Sunday, September 06, 2009

Farmers Dump Cherries And Let Them Rot

The article is Bumper Cherry Crop Turns Sour: Tons of Unharvested Fruit Rots Under Government Program to Keep Prices Stable. Farmers are destroying their cherries to reduce supply and drive up the price under an old government program. Here are the key exerpts:

"Under a Depression-era federal program designed to keep prices from plummeting, tart-cherry farmers are being told by fruit processors to leave up to 40% of their crop unharvested."

"Thanks to ideal temperatures and fewer frosts, the crop is expected to be the biggest in eight years."

"But the big harvest is coming in just as the troubled economy has exacerbated weakening demand for tart cherries."

"The tart-cherry industry operates under a government-sanctioned plan called a federal marketing order that dates to 1933. It allows farmers and processors to legally regulate supply to keep prices stable."

"Some farmers say they would like to see their cherries donated to food banks, but the cost of processing them is too expensive."

One additional point. They sometimes put cherries on reserve in bumper years like this but there is so much surplus that only a small amount is being used for that. If they did not destroy cherries, the price would fall. But the government policy says the price has to be maintained. The farmers' gain, however, means higher prices to the consumer than would occur without the policy.

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