State wants growers to bog down

Offers $40,000 grants to those who agree not to develop land

By Charles Mathewson
� 1999, MPG Newspapers

PLYMOUTH- Cranberry growers got an offer for help Friday. It's an offer many can refuse. They wonder if it's enough to save their farms.

Approximately 150 growers participated in a symposium at the Sheraton Inn Plymouth. They learned the state will offer $40,000 grants in exchange for an agreement not to develop their land for 10 years.

"Our growers must increase the efficiency of their operations and lower costs to remain competitive," said Jeff LaFleur, executive director of the Cape Cod Cranberry Growers' Association. "These programs will provide the means for Massachusetts' cranberry farms to remain a strong force in the now global cranberry industry."

No longer kings of the cranberry industry, local growers have to find new ways to remain competitive or sell the farm. Collectively, they own thousands of acres of developable land around their bogs. They could dump all those acres onto the housing market and retire from an increasingly losing proposition. Such a move would further stress local governments trying to maintain a reasonable balance between commercial and residential land.

"It's discouraging. You put your heart and soul into something for years and overnight you have no income, no equity." Wayne Barnes

"The meeting helped us put things into focus," said Wayne Barnes, a Plympton grower and past president of the Cape Cod Cranberry Growers Association. "It's discouraging. You put your heart and soul into something for years and overnight you have no income, no equity."

Cranberry cultivation began here. Marketing the bitter little berries as sweet sauce for Thanksgiving and sweet juice year round was invented here. Massachusetts cranberry growers generated $139 million in cash receipts in 1997. Cranberries are the second largest crop in the state, behind nurseries and greenhouses. Tending the 14,600 acres of bog has generated more than $200 million in payroll for 5,500 people statewide. No more. And Plymouth County has 70 percent of the state's bog acreage.

Massachusetts now ranks number two, behind Wisconsin, in berry production. Not that the Bay State production has fallen, but the Midwestern production has risen. The competing regions have not only increased acreage under cultivation, they've increased the productivity per acre. While the competition rages, demand has remained steady. The result is a glut on the market for both states.

To protect wetlands, Massachusetts banned creation of new bogs except in "perched wetlands." Former wetland bogs can be restored. New bogs can be built in uplands into which the grower pumps water.

The environmental protection regulation prompted the state of Wisconsin to lure growers there with tax incentives. Northland Cranberry Corporation and numerous smaller growers built new, big, easily picked and maintained bogs to compete with the old, irregularly-shaped, difficult to pick bogs of Massachusetts.

The resulting competition has caused inventories of stored berries to rise from 1.1 million pounds in 1994 to 4.9 million in 1999. The average price per barrel hit a high of $70 in 1996 and plummeted to $40 in just two years. Total cash receipts have dropped in half. The most recent projections from Ocean Spray put the estimated price per barrel for wet-picked fruit at $10.50. An estimate of future return, called the float, raises the price to $20.50. The float has not been realized for two years.

A Kingston grower, standing on the bank of one of his bogs, asked no one in particular, "Anything else you can use this land for?" Still weighing his options, he prefers to remain anonymous.

The most obvious option is residential development. In addition to those 14,600 acres of bog, growers own 48,000 acres of upland. They need very little of it to produce cranberries, but pay property taxes on all of it.

The state's department of food and agriculture has extended its Farm Viability Enhancement Program by creating the Cranberry Viability Program. It offers growers up to $40,000 to ease the recent economic blows and a series of seminars to help them plan and execute their businesses more efficiently.

"The Cranberry Viability Program is designed to keep cranberry businesses viable during these challenging times," said Jonathan Healy, commissioner of food and agriculture. "We hope to achieve this by improving production and/or reducing costs and by preserving developable land in Southeastern Massachusetts from unbridled growth."

Environmental Affairs secretary Bob Durand has transferred $2 million to Healy's department to offer as grants to growers. Bog owners with at least 10 acres of upland are eligible to receive a grant of up to $40,000. In exchange, they must sign a covenant promising not to sell their upland for development for 10 years.

