The U.S. Department of Agriculture's Agricultural Marketing Service (AMS) has finalized a significant rule impacting the tart cherry industry, establishing specific free and restricted percentages for the 2024-2025 crop year. This decision, effective September 28, 2026, and applying to the crop year beginning July 1, 2024, sets the proportion of tart cherries from Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin that may be sold in commercial markets. The measure is designed to proactively manage market supply, aiming to stabilize prices and improve financial outcomes for tart cherry growers by balancing anticipated production with market demand.
Context and Authority
The final rule operates under Marketing Order No. 930, which regulates tart cherries across the specified states, and is authorized by the Agricultural Marketing Agreement Act of 1937. This Act empowers the Secretary of Agriculture to implement marketing orders to address market imbalances in certain agricultural commodities. The Cherry Industry Administrative Board (the Board), comprised of growers and handlers from the production area, along with a public member, locally administers this Order. The Board plays a pivotal role in recommending these crucial market adjustments. This action is exempt from review by the Office of Management and Budget under Executive Order 12866, and from the requirements of Executive Order 14192, "Unleashing Prosperity Through Deregulation," pursuant to section 5(c). Furthermore, the AMS has determined that this rule is unlikely to have substantial direct effects on Indian Tribal Governments, as per Executive Order 13175.
The Mechanism of Volume Control
Central to Marketing Order No. 930 is the authority granted to the Secretary of Agriculture to regulate volume by designating "free" and "restricted" percentages. For the 2024-2025 crop year, these percentages are set at 81 percent free and 19 percent restricted. The "free percentage" refers to the volume of tart cherries that can be shipped to any market without additional limitations. Conversely, the "restricted percentage" volume must either be held in a primary or secondary reserve, diverted from the primary market, or utilized for exempt purposes. These exempt uses include developing new products, selling into new markets, fostering export opportunities, and making charitable contributions. Handlers are responsible for the storage of reserved cherries and retain title.
Calculating Optimum Supply and Restricted Volume
The Board employs a detailed methodology to calculate these percentages, centered on determining an "optimum supply." This optimum supply represents the ideal volume of tart cherries needed for sale in the coming crop year, derived from a three-year average of free sales, adjusted for exempt and diverted cherries, plus a "desirable carry-out inventory." Desirable carry-out is the amount of fruit required to meet market demand until the next crop is available, with the Order specifying a range of zero to 100 million pounds. Additionally, the Board must ensure that an additional 10 percent of the average sales from the prior three years is made available for market expansion, aligning with USDA guidelines.
To determine if an oversupply exists, the Board compares the available volume (current year's production plus carry-in inventory) against the optimum supply. Any excess constitutes a "surplus." This surplus is then adjusted by the 10 percent market expansion factor and any economic adjustments recommended by the Board. The resulting adjusted surplus tonnage is then divided by the total production in regulated districts to arrive at the restricted percentage.
Board's Deliberations for 2024-2025
The Board met on June 20, 2024, to assess the potential for supply exceeding demand. They unanimously estimated the 2024-2025 crop at 247.3 million pounds. Based on a three-year average of free sales (191.6 million pounds) and a recommended desirable carry-out of 76.7 million pounds, the optimum supply was computed at 268.3 million pounds. The discussion around desirable carry-out was extensive, with the Board considering a committee's findings based on a five-year average movement for specific months, which suggested 76.7 million pounds. While some members questioned the necessity of four months of inventory, and others noted the previous year's 85 million pound carry-out and higher carry-in inventory, the Board ultimately unanimously recommended 76.7 million pounds.
To calculate the surplus, the Board subtracted the carry-in inventory of 93.1 million pounds from the optimum supply, yielding 175.2 million pounds as the quantity needed from the 2024-2025 crop. Subtracting this from the estimated total production of 247.3 million pounds (from regulated and unregulated districts) resulted in an initial surplus of 72.1 million pounds. The Board then considered a "preliminary economic adjustment" due to concerns about fruit quality in Michigan from weather and reports of short European crops potentially increasing domestic demand. This adjustment process reflects the Board's attempt to fine-tune the supply management in response to real-time market dynamics.
Geographic Scope
Not all tart cherry producing districts are subject to volume regulation every year. For the 2024-2025 crop year, regulated districts include Northern Michigan, Central Michigan, Southern Michigan, New York, Utah, Washington, and Wisconsin. Districts 5 (Oregon) and 6 (Pennsylvania) are exempt from volume regulation for this season, a status determined by their average annual production over the prior three years not exceeding six million pounds, or if their crop is less than 50 percent of their five-year average processed production. This flexibility allows the order to focus regulation on areas with significant production capacity.
Implications and Outlook
This final rule directly affects tart cherry growers and handlers in the regulated states, influencing their ability to market their full crop. By limiting the volume available to the free market, the USDA and the Board aim to prevent price collapses that could occur during periods of oversupply. This proactive supply management is intended to create a more stable and predictable market environment, ultimately supporting the economic viability of tart cherry operations. The exemption provisions, such as for new product development and export, also incentivize innovation and market diversification within the industry. This continued regulatory framework demonstrates an ongoing commitment to a managed market approach for agricultural commodities like tart cherries, recognizing their unique supply and demand characteristics.
