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-
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to everyone who made the Mid-Valley
Winter AgFest possible.
See you next year!
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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.
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