"Isn't that just a drop in the bucket," said Peter Stearns, a South Plymouth grower. "Look at the numbers. None of our expenses justify what you can make."

The numbers are as hard as a fresh-picked Early Black cranberry variety.

It costs, on average, $5,900 an acre to keep a cranberry farm running. With the known numbers of 1998 harvest, growers lost, on average, nearly $1,000 per acre. If the current projections hold for the 1999 harvest, they will lose nearly $3,000 for every acre they keep in production.

"Ocean Spray is saying we'll make $17 to $20 a barrel," Peter Stearns said. "In reality that's $15 for the majority of growers who wet pick. For those who dry pick, with the labor costs, the difference is more than made up. It takes 18 months to get paid. I have to say now, where can I cut my costs for 2001 when I've already cut."

"I've had to lay off employees that worked for me for 10 years," Barnes said. "I've gotten an outside part-time job. There's no money coming in from cranberries now, so you do what you need to do."

Because an average of 40 percent of the cost of running a bog comes from labor, growers have cut there first. They can't cut back on property taxes. If they cut back on bog maintenance they risk losing their bogs when and if the market improves.

"The dilemma is, who's going to do the work in the meantime?" Stearns said. "As an owner, I can only do so much. Before I walk onto a bog, I have property taxes, electricity payments, insurance bills. You can take out some capital expenses, like not clearing ditches or cutting back on herbicides, but that only comes back to hurt you."

To survive, growers may have to spend more money they don't have.

"In Wisconsin and Canada growers are getting a consistent 200 barrels and acre," Barnes said. "They're using newer hybrid varieties. A third of my bogs are Early Blacks. They don't have the size and the vines are more delicate. I'm lucky to get 150 barrels an acre. I've also been growing the Stevens variety since 1983. You have to mess up pretty bad not to get 200 barrels and acre. The problem is, it costs money to take the old vines out and plant new. Then it takes five years before you can harvest."

That's why the development option looks attractive. Selling upland could pay for improvements to the bogs and get growers through the bad times. When growers can get $50,000 to $75,000 an acre for their upland, the grant program doesn't offer much counter-incentive to development. They can only get $15,000 an acre for the bogs.

"But I don't want to subdivide," Barnes said. "My family lives on the farm. We don't want to give up the land."

"You hear guys saying they've cashed in their life insurance," said Will Stearns, a West Plymouth grower. "They've cancelled their health insurance. They know it's going to be tough or impossible to get loans to bring in the next harvest. They don't want to lose their land."

In the larger arena, growers rely on Ocean Spray and Northland to expand the market for their product. Ocean Spray is expected to announce the appointment of a new CEO within the next two weeks. The two frontrunners for the job are reportedly hardliners who have turned other failing businesses around.

The board of directors at Ocean Spray had a buyout offer from Coca Cola. It would have ended the growers' cooperative. It would have given the growers a world-wide beverage market. By a 13 to 11 vote, the executive board turned the offer down. The Massachusetts representatives voted in favor of the buy-out. The Wisconsin majority voted against it.

The Wisconsin growers have newer, less expensive bogs built for ease of harvest. The Massachusetts growers have the original bogs, constricted to the shape of the wetlands, with generations of re-sales and resultant mortgages attached.

"They can outlast this thing," Will Stearns said. "We can't."

"They know that's true," Barnes said. "They consider us hobby farmers. Most of their spreads are 50 acres of bog or more. Half of ours are 20 acres or less."

These growers won't take advantage of the $40,000 grant program and haven't heard from anyone who plans to.

"If they can grow cranberries cheaper in Wisconsin and Canada, that's where the industry will go and we'll be done here," Barnes said. "We're hoping we can survive this thing. We know we have to cut costs, improve production and find new markets or we're not going to survive. We know we have a lot of Yankee ingenuity."