Cherries-More or Less?

Michigan farmers are among the top 10 producers of about 40 different crops. They lead all other states in at least a half-dozen. Surprisingly, however, some Michigan farmers are looking to cut back on their lead in at least one category-tart cherries.

The tart cherry growers of Michigan are the biggest producers of cherries for pie fillings, jellies, jams, and juices. Last year's production was so high-in large part because of ideal weather-that many producers now want the federal government to impose a "marketing order" to limit future supplies. Through these orders, producers can not only fix the volume that is allowed onto the market, they can also regulate the color, size, and shape of the commodity. Under a proposed marketing order that may soon be established, tart cherry growers would limit their annual production to no more than 110 percent of the preceding three years' average.

Agricultural marketing orders started in 1937. They were thought of as a way to keep the supply of perishable crops steady at a time when refrigeration was not yet reliable, transportation was sometimes slow and difficult, and cross-country market information was sketchy at best. Today, advances in refrigeration, transportation, and communications combined with breakthroughs in plant physiology have produced a very different situation.

The very nature of tart cherries and their ultimate use also call into question the purpose of marketing orders. Grown primarily in Washington state, sweet cherries sold as fresh produce operate under a marketing order, just like California navel oranges that consumers buy in the grocery store. Tart cherries, however, are not sold as fresh produce but rather are processed into value-added products like the Florida oranges that are raised for juice. Long ago, and for good reasons, Florida orange growers rescinded their participation in a federal marketing order: they knew that artificial limitations on supply would hurt the state's citrus industry in the long-term.

The proposed cherry marketing order could actually cause more long-term damage to the industry than did last year's over production or even this year's unexpected late frosts. Food manufacturers who face declining quantities and increasing prices for cherries will steer clear of innovation and the marketing of new products made from cherries. Ultimately, the higher prices caused by a marketing order could erode even the existing markets for stalwarts like juice, jelly, and pie filling. Developments like that could also hurt jobs in related, non farm businesses in small towns across Michigan.

Economist James Bovard, in his remarkable 1989 book, The Farm Fiasco, says this about federal marketing orders: "While the federal government spends tens of thousands of dollars a year imposing restrictions on spearmint farmers, peppermint farmers are allowed to grow and sell as much as they choose. . . . The USDA forces farmers to abandon most of their fresh lemons, while the entire fresh lime crop is sold on the market without disruption. . . . Avocados were under strict marketing orders until 1973. After controls were lifted, the real price of avocados fell by 23 percent and avocado consumption increased fourfold: Both producers and consumers were better off."

Consider the example of peanuts. They are regulated by an inflexible program that, like a marketing order, limits production and inflates prices. That fact, plus heightened concern about fat content, has prompted U.S. food manufacturers to move away from developing and marketing products that include peanuts. Since 1990, food use of peanuts has declined almost 10 percent. Snack food uses of peanuts have declined more than 11 percent. Production of peanut butter, the largest single food use of peanuts, is down nearly 19 percent. The net effect of a new marketing order for tart cherries could be similar.

On the other hand, with a plentiful supply of fruit, the so far successful research into a hamburger additive made of cherries could yield big dividends for Michigan in the global market. In the emerging economies of the Far East, the potential for "cherry burgers" and other innovative products seems especially promising.

Ironically, the cherry marketing order proposal comes at a time when global demand for consumer-ready food products is at an all-time high. While U.S. producers and are considering schemes to restrict production, Europeans are targeting the fast growing Asian market for advertising and marketing promotion of their canned tart cherries and pie fillings.

Last year's bumper crop and low prices caused some problems for Michigan tart cherry growers, but artificial controls on supply backed up by the federal government are not a dependable answer.