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CASE NUMBER: 467
CASE MNEMONIC: CHERRYMX
CASE NAME: Mexico Markets Opens to U.S. Sweet Cherries 
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I. IdentificationOn February 20, 1997 the Government of Mexico announced that it would admit the sale of U.S. sweet cherries for the first time in six years. Mexico's decision to allow for the importation of U.S. cherries closely follows Washington's determination to allow imports of Mexican avocados, a long-standing issue that complicated U.S.-Mexican trade relations (The Journal of Commerce, Feb. 1997). U.S. cherry exports to Mexico could reach $20 million to $30 million, according to Ken Severn, president of the Northwest Cherry Growers' Association. This would put Mexico ahead of other lucrative markets such as Hong Kong and Taiwan. In addition, the cherry case is the first resolution of an agricultural dispute under the North American Free Trade Agreement (Puget Sound Business Journal, Feb. 1997).
Mexico's Ministry of Trade and Industrial Development (SECOFI) had allowed U.S. sweet cherry imports until 1992, when it closed Mexico's markets as part of a review of border controls. SECOFI became concerned that imported U.S. cherries might bring with them two insect pest: the apple maggot and the plum curcullo. After the Mexican government closed its markets to U.S. imported cherries, Mexico's Health and Safety Office (Sanidad Vegetal) demanded that all sweet cherries coming from the U.S. be fumigated. According to Mexican Sanidad Vegetal, the fumigation procedure would prevent the propagation of the apple maggot and the plum curcullo. The U.S. sweet cherry producers objected and argued that there was no scientific justification for the required fumigation (Journal of Commerce, Feb. 1997). The U.S. industry claims that the apple maggot is deep in the core and that the plum curcullo cannot be found in California. Different types of non-tariff barriers (NTBs) involving stringent food safety and pest control rules have been an important issue in opening new foreign markets. However, Mexico and U.S. have employed these NTBs tactics to protect domestic producers as traditional barriers such as quotas, tariffs and duties are lowered or eliminated under trade agreements.
Supporting the views of the U.S. cherry industry, a North American Free Trade Agreement agricultural dispute panel ruled in 1995 that cherries could move safely to Mexico without fumigation. However, the Government of Mexico did not actually agree on a procedure until the avocado dispute was settled in early February 1997. The panel's decision on U.S. cherries outlines a work plan which requires that a certified "pre-season inspection" take place. The inspection will cover 1% of the packed fruit, done on-site visits by state and county agriculture acting for the USDA's Agricultural Plant and Health Inspection Service commissioners (NAFTA Office, U.S. Department of Commerce). .
Mexico agreed to the panel's decision, but devising a work plan outlining production, packing and inspection guidelines for the cherries got caught up in Mexico's long running trade battle to open the U.S. avocado market. The avocado market had been closed to Mexico since 1914 until last week when the U.S Department of Agriculture decided to open it. This opening however, is very restrictive and only allows Mexican avocados to a few U.S. states during very specific periods of time.
"When the U.S. Department of Agriculture recently finalized a rule ending the avocado import ban, experts and shippers thought that logjams in Mexico covering other agricultural barriers such as cherries, nectarines, peaches and grapes might soon fall" (Journal of Commerce, Feb. 1997). As a result of the NAFTA panel decision, cherries are the first product to benefit. There are no set dates for the other products.
The First Cherry:
European settlers had hardly stepped on the soil of the New World before they began planting cherry trees. Early French colonists from Normandy brought pits that they planted along the Saint Lawrence River and the Great Lakes. Cherry trees were part of the gardens of French settlers as they established such cities as Detroit, Vincennes, and other Midwestern settlements.
