At the Dane County Farmers’ Market in November, cranberry grower Nodji VanWychen proudly lifted a bag of fresh berries and declared, “This is going to help keep our head above water.”
VanWychen is a third-generation cranberry grower who runs the family’s Warrens-area Wetherby Cranberry Co. 110 miles northwest of Madison with her husband, Jim. The VanWychens’ son and son-in-law also grow cranberries at their own marshes.
“I always keep on saying if Grandma has anything to do with it there’s going to be a fifth generation on this marsh,” VanWychen said. “I’m just hoping and praying that that will happen.”
But her optimism faded in December when Cliffstar, a beverage manufacturer, terminated a contract to buy the family’s cranberries — a deal that had been in force for nearly a quarter century.
The problem: too many cranberries.
With a 57 percent increase in cranberry production nationwide from 2002 to 2013 — and sales that continue to trail demand — U.S. growers such as the VanWychens are struggling to create new markets to absorb a growing oversupply of the tiny tart berries grown in marshes.
Wisconsin is at the center of the glut. Between 2012 and 2013, Wisconsin had a 25 percent boost in production, a record-breaking harvest of 6 million barrels of cranberries. The state produced 67 percent of all cranberries harvested in the United States in 2013, marking the 19th consecutive year as the country’s leader in cranberry production, according to figures released in July.
VanWychen believes the industry must do even more to boost demand for their crop.
“One thing we learned (was) how to grow them too well,” VanWychen said. “We didn’t keep up with the marketing portion of our industry.”
The glut also has led to a widening gap in the earnings between independent growers, such as the VanWychens, and those who supply Massachusetts-based Ocean Spray. The cooperative, which dominates the industry, has been sued for allegedly deliberately driving down the cost of the commodity — a charge Ocean Spray said stems from a misunderstanding of how cooperatives operate.
According to Ocean Spray spokesperson Kellyanne Dignan, Ocean Spray pays some of its growers through sales of Ocean Spray branded products. Those farmers got just under $57 per 100-pound barrel on average for the 2012 crop. Other growers who sell their cranberries to Ocean Spray at the commodity price received just over $22 per barrel on average.
Independent growers are seeing significantly lower prices for their berries. They have gotten as little as $10 per 100-pound barrel — well below the cost of production.
The industry is considering some steps, including controls on how much growers can produce, to reduce the oversupply. Cranberry growers also are working to boost demand overseas and in the United States and to convince the federal government to purchase more of the crop.
Roots of overproduction
Growers and industry leaders have attributed the overproduction to a variety of factors.
One is the popularity of sweetened and dried cranberries — branded as Craisins by Ocean Spray — which has led some growers to plant more cranberries. Growers in Canada also have increased production. Some growers say Ocean Spray has encouraged both Ocean Spray and independent growers to plant more acres of cranberries, partly fueling the oversupply.
Tomah-area independent grower Linda Prehn of Prehn Cranberry Co. said Ocean Spray asked both independent and Ocean Spray growers in 2008 to plant thousands of more acres nationwide. Berries take between three and five years from planting to harvest.
At the time, independents were earning more than Ocean Spray growers, and some were leaving the cooperative, Jim VanWychen said. He believes Ocean Spray was encouraging additional production to drive down prices and bring the prices for Ocean Spray growers closer to what independents were earning.
“It’s because they had lost growers that went independent,” he said. “So Ocean Spray said, ‘For us to maintain our market, we need this many acres.’ At the time, the independents and a lot of our Ocean Spray neighbors questioned, ‘Why do we need that many more acres?’”
Prehn said the handler who markets and arranges sales of her berries had told her the industry did not need more cranberries at the time, but Ocean Spray did, “which I thought was really very, very interesting.”
Dignan said Ocean Spray’s own projections called for more fruit to keep up with demand for its products.
She cited a report from the Wisconsin State Cranberry Growers Association in 2008 that also said the industry as a whole needed 5,000 additional acres to meet market demand in the next five to 10 years, which would add a projected $75 million a year to the state economy and 1,115 jobs.
But now there are too many berries. To help farmers facing oversupply, independent grower Prehn created the United Cranberry Growers Cooperative four years ago to unite and organize independent cranberry owners who are not part of Ocean Spray.
Ocean Spray executives attribute the oversupply to growers attempting to meet demand for the fastest growing product in the industry: sweetened and dried cranberries.
“I think we’ve had a long period of success over the last decade … because of Craisins,” said Dan Crocker, vice president of cooperative development for Ocean Spray. “That has helped increase returns to growers over that time period, and when growers get increased returns, they often reinvest in their farms.”
Tom Lochner, executive director of the Wisconsin State Cranberry Growers Association, said the price of cranberries ebbs and flows, but there is a longer price cycle because cranberries take years to reach harvest.
“With cranberries, you plant, you wait three to five years for your crop, and it takes a couple years to be ready,” Lochner said.
