Bitter Times in Cranberry Bogs
Aug. 25, 2000 -- The business of growing cranberries is running low on juice.
An enterprise that for decades provided a nice living for hundreds of families, mostly in small coastal towns in the Northeast and the Pacific Northwest, now is a ticket to the poorhouse.
A barrel of cranberries that costs $35 to $45 to produce will certainly fetch less than half that this fall. That’s because there’s already too much of the stuff harvested last year and not yet sold, as much as 80 percent of what the world wants in an entire year. What’s left of last year’s crop now goes for $17 a barrel, and “everyone expects things to get worse before they get better,” says Aubrey Davis, who tracks cranberry production for the U.S. Department of Agriculture. So producers — particularly the family growers tending bogs of 15 to 50 acres — are facing an excruciating choice: Do they tend their crops this year and sustain another loss, or do they sell out?
Too Much of a Good Thing
“It’s tough, watching your income go from making a decent living to barely making enough to pay for chemicals, let alone pay your employees, and not knowing if the crisis is going to end in a year, or two or three,” says Hal Brown.
Brown is a social worker who operates the online Cranberry Stressline, a source of news and opinion about Ocean Spray, the Lakeland, Mass., cooperative of growers. Brown and his wife, Betty, a librarian, grow cranberries on 38 acres in Middleborough, Mass. “The feeling is that the last one standing is going to make it,” Brown says. “If people have outside jobs, maybe they can hang on.” Whether families like the Browns decide to tough it out or get out depends in large part on their faith in Ocean Spray’s ability to bring demand back in balance with supply. Ocean Spray is the nation’s biggest producer of cranberries, with 1999 revenues of $1.36 billion, about 800 growers and some 70 percent of production. But competitors, including Wisconsin-based Northland Cranberries Inc., are in the same predicament. It’s a mess, by and large, of the industry’s own making.
Growers Squeezed for Ad Campaign
“There was a gold-rush mentality in the mid-90s,” explains Ocean Spray spokesman Chris Phillips. With cranberries fetching more than $60 per 100-gallon barrel, growers brought new acreage into cranberry production, particularly in Wisconsin and Canada and often at the urging of Ocean Spray. About one-quarter of the nation’s acreage has been added since 1994, largely in Wisconsin. Ocean Spray and rival Northland asked the government to impose a limit on this year’s production, and earlier this summer the Agriculture Department complied. Under its market-limit order, growers can bring to market this year 85 percent of their average production from previous years. The idea is to help drive up prices a little to help growers hang on until Ocean Spray and others can stimulate consumer demand. But marketing campaigns cost money, and as a cooperative Ocean Spray has a harder time raising capital than public companies. “For struggling growers who have to pay for a revival of the industry, that’s an extraordinary sacrifice,” acknowledges Phillips.
New CEO a Brand Builder
Still, the mood is upbeat at Ocean Spray, where there’s a sense that the management team brought in to turn around the struggling company has a winning plan. The hopes are pinned on Robert Hawthorne, hired in January as Ocean Spray’s chief executive. Hawthorne, 55, brought a reputation as a brand builder after turning around the Alpo pet foods brand in the early 1990s. The new CEO also brought in a fresh management team and reorganized Ocean Spray’s board. The leadership is confident it can boost demand for cranberry drinks with what co-op spokesman Phillips calls “a litany of new products and new packaging.” Phillips also said the cooperative is preparing a new ad campaign that calls attention to the health benefits of cranberry juice, based on studies suggesting cranberries act as an antibiotic. Out in the bogs, there’s a mixture of hope Hawthorne is the answer and skepticism that any changes will come soon enough to prevent the trickle of farms being put up for sale from becoming a torrent.
Many growers, says Brown, still harbor resentment over how growers in the largest single producer in the Ocean Spray collective were allowed to split off in 1993 to form Northland and begin marketing beverages and sauces. Worse, Northland’s line of all-fruit juice products were more in tune with the times than Ocean Spray’s trademark cranberry juice cocktail, laden with corn syrup and other sugary sweets. And some growers remain frustrated that the Ocean Spray board last year narrowly defeated a proposal to offer the cooperative for sale to a deep-pocketed company like PepsiCo or Coca-Cola, each of which owns divisions that market citrus juices and have explored branching into so-called red drinks.
Taking the Long View
But maintaining the cooperative’s independence was the right move, says Don Hatton, a former Ocean Spray board chairman who grows cranberries with his wife on 22 acres near Grays Harbor, Wash., and augments his income by raising oysters and catching salmon. Hatton is tending his cranberry patch this year knowing he’ll lose money doing so. “I’m going to do it this year, and probably next year, because it’s been a good industry for us,” he says.
Hatton believes Hawthorne has Ocean Spray headed in the right direction, and that within a couple of years it will again be possible to make a good living growing cranberries.
But how many growers can hold on until prices bounce back?