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CapitalPress.com March 11, 2016 Eugene vineyards inally can say they’re in Willamette Valley By ERIC MORTENSON Capital Press A couple vineyards in the Eugene area, including King Estate, one of the state’s big- gest, have operated for 20 years or more without being able to put “Willamette Valley” on their labels. Maps and simple geography would say they’re in the valley, but the U.S. Treasury Depart- ment’s Alcohol and Tobacco Tax and Trade Bureau, which designates American Viticul- tural Areas, or AVAs, said oth- erwise. That changed March 3 when the bureau approved a 29-square-mile expansion of the Willamette Valley AVA. Now King Estate, a 1,033-acre organic vineyard and winery that was established in 1991, can inally tell consumers its Dan Wheat/Capital Press Kanzi apples in colorful 2-pound bags are shown at Columbia Fruit Packers, Wenatchee, Wash., on Feb. 4. Kanzi is one of many new varieties helping to increase U.S. apple consumption. Apple prices plateau strong as shippers move fruit By DAN WHEAT Capital Press WENATCHEE, Wash. — Wholesale prices of Wash- ington apples have lattened at a good level after improv- ing markedly this sales sea- son compared to last. Average asking wholesale prices of size 88, extra-fan- cy grade apples on March 7 were the same as a month ago on four varieties, accord- ing to USDA Market News. Gala remains at $34 to $36.90 per box. Red Deli- cious is unchanged at $18 to $20.90. Golden Delicious is the same at $26 to $28.90 and Granny Smith stayed even at $24 to $26.90. Cripps Pink was down at $30 to $34.90 versus $32 to $36.90 a month ago. Fuji was up on the low end at $32 to $34.90 versus $30 to $34.90 a month ago. Honeycrisp was not reported, having mostly sold out. “This is fairly normal this time of year. Shippers are moving fruit that won’t last into August,” said Des- mond O’Rourke, a retired Washington State University agricultural economist and longtime observer of the ap- ple industry. Prices have averaged $25 to $26 per box across all vari- eties and sizes at extra-fancy grade for the past ive to six weeks, he said. The industry’s March 1 storage report shows the to- tal crop now at 116.7 million boxes, down a fraction from 116.9 million a month ago and 117.1 million on Jan. 1. The record crop was 141.8 million in 2014. The 2015 crop is 54 per- cent, 62.9 million boxes, shipped versus 54 percent a year ago and 56.7 per- cent two years ago. Weekly shipments are averaging a healthy 2.5 million boxes. At 17.1 million boxes, ex- ports are down 29.3 percent from a year ago because of a smaller crop and foreign buying power weakened by the strong value of the U.S. dollar, said Todd Fryhover, president of the Washing- ton Apple Commission in Wenatchee. Total season exports may end up around 34 million compared to 48.7 million from the much larger 2014 crop, he said. Increasing do- mestic consumption due to better fruit and more vari- eties also is competing with exports, he said. The No. 1 export market, Mexico, has purchased 3.5 million boxes of Washington apples so far this season, Fry- hover said. That’s down 37.5 percent from a year ago. The market will end up around the normal 9 million boxes, down from 15 million a year ago, but not bad given pre- liminary tariffs of up to 20.8 percent imposed on shippers in January for alleged apple dumping in 2013, he said. Exports to Mexico and India increased in February. Mexico bought 1 million boxes. India bought 450,000 which is half of the 900,000 sold there so far this season. A port issue was resolved but a 50 percent tariff re- mains and along with the strong U.S. dollar probably will hold exports to India at 2 million boxes this season, Fryhover said. The record was 5.6 million last season. China continues to build and was at 978,375 boxes at the end of February, he said. Southern Hemisphere ap- ple harvest is just getting un- derway and crops have been reduced by bad weather, O’Rourke said. That should prevent imports from chal- lenging domestic sales. The bigger challenge, he said, is the potential for a 150-million-box crop in 2016 while exports are ham- pered by a strong U.S. dollar, the Russian embargo and problems in the Middle East. wine is from the Willamette Valley. Until now, its Pinot noir and Pinot gris labels have de- scribed products simply as Or- egon wine. A neighboring business, Iris Vineyards, also will be able to list its wines as coming from the Willamette Valley. The expansion had the blessing of the Oregon Wine Board and the Willamette Val- ley Wineries