The History and State of the Wisconsin Cranberry Industry

Cranberries have always been synonymous with eastern Massachusetts and Cape Cod. Massachusetts residents may not realize that the biggest cranberry producer in the U.S. is now Wisconsin, having overtaken Massachusetts in 1995. It was in the 1860s that Wisconsin first began cultivating its native cranberries, and it began expanding its bogs by the early 1900s. By the middle of the twentieth century Wisconsin became a major industry player, and it now produces over half the country’s cranberries.

Traditionally cranberries had been only a seasonal item, used in sauces and eaten fresh during the holidays. However, in the 1970s demand began to rise, as processors started blending cranberry juice with sweeter juices, and touting its health benefits. As additional health benefits, such as antibacterial properties, became known, demand soared in the 1990s, causing prices to rise quickly, from $40 per barrel in 1989 to $65 per barrel in 1997. Production costs were only $30 to $45 per barrel and growers responded to the increased profits by expanding their production. Acreage in Wisconsin was added at a rate of almost 1,000 acres per year from 1993 to 1998. By the year 2000 Wisconsin’s area harvested was up to 14,000 acres, compared to only 6,000 in 1970. Additionally yield per acre was up to 226 barrels in 1999 from only 100 in 1970.

Unfortunately, in their attempt to take advantage of high prices, growers’ expanding production caused a disastrous decline in prices several years later. One contributing factor to the declines near the end of the century was that establishing fully productive cranberry bogs takes up to five years. By the time new bogs were in operation, the demand boom had declined. People would only buy so much cranberry juice, and there was now competition from other fruit juices and health products. As production increased despite waning demand, year end inventories went from 20 or 30 percent of sales, which was the norm, to over 50 percent of sales. By 2000, grower prices had plummeted from a high of $65 per barrel in 1997 to just over $17.

To cope with the decline, a federal marketing order was established to restrict supply and stabilize prices. The federal marketing order uses two methods to restrict supply. One is handler withholding, in which handlers limit sales at commercial locations to a certain percentage of receipts. The other method used, producer allotments, restricts growers’ deliveries to commercial locations to a certain percentage of their average historic deliveries. It was the latter method that was enacted in July of 2000, at 85 percent of sales histories. However, because supply controls were not enacted until July, growers could not alter current production, and little improvement in prices or inventories was seen. In 2001 the allotment was decreased to 65% of sales histories. Additionally, Congress gave $20 million for market loss payments to growers and $30 million for USDA purchases of cranberries for domestic food programs.

Since 2001, Wisconsin’s prices have stabilized and even risen, from the low of $17.40 in 2000, to $36.30 in 2006. Wisconsin production decreased from 3.3 million barrels in 1999 to 2.7 million in 2001. Since then production has again started increasing, reaching 3.9 million barrels in 2006. However, this time the increase in supply has not yet caused prices to decrease.

 

Sources:

Jessey, Ed. “Status of the Wisconsin Cranberry Industry” Department of Agricultural and Applied Economics, University of Wisconsin Madison.

National Agricultural Statistics Service