Lochner added while Ocean Spray growers are generally doing better now than independent growers, there have been years when independents did better. Prehn, a former Ocean Spray grower herself, said the cooperative is a mixed blessing. Ocean Spray controls 61 percent of the state’s crop, meaning “it’s not really a free market,” but it also extensively markets cranberries, benefiting all growers.
“(Ocean Spray) creates some headaches, but they create some opportunities,” Prehn said. “You won’t find me to be an Ocean Spray hater, but I choose to compete with them differently, that’s all.”
Despite the oversupply, the cooperative’s bottom line continues to grow. In 2013, Ocean Spray had gross sales of $2.2 billion and net proceeds of $380 million, the latter up 15.5 percent from 2012. Figures for independent growers were not available.
Growers cooperate, no matter who buys berries
Lochner said of the 250 cranberry growers in Wisconsin, about half are independent and half are with Ocean Spray. Some growers have acres with Ocean Spray and independent acres, like grower Dan Tritz of Twin Lake Cranberry Co. in Vesper.
Tritz said he perceives little animosity between the cooperative and independent growers, who work together whether they supply Ocean Spray or not.
“They help each other,” Tritz said. “Anytime I could drive into any growers’ (marsh) and ask them what they do about this or how they do something …We are really fortunate in that way.”
Jim VanWychen hopes the price independents get moves more in line with what Ocean Spray growers are receiving.
“After 40 years in the business, I never foresaw this situation that we’d have that much of a price spread,” VanWychen said. “For the first 25 years we were in business, Ocean Spray always got a little more than what the independents got. And it didn’t bother me because we weren’t doing the advertising. Ocean Spray was doing the advertising and it was no big deal.”
The VanWychens have a “never say never” approach to growing for Ocean Spray; their son Henry and son-in-law Michael Gnewikow have joined Ocean Spray. But these days, the cooperative has a waiting list and is not accepting any new contracts.
Jim VanWychen plans to continue doing tax work to supplement their income as his wife, Nodji, focuses on the family business, giving bus tours of the family marsh, holding roadside sales and hosting a day for members of the public to harvest berries for free.
“We just hope they are so inspired that they’ll buy cranberries before they leave that day,” Nodji said of the public harvest tour. “That’s how we earn our income.”
Attempts to control supply
Due to the widening gap between supply and demand over the past decade, the Cranberry Marketing Committee, a federally chartered body, has recommended using volume control to address the oversupply of cranberries.
The proposal, which must be approved by U.S. Secretary of Agriculture Tom Vilsack, would restrict a grower to selling only 85 percent of a grower’s recent average sales in an effort to drive up the price. Volume control has been used five times since the CMC’s inception in 1962.
Although some growers have expressed concerns about curbing production, Scott Soares, executive director of the CMC, said he expects the proposal to pass.
“Well, I think no one likes volume regulations, but there was a level of acceptance that something needs to be done,” Soares said.
Prehn agreed.
“I think overall the volume regulation is a great tool for the industry to use, but it’s not an endgame for us,” she said. “We don’t want to control our crops every year. We want to sell our crops every year. We don’t do it very often, that’s why there’s consternation when we do it.”
Ocean Spray favors a cap on supply, Crocker said, but prefers a long-term strategy to increase demand.
In a January press release, the Ocean Spray board of directors unanimously supported working with the industry and the Cranberry Marketing Committee to curb the surplus. The cooperative proposed that production be capped at the size of the 2013 crop. Proposed reductions ranged from 7 percent to 35 percent; the committee settled on a recommended 15 percent cut from current levels.
Nodji VanWychen questions whether even a 15 percent reduction is enough.
“I don’t think independents were pleased with the small reduction, but it was clear that OSC (Ocean Spray) wasn’t willing to go any higher,” Ed Jesse, UW-Madison agricultural economist and former CMC member, said in an email interview. “It won’t do much to bring the industry back to a balance, but I guess it’s a start toward that goal.”
Ocean Spray executive Crocker believes the outlook is positive for the industry, including Ocean Spray growers.
“I think (the growers) are confident that Ocean Spray can lead the way by doing the same thing we’ve done for 84 years, which is find new ways to create products that hopefully consumers enjoy around the world,” he said.
The VanWychens have found a new handler for most of their cranberries, Cranberries Limited, a small Wisconsin Rapids company that arranges buyers for their crop.
However, other independents without a home for their berries and limited options for distribution may have to spread them onto fields to enhance soil, something Nodji VanWychen said she “hates to see.”
UW-Madison School of Journalism and Mass Communication students Mary Sussman, Harriet Rowan and Michael Langlois contributed to this report, which began as a project in a reporting class taught by UW-Madison journalism professor Deborah Blum. The nonprofit Wisconsin Center for Investigative Journalism (www.WisconsinWatch.org) collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by the Center do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.
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