Association, said Michelle Kaufmann, the wine board’s communications man- ager. The original Willamette Val- ley AVA, established in 1983, didn’t extend to the ground King Estate began farming southwest of Eugene in the ear- ly 1990s. “This small chunk got left out,” Kaufmann said. “They have the same soil, the same climate attributes, the same la- vor in inished wine. It really was an oversight.” AVAs are part of an appel- lation system that deines dis- tinct wine-growing regions. Oregon has 18 AVAs; the Wil- lamette Valley AVA goes from the Columbia River south to the Lane-Douglas County line, about 120 miles, and from the Coast Range to the Cascades, about 60 miles wide. But if a winery isn’t within an AVA, it can’t use the name. In addition, at least 95 percent of the grapes used to produce wine must be grown within the AVA. King Estate bought some grapes from within the AVA, but everything it produced and used itself didn’t count toward the required percentage. “Those are the rules,” said Ed King, co-founder and CEO of King Estate. Petitioning the federal agen- cy for inclusion seemed com- plicated and a time-consuming chore, so the company at irst concentrated on marketing its wines to consumers as being from Oregon instead, King said. “If we couldn’t get Oregon in their heads, we couldn’t get ‘Willa-met,’” he said, using a common mis-pronunciation of the valley’s name. In 2013, King Estate pe- titioned the Alcohol and To- bacco Tax and Trade Bureau for expansion of the AVA. The bureau approved the expansion March 3. King and others acknowl- edged the AVA inclusion won’t resonate with some consumers, and doesn’t affect the nature of the wine produced. “The other side of the coin is, it does put us in with our col- leagues,” King said. Despite strong sales, some wineries inancially stressed More than one-fourth of wineries report poor financial performance By MATEUSZ PERKOWSKI Capital Press Oregon wineries expect sales to surge in 2016 but that doesn’t mean all of them an- ticipate a healthy bottom line. Despite healthy demand for their wine, more than one-fourth of Oregon wine producers reported being in inancial distress in a recent survey. About 28 percent of Ore- gon wine producers surveyed by Silicon Valley Bank, a wine industry lender, said they were in poor inancial health, compared to 16 per- cent for the industry overall. According to that same survey, Oregon wineries pre- dict sales will grow 13 percent in value and 9 percent in vol- ume this year. Experts say this seeming disparity between rising reve- nues and inancial uncertainty isn’t necessarily surprising. “The good news is sales are up, the bad news is sales are up,” said Joe Dobbes, a longtime Oregon winemaker. Rapid growth in sales and production often reduces prof- its due to the hefty investment involved, said Christian Mill- er, proprietor of the Full Glass Research irm, which tracks wine industry trends. “You’re spending more on Mateusz Perkowski/Capital Press Wine is poured in an Oregon tasting room in this Capital Press ile photo. A recent survey by Silicon Valley Bank found that 28 percent of the state’s wineries report poor inancial performance, compared to 16 percent for the industry as a whole. new tanks, a new crusher, bet- ter barrels,” he said. “That’s certainly been the case in Or- egon for the past few years.” Sales of Oregon wine rose more than 14 percent, to $430 million, while wine grape production increased about 40 percent, to more than 78,000 tons in 2014, the most recent year for which Oregon Wine Board statistics are available. By the time vineyards reach maturity, grapes are harvested and wines are bot- tled, producers have already spent a great deal of time and money, said Kurt Wittman, a relationship manager and vice president at Northwest Farm Credit Services, who’s famil- iar with the wine industry. Finding a market for a new brand also isn’t immediate, so many wineries experience a “predictable 5-10 year nega- tive cash low, negative prof- itability cycle,” Wittman said. “It’s a long time line,” he said. The challenge for small wineries is that some expen- sive equipment is only used once a year at harvest, said Michael Adams, wine busi- ness instructor at Chemeketa Community College in Sa- lem, Ore. “There is an econo- my-of-scale issue,” Adams said. Oregon has seen a rush of new entrants to the wine in- dustry — the number of win- eries climbed about 75 per- cent, to 676, in ive years and nearly tripled over a decade, according to OWB’s 2014 statistics. In light of this inlux of newcomers, it’s perhaps fore- seeable that many