Ncc Case Study

9-688-122
REV: MARCH 17, 2006

National Cranberry Cooperative (Abridged)
On February 14, 1981, Hugo Schaeffer, vice president of operations at the National Cranberry Cooperative (NCC), called his assistant, Mel O’Brien, into his office and said: Mel, I spent all day yesterday reviewing last fall’s process fruit operations at receiving plant #1 [RP1] with Will Walliston, the superintendent,and talking with the co-op members [growers] in that area. It’s obvious to me that we haven’t solved our problems at that plant, yet. Even though we spent $100,000 last winter for a fifth Kiwanee dumper at RP1, our overtime costs were still out of control this fall, and the growers are still upset that their trucks and drivers had to spend so much time waiting to unload process fruit into thereceiving plant. I can’t blame them for being upset. They are the owners of this cooperative, and they resent having to lease trucks and hire drivers to get the berries out of the field and then watch them stand idle, waiting to unload. Walliston thinks that the way to avoid these problems next fall is to buy and install two new dryers [$40,000 each], and to convert our dry berry holding bins so thatthey can be used to store either water-harvested or dry berries [$7,500 per bin]. I want you to go out there and take a hard look at that operation and find out what we need to do to improve operations before the 1981 crop comes in. We’re going to have to move quickly if we are going to order new dryers, since the equipment and installation lead times are in excess of six months. By the way, thegrowers in that region indicated that they plan on about the same size crop this year as last. But it looks like the percentage of water-harvested berries this year will increase to 70% of total process fruit from last year’s 58%.

NCC and the Cranberry Industry
NCC was an organization formed and owned by growers of cranberries to process and market their berries. In recent years 99% of all salesof cranberries were made by the various cooperatives active in the cranberry industry. NCC was one of the larger cooperatives and had operations in all the principal growing areas of North America: Massachusetts, New Jersey, Wisconsin, Washington, Oregon, British Columbia, and Nova Scotia. Table A contains industry data for U.S. production and sales of cranberries.____________________________________________________________

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This case represents a major revision of the case “American Cranberry Cooperative” written by J. Tucker. Certain dates and financial data have been disguised. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, orillustrations of effective or ineffective management. Copyright © 1988 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted inany form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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688-122

National Cranberry Cooperative (Abridged)

Table A

Data on U.S. Cranberry Harvest

Crop Year Five-Year Average 1945-1949 1950-1954 1955-1959 1960-1964 1965-1969 1970-1974 1975-1979 Annual 1975 1976 1977 1978 1979 c 1980Production/Utilization (in barrels)a Acreage Barrels Fresh Production Harvested per Acre Sales

Process

Average Price (all uses, $ per b barrel)

26,022 25,434 26,205 24,842 21,448 20,778 20,988 20,640 20,760 21,220 21,135 21,185 21,445

23.7 24.9 31.3 39.8 51.2 62.6 73.7 69.6 77.0 66.2 69.4 86.1 95.1

615,000 643,300 822,580 983,660 1,096,160 1,300,120 1,546,120 1,436,800 1,598,600...