Peter Dougherty, a Presbyterian missionary, is credited with planting the first cherry orchard and, in essence, getting the cherry industry started as a commercial enterprise in the Midwest. Against the advice of local Indians who had grown other fruits in the area, Dougherty planted a cherry orchard in 1852 on the Old Mission Peninsula. This peninsula is a narrow strip of land that juts out into Grand Traverse Bay near Traverse City, Michigan. Much to the surprise of the Indians and others, Dougherty's cherry trees flourished and soon other residents of the area planted trees. The area proved to be ideal for growing cherries because Grand Traverse Bay and nearby Lake Michigan help to temper Arctic winds in winter and cool the orchards in summer (CMI Export Information).
Cherry Industry in the U.S.:
The sweet cherry is a drupe or stone fruit that belongs to the genus Prunus, along with almonds, peaches, plums, and apricots. Both sweet and sour (or tart) cherries belong to the same family, osaceae, but different species; Avium is the sweet cherry species and Cerasus is the sour species.
Most U.S. sweet cherries are grown in the West. Washington and California supply mainly dark, sweet Bing cherries intended for fresh use, while Oregon and Michigan provide light-colored Royal Ann (Napoleon) cherries for the maraschino process. Overall, there are more than 500 sweet cherry orchards, but less than 20 are currently commercially important in the United States.
Production of sweet cherries in the nine states reported by USDA (Washington, Oregon, California, Michigan, Pennsylvania, New York, Montana, Idaho, and Utah) has fluctuated during the last 10 years from 430 million pounds in 1987 to only 265 million pounds in 1997. Washington has been the leading producer, with an average 154.5 million pounds in 1991-97, followed by Oregon (84 million pounds), California (69 million pounds), and Michigan (47 million pounds). Acreage has risen since the mid-1980's in California and Washington, but has declined in Michigan and Oregon.
About half of the U.S. sweet cherry crop is typically used fresh and half is processed. Cherries may be processed that cannot be effectively marketed during the short harvest season, or that are undersized and/or blemished and do not meet fresh-grade standards. About 70 percent of the sweet cherries processed in 1991-94 were brined, about 10 percent were canned, and nearly 20 percent were frozen, dried, or used for juice. Brining is the first step in the maraschino process.
Michigan and Oregon accounted for 64 percent of U.S. brined cherries during 1991-94. Most premium-quality handpicked cherries with the stems attached (used in making cocktail-style maraschino cherries) are produced in Oregon. Michigan produces the smaller, stem less maraschino cherries that are used in fruit cocktail. These cherries are likely to have been machine harvested.
Sweet cherries have a relatively short season and the marketing periods for the major producing regions only partly overlap. Prices, consequently, are more closely related to the size of supplies from individual areas than to national output. Grower prices (all sweet cherries) in Oregon and Michigan, where the bulk of production goes for processing, generally average lower than in California and Washington.
All commercial sweet cherry trees are propagated vegetatively. None are grown from seed. Commercial sweet cherry orchards are planted with nursery trees produced by "budding" a selected scion onto the desired rootstock. The rootstock provides the lower trunk and root system, while the scion forms the top of the tree. Budding consists of inserting a dormant bud of the desired
sweet cherry variety into a t-shaped slit in the bark of a year-old seedling just above ground level. When the bud grows, the branches associated with the rootstock seedling are cut off and the bud becomes the new tree.
Pollination is required to ensure adequate fruit set. Nearly all sweet cherry cultivars are completely self-incompatible (cannot be fertilized by the pollen of the same cultivar), and some groups of cultivars are cross-incompatible, such as Bing, Lambert and Napoleon (Royal Ann). Carefully chosen varieties are planted in orchards mainly for pollination purposes. Honeybees are the main pollinating agent for sweet cherries. Growers normally rent hives of bees and place them in the orchards during bloom.
Cherry trees require extensive pruning and training to produce a limb/branch configuration that will maximize productivity. Pruning and training cherry trees is labor intensive. Some pruning is needed annually on all trees to maintain a good supply of fruiting wood.
Most sweet cherry trees in the western U.S. are irrigated. Irrigation is beneficial to sweet cherry trees during dry spells, but too much water is detrimental to the roots. Under-the-tree sprinklers (drip and trickle systems) are typically used to avoid rain-cracking and disease hazards that
can accompany overhead systems that wet the fruit.