still haven’t found their legs inancially, said Wittman. “Maybe some of that exuberance when they started 10 years ago isn’t there anymore.” The precarious economic position of these wineries is likely correlated with anoth- er survey inding by Silicon Valley Bank. Owners of Ore- gon wineries report a greater willingness to sell their oper- ations, said Rob McMillan, founder of the bank’s wine division. Oregon wineries tend to be smaller than average, which may impede access to distri- bution channels, and many owners are reaching the age when they must either sell the company or transfer it to the next generation, he said. According to Silicon Val- ley Bank’s survey, 41 percent of Oregon wine producers said a sale is likely or pos- sible, compared to about 25 percent for the industry as a whole. “I think it has to do with winery size and dificulty in getting distribution,” McMil- lan said. The California wine indus- try is larger and more mature, so it’s had a chance to under- go changes that are only now confronting Oregon produc- ers, said Dobbes. “There’s po- tentially been a lot of fallout in California that hasn’t hap- pened yet in Oregon.” Oregon lawmakers ratify wolf delisting, nullifying lawsuit Critics argued lawmakers should not intervene in judicial review By MATEUSZ PERKOWSKI 11-4/#6 Capital Press SALEM — Oregon law- makers have ratiied the re- moval of wolves from the state’s list of endangered spe- cies, nullifying an environ- mentalist lawsuit against the delisting decision. House Bill 4040, which holds that state wildlife regula- tors correctly delisted wolves, passed the Oregon Senate 17-11 on March 2 after earli- er winning approval from the House. Proponents claimed the bill was necessary to prevent implementation of the state’s wolf management plan from being hijacked by litigation. The Oregon Fish and Wildlife Commission delisted wolves last year but several environmental groups have challenged the legality of that decision before the Oregon Court of Appeals. By afirming that the com- mission followed the delisting process properly, HB 4040 voids the environmentalist ar- THANK YOU to everyone who made the Mid-Valley Winter AgFest possible. See you next year! 11-1/#T4D ROP-32-52-2/#17 4 gument that the decision was unlawful. Sen. Michael Dembrow, D-Portland, urged the Senate to vote against the bill be- cause it was “troubling” that the legislature would preclude judicial review of an agency action. “I don’t know about you, but I don’t feel qualiied to be able to decide whether or not the right science was used in the agency making this deci- sion,” Dembrow said. Sen. Chris Edwards, D-Eu- gene, said the legal challenge against delisting would only increase the hostility between ranchers and environmental- ists, hindering the process of planning for wolf recovery and management. “Environmental lawsuits are sure to deepen the divide and mistrust,” he said. “At some point, we have to stop this cycle.” While wolf advocates claim their lawsuit is based on scientiic concerns, its true purpose is to gain leverage in upcoming revisions to the wolf management plan, Ed- wards said. As chair of the Senate Com- mittee on Environment and Natural Resources, Edwards had a signiicant inluence on the bill’s progress after it was passed out of the House. Apart from scheduling a public hearing and work ses- sion that prevented HB 4040 from dying in committee, Ed- wards cast the deciding vote in favor of the bill that allowed it to reach the Senate loor. Supporters of HB 4040 worried that livestock groups would be left out of a potential legal settlement between en- vironmentalists and the state government, short-circuiting public involvement in setting wolf policy. Edwards said the bill’s pas- sage will make moot some of those worries without disrupt- ing how wolves are managed in Oregon. “The bill does not endanger wolf recovery in any portion of their territory,” he said. LEGAL LEGAL NOTICE OF PUBLIC MEETING The USDA Natural Resources Conservation Service (NRCS) announces a meeting of the Washington State Technical Advisory Committee on March 22, 2016 from 9:30 am to 3:00 pm, 316 W. Boone Ave., Suite 450, Spokane, WA. Remote access is also available. For more information contact Sherre Copeland, (360) 704-7758. 11-4/#4 In accordance with Sec. 106 of the Programmatic Agree-ment, AT&T Mobility plans to upgrade an exist- ing telecommunications facility at 1313 Mill Street SE, Salem, Oregon 97301. Please direct comments to Gavin L. at 818-898-4856 regarding site SA06. 3/4, 3/11/16 CNS-2849727# CAPITALPRESS rop-10-2-7/#4
