Monday, October 29, 2007

the cranberry cartel: it's not just for breakfast anymore

In a piece in today's C-J about foreigners acquiring a taste for American cranberries, we read some interesting details about this native fruit.

Cranberries aren't found in just beverages and Thanksgiving side dishes. Papadellis said Ocean Spray has cranberries in more than 1,000 products.

Some of the newest items include ice cream topping, crackers, pancake mix, soap and lotions, said Tom Lochner, executive director of the Wisconsin State Cranberry Growers Association.

Wisconsin, the nation's top cranberry-producing state, expects to harvest 3.9 million barrels of the tart fruit this year, more than half the crop produced nationwide

That's followed by Massachusetts at 1.8 million, New Jersey at 520,000, Oregon at 500,000 and Washington state at 180,000.

The cranberry is one of only three fruits native to North America, along with the blueberry and the Concord grape.

And then there are a few tangents related to economics and politics...

The Cranberry Marketing Committee began promoting the product outside the country in earnest in 1999, said Michael Rucier, the committee's export promotion manager. Foreign sales represented 14 percent of the market that year, at nearly 898,000 barrels. That increased to 27% of the market last year, with more than 1.67 million barrels shipped overseas.

OK, so far, so good: a group agreeing to coordinate its efforts to promote their product.

The committee was created in 1962 to maintain a balance between supply and demand in the U.S. cranberry industry. It was changed in 1992 to allow the committee to promote the sale and use of cranberries and cranberry products.

Whoa! "Maintain a balance between supply and demand"? The market takes care of that, nicely, by itself! Translation? They wanted to control/restrict/reduce supply to keep prices artificially high. According to this story, the strategy changed in 1992, but the Ocean Spray co-op has been sued for anti-trust violations since then.

"The bottom fell out of the market" in 1999, and prices plummeted, Rucier said. "We had a lot of inventory and no place to sell it."

Translation: The cartel fell apart. In economics, it's common to note that voluntary cartels are difficult to establish and maintain. That's why they typically rely on the government to mandate higher prices and lock out their competitors.

Generic marketing of cranberries overseas is financed primarily through assessments collected from growers by the Cranberry Marketing Committee on each barrel produced and through grants provided by the Agriculture Department, Rucier said.

Again, there's a big difference between a voluntary agreement to share advertising costs-- and a coercive arrangement with the government where politicians take the average taxpayer's money and give it to generally wealthy cranberry farmers. I hope this doesn't ruin your Thanksgiving meal, but it's probably better to know that cranberry farmers are eating "pork"-- not just for T-day but all year round.


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