Sweet cherry trees begin to bear fruit 4-5 years after planting and reach peak production after 8-10 years. Sweet cherry varieties mature at about the same time each year. Some varieties in California are ready for harvest in mid-April and the rest by early May. Harvesting begins in Oregon and Washington in early June, about 65 days after full bloom. Most of Michigan's sweet cherries are harvested in July.
One of the most common production perils affecting sweet cherries is rain near harvest-time, which causes "rain cracking." Cracked cherries are susceptible to fungal infection and the fruit is not marketable. Sweet cherries are most susceptible to cracking during and just prior to harvest. Rain drops striking mature cherries will frequently cause the skin to split or crack. Cracking results from direct absorption of water through the fruit skin, not from excess soil moisture absorbed through the roots.
Freezing temperatures are another common peril. Sweet cherry buds are especially susceptible to spring frosts during a period of time before the blossoms are fully open. The fruit are also subject to disease infestations, as well as insect, bird, and rodent abuse.
California has always had a reputation for producing quality fruits. In the San Joaquin and the coastal valley regions of Hollister and Gilroy, cherry orchards thrive in the mild climate. Every tree is exposed to the perfect balance of nutrient-rich soil, warm, sunny days and cool nights. Hazardous freezing temperatures, even in the winter months, are rare. This ensures optimal budding and bloom conditions which lead to bountiful harvests. With such fertile soil and fantastic weather, it makes perfect sense that California is one of the top three cherry producers in the United States (California Cherry Advisory Board).
Bing This popular cherry has red/mahogany-colored skin and flesh. The stone is relatively small, while the fruit itself is crisp, firm and juicy. Consumers enjoy its sweet, rich flavor, which is the reason that it's the dominant variety.
Rainier This cherry is recognizable by its golden/pink blushed skin color. It's a finely textured variety with firm, clear flesh and colorless juice. The Rainier offers consumers a very sweet, delicate flavor.
Lambert This heart-shaped, dark red cherry is slightly smaller than the Bing. It has a sweet, rich flavor and moderately firm flesh. The Lambert variety is also a favorite among consumers.
Vans Vans This late-season cherry is appreciated for its refreshingly sweet taste and deep red color. Consumers love to snack on Vams, one after another.
Unlike peaches and nectarines, a cherry tree is normally picked only once per season , the exception being Rainier cherries. Only tart cherries like Montmorency, are truly "cherry red" or cerise color. Dark, sweet cherries, like Bing, should be a deep mahogany to be truly appetizing. Cherries which are too ripe, too immature, or too small, are graded out and used for processing, or discarded. It is always tempting to harvest a valuable, but perishable, crop of cherries before full maturity, and before the rain. The fruit is tested daily, or more often, for percent soluble solids (sugar) or Brix. Pickers are expected to discard bird damaged and other unsightly fruit, and to avoid bruising. Harvest begins at daylight and ends before the heat of the July days can make fruit too soft and easy to bruise. Cherries are rushed to cold, usually a hydro-cooler process, at least daily, and more often, three to four times daily. At the warehouse, they are ideally packed and shipped within 48 hours. Modified atmosphere packaging is making it possible to extend the shelf like of cherries to weeks instead of days.)
Look far a dark cherry that is a deep mahogany color, not soft and "pitted" which has bright,
non-wilted stems. Light cherries, like Rainier, should be a creamy yellow with bright red blush. Rainier will normally have a higher Brix, or sugar content, than dark cherries, and should be 10-row larger. In the '40s it was common to hand pack the top layer of cherries (in the lid) then "fill" the box with loose cherries to weight. A 10-row cherry took 10 cherries to fill one row of this pack, a 13-row, 13 cherries, etc. The designation is still used to size cherries, the smaller the number, the larger the fruit. To assure the size, color and flavor you expect from a Rainier, the tree will be picked a minimum of three times, the pickers carrying a "sizing ring" to assure them the fruit will meet the standards required for premium fruit (Rest A While Fruit Stand, Washington Fruit Stand).
