consumer that should be very hungry for our product,” Lutz said.

The progress of f.o.b. and retail pricing for cherries may depend on how quickly the crop flows into the market.

Last year, CMI category statistics showed the U.S. average retail price for all of 2013 was $3.52 per pound, up from $2.85 per pound in 2012.

F.o.b. prices may start the year very high, similar to last year, said Jon Bailey of The Dalles, Ore.-based Orchard View Farms, whose cherries are marketed by The Oppenheimer Group, Vancouver, British Columbia.

There could be limited ads for June, with more spot business early, he said.

“We need to get down quickly by July or the end of June to more reasonable (prices) to make sure we have got momentum and ads placed for July Fourth and throughout July because July will be a huge month for the Northwest,” he said.

“It is always difficult lowering the price, but we have got to get there,” he said.

July promotion opportunities should be stellar, Lutz said.

“The old notion of the crop peaking at around the Fourth of July and then tailing off has really been rendered obsolete in the last few years,” he said.

“Retailers can plan and know that they will have promotable supplies all through the month of July,” he said.

Queen said Domex Superfresh is looking for retail ad support throughout the season from its retail customers, asking for one ad in June, three in July and one in August.

“We definitely want to encourage as many ads as possible,” he said.

The USDA reported the lowest retail ad price for cherries during the 2013 Washington season — $3.19 per pound — occurred the week of July 19.

In 2012, the lowest ad price of $2.51 per pound was recorded the week of Aug. 10, and in 2011, the lowest ad price of $2.65 per pound was recorded the week of July 15.

Fourth of July promotions are critical for the Northwest industry, but Bob Mast, president of CMI, said marketers also want ad support for high volume shipping periods the weeks of July 13 and July 20.

Ad prices in the $1.99-2.99 per pound range can move a lot of fruit, he said.

Mast said CMI sets up a majority of its volume on a program basis.

“We try not to lock on pricing for the season, but we can do price locks for one- or two-week periods,” he said.

Last year, f.o.b. prices ranged anywhere from the low $30s to the mid-$50s on red cherries. Rainier variety cherries had f.o.b. prices from the mid-$40s to the high $70s.

The rainier variety makes up about 10% of the cherry category, and Thurlby said some retailers are under-utilizing the variety.

Average retail sales of rainiers as a percent of total cherry sales range from about 3% in some stores to a high of 15% in others, he said.

When visiting with major retailers, Northwest Cherry representatives ask retailers to assess their percent of sales of rainier cherries compared with the whole category.

In 2009, heavier volume of rainiers allowed price points of $2.99-3.99 per pound, Thurlby said. In subsequent years, the average retail price for rainiers has moved up to $3.99-5.99 per pound.

Even so, Thurlby said the 2009 crop year introduced more shoppers to the rainier, and sales have increased.

“We felt like that the demand has been stronger since (2009). We brought some people into the category,” he said.

 

Organic segment

Organic fruit is less than 2% of the Northwest cherry crop, but Thurlby said growers may be increasing that percentage in coming years.

“I have a feeling at this point that there is not enough organic in the ground to meet the demand that is there,” he said.

Retailers have increasingly mentioned their desire for more organic cherries, Thurlby said.

Suzanne Wolter, director of marketing for Rainier Fruit Co., said while the apple is the gateway item for the organic consumer, organic cherries could boost retail sales.

The greater perishability of the fruit demands greater attention to ordering and rotation, she said.

The USDA reported that the U.S. average wholesale price in 2013 for Washington organic cherries was $79.21 per box in June and $70.54 per box in July.

That compares to the average wholesale price for conventional Washington cherries at wholesale markets of $62.29 per box in June, $47.23 in July and $41.40 in August, according to the USDA.



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