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California wine grape growers hope good times continue

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  • California wine grape growers expecting good return in 2011 while waiting for another shoe to drop. Vintners preach partnership yet cast California growers aside for cheap imports sold under mislabled appellations

California may be the most diversified agricultural region in the nation and the world, yet there are some interesting parallels between the seemingly fragmented segments.

One is that growers and processors, regardless of commodity, are constantly seeking to open new markets and expand existing ones. These efforts via mandatory assessment marketing orders and commissions have produced some remarkable success stories, starting with the California Table Commission.

The commission was born from the chaos and violence of the UFW movement in the late 1960s when table grape growers realized the labor union’s malicious characterization of their industry was destroying their consumer markets. Growers and shippers decided to fight back, not by battling the UFW in the media, but by telling consumers the truth about healthy, nutritious fresh market grapes.

This team effort has been wildly successful. In 1970, per capita consumption of table grapes was 2.5 pounds per acre. Today it is 8.4 pounds. The California Table Grape Commission set the pattern for other commodity promotion programs to follow.

It would seem unimaginable that that the table grape industry’s track record could be exceeded. However, the California almond industry and its grower/processor-funded marketing represents an even bigger success.

In the early 1990, prophets of doom were predicting the economic collapse of the almond industry when production reached 1 billion meat pounds. Since 2002, the industry has exceeded that mark nine out of 10 years with profitable returns each year to growers. Acreage has increased by 77 percent over the past 14 years, and it’s still growing. This year the California almond crop forecast is breathtakingly close to 2 billion pounds, and the industry says it needs every pound to meet world demand. California almonds are a remarkable story of a unified industry working for the good of both producers and processors.

Although not as wildly successful as almonds and table grapes, California producers and processors of walnuts, pistachios and raisins have had success in unification for betterment of their industries. The federal cotton check-off program, as well as the regional Supima organization, have also significantly bolstered consumption of Upland and Extra Long Staple cottons in partnerships with growers, processors and even retailers.

Perhaps the best known of all California specialty crops is wine grapes. California is famous for its wine, yet it is an industry that in many ways is faltering within an overall, healthy California agricultural economy. Yes, California wine grapes are looking at the best economic outlook in decades this year.

However, it has been a costly journey for wine grape and raisin growers — tied inextricably to vineyard acreage which has dropped dramatically over the past decade as vines have been pushed out and replaced by other more economically sound horticultural crops like almonds. This has come despite a steady growth in U.S. wine consumption.

Although this year promises to be a good one for wine grapes, there is an uneasy feeling amid the prosperity. Growers have been close to a good year before, only to be left out in the cold by the state’s major wineries going offshore rather than paying California growers fair prices for their grapes.  There have been other winery shenanigans, like asking growers to leave grapes hanging longer to “improve quality.” That turned out to be just another ploy to reduce tonnage and payments to growers. There have been delivery charades over the years that reduced the tonnage and grower income as well.

It all goes to the fact that more than 65 percent of the wine grapes crushed in California are controlled by four major wine conglomerates and they all want cheap grapes. In most industries, that would be called a monopoly.

Steve Smit, vice president of operations for Constellation Wines US, one of the four conglomerates, spoke at Allied Grape Growers annual meeting on the North Coast. We exchanged e-mails about his message.

His message was a call “to leverage our (winery and grower) knowledge by working together to maintain and grow our business … and the need for growers to work in partnership with wineries and industry organizations.”

It was interesting to note that he said one of the major issues facing the industry is global wine competition and wine imports coming into the U.S. to “cover the shortfall of California grapes.” A shortfall created by global outsourcing by wineries like Constellation.

One-third of the wine sales in the U.S. are now foreign wines, some of the sales sold under an American appellation. The power of the California wine industry has convinced BATF that up to 25 percent of a wine product can be imported and sold as American wine. That’s wrong.

The “shortfall” Smit talks about has come about because wineries have not paid growers fair prices for their grapes, and producers have switched to more stable crops. Not only that, many growers in the San Joaquin Valley refuse to plant new vineyards, even with prices as good as they are this season, because of the uncertainty of the wine business.

Wineries like to talk partnerships, and there are many solid grower/vintner relationships. However, the reality is the four 800-pound gorillas control the show. It is evidenced by the fact that for several years industry observers have been saying it won’t be long before the supply of wine grapes will not be able to meet demand, even at modest consumption increases.

Obviously, the California wine grape industry will not disappear. Unfortunately, it will not prosper as other commodity grower/processors have as long as wineries give only lip service to true industry-wide grower/vintner partnerships.

Hopefully, this year will be repeated for growers for several years to come. Savvy producers know better. The next bad year is only a world wine glut away for California growers.

Partnerships begin with respect and recognizing that what is good for the growers is also good for the winery — like promoting California wine.

Discuss this Blog Entry 1

Anonymous (not verified)
on Jul 26, 2011

Harry Cline, another wonderfully divisive post that only looks at an issue from one side, with a biased preconceived message that doesn't cite or rely on any actual facts, but makes use of as much rumor-based rhetoric as possible. Bring us a solution, not something that gets people mad at each other and helps to sell more advertisements.

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