II. Legal ClustersThe Government of Mexico has agreed to allow all imports of U.S. Cherries under the Cherry Protocol which is a result of the first quarantine case to be resolved through NAFTA's Sanitary and Phytosanitary Working Group under North American Free Trade Agreement. On February 20, 1997, US Agriculture Secretary Dan Glickman announced that Mexico and the US had reached agreement on allowing the importation of US sweet cherries from Washington, Oregon and California under a "work plan." The US will begin exporting cherries in mid-April from California and at the end of May from Washington and Oregon. Under the work plan, no fumigation is required. There will be a one-time inspection of California grower facilities. The California Cherry Advisory Board has said that the new agreement could lead to initial annual sales to Mexico of more than $20 million.
III. Geographic Clustersa. Geographic Domain: North America
b. Geographic Site: Western North America
c. Geographic Impact: US
Yes
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IV. Trade Clusters
a. Directly Related to Product: Yes, Sweet Cherries
b. Indirectly Related to Product: NO
c. Not Related to Product: NO
d. Related to Process: Yes, habitat loss.
U.S. sweet cherry production is forecast at 191,250 tons, up 24 percent from 1996 and 16 percent above 1995. The three largest states, California, Oregon, and Washington expect an increase in production from last year.
The Washington crop, at 85,000 tons, is 23 percent more than last year. All major areas forecasted an increase from last year, and a good quality crop is expected. Weather was favorable for growing conditions in Washington and Oregon. Production in Oregon is forecast at 43,000 tons, up 34 percent from last year. The sweet cherry crop in California is forecast at 35,000 tons, up 42 percent from 1996. Good weather throughout the growing season resulted in better yields. The Michigan sweet cherry crop is forecast at 24,000 tons, up 9 percent from 1996, but down 11 percent from 1995. Bloom population was adequate, but cold weather hampered pollination. Cooler than normal temperatures also affected crop development in New York and Pennsylvania. Both states expect slight declines from a year ago.
| State | 1995 | 1996 | 1997 |
| CA | 19,800 | 24,600 | 35,000 |
| ID | 700 | 2,200 | 1,300 |
| MI | 27,000 | 22,000 | 24,000 |
| MT | 900 | 700 | 1,000 |
| NY | 1,100 | 700 | 650 |
| OR | 38,000 | 32,000 | 43,000 |
| PA | 1,000 | 800 | 700 |
| UT | 2,000 | 2,300 | 600 |
| WA | 75,000 | 69,000 | 85,000 |
| Total | 165,500 | 154,300 | 191,250 |
Source: The United States Department of Agriculture (USDA).
Agency: UDDOC, BUREAU OF THE CENSUS PROGRAM: MERCHANDISE TRADE - U.S. EXPORTS BY COMMODITY TITLE: 0809200020 Cherries, Sweet Varieties, Fresh (SIC0175)
FAS Values ($1,000) |
V. Environment ClustersAccording to the Governemnt of Mexico, U.S. cherries were infected with the apple maggot wich was discovered around 1980 in Oregon, and since then it has been gradually found in much of the Northwest and Northern California.
The apple maggot can do serious damage to apples. Unlike traditional apple worm (codling moth larva), which just tunnels in and out of the fruit, apple maggot riddles the fruit with brown trails. There's nothing left to save. Apple maggot covers most of the territory between the Pacific Ocean and the Cascades and Sierra Nevada from Seattle to the San Francisco Bay Area, including all of western Oregon. Its northern boundary is the Olympic Peninsula and roughly the King County--Snohomish County line. On the south end, the maggot follows the California coast to Marin County, though in the Sacramento Valley it doesn't go far south of Chico. East of the Cascades, there's a small population of apple maggots in northeast Spokane. In the Columbia Gorge, the pest's range extends to Goldendale on the Washington side and to The Dalles on the Oregon side.
Name: Cherries
Type: Sweet
Diversity: Sweet varieties and fresh
VI. Other Factors