Advantages of Renovation in a Surplus Market

SURVIVING PERIODS OF SUPPLY AND DEMAND IMBALANCES

  • Due to the extent of the current imbalance, it is highly unlikely that it will be remedied through development of new markets in the near term.
  • The difference in growers cost of production will ultimately correct this imbalance.
  • Oversupply will lower profits and could force some high cost growers to exit the business.
  • As in all industries under pressure, low-cost producers will be the survivors in the long run.

RENOVATION + NEW TECHNOLOGY = THE KEY TO LONG-TERM SURVIVAL

  • Historically ‘good’ yields of 300 barrels/acre will not likely achieve lowest cost.
  • Utilization of the best technology (new varieties that offer high yield and related benefits) is key to being a low-cost producer and long term survivor in any industry.
  • Agricultural market swings have become closer in frequency with more severe price fluctuations.
  • In the cranberry industry, it is critical for investments in technology (bed renovations with productive RUTGERS varieties) to be made early in the down cycle to achieve maximum return in the subsequent era of profitability.
  • Contrarians, those who invest during down periods, are likely to be long term survivors in a cyclical agricultural market.
  • Loss of production income has been a major cost of bed renovation.
  • Therefore, a good time to renovate is when prices are low (e.g. time o oversupply), subsequently minimizing the loss of production income.

Rutgers varieties can be a key part of the solution to being a long term profitable cranberry producer

The varieties of today for tomorrow’s growers”