Grape prices surge in Golden State

Good news at last for California’s grape growers: wineries are offering the best prices in seven years. It appears the worm is turning when it comes to the supply and demand of grapes in the golden state.

According to the Western Farm Press, Allied Grape Growers, the state’s largest wine grape grower cooperative, which boasts 600 members, expects to sell 300,000 tons of grapes this season valued at more than US$70 million.

Nat DiBuduo told cooperatives in Fresno and Santa Rosa that, this year, wineries want to buy grapes earlier than at any time during his decade-long tenure as Allied’s president. This initial demand was for quantities larger than in 2007. “Wineries are offering better prices than any of the past seven years, and they are offering term contracts,” DiBuduo said.

One of the reasons for this turnaround is that supplies are down, in particular following the removal of 135,000 acres of vineyards from the San Joaquin Valley, where almond, pistachio and pomegranate orchards have taken their place.

However, on the coast, hundreds of acres of new vines are being planted. DiBuduo has warned cooperative members against the dangers of over-planting and subsequent oversupplies, contradicting the advice of some who think the state will lose market share to foreign imports if they don’t plant more grapes. Instead, DiBuduo recommends planting with contracts in order to meet winery needs at an economic return equal to almonds.

Although farming costs are going up faster than grape prices are rising, DiBuduo predicts a better year for California’s growers. “Demand is good while the supply is short for the market,” he said. Growers have a number of advantages in the current market. Sales are up, exports are strong and Q1 imports this year were down. The Californian concentrate business was also recently bolstered by the highest price ever for Thompson Seedless ($225) per ton due to a long-term contract between raisin packers and raisin producers.

This year’s crop is also likely to be smaller than last year due to difficult weather conditions and a lack of irrigation water.

Fionnuala Synnott, 06.08.08