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CapitalPress.com
February 24, 2017
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California
Vintners court Mexican buyers Dairy groups weigh
as U.S. wine export values soar USDA marketing
order proposal
By TIM HEARDEN
Capital Press
The value of U.S. wine
exports set another record last
year, and California vintners
are taking trade relations into
their own hands to try to keep
the boom going.
Nearly 40 vintners traveled
to Mexico Feb. 12-17 to offer
seminars and meet with key
importers to bolster sales in
the nation, which is already the
sixth-biggest export market for
California wines.
The trip came as U.S. wine
exports, 90 percent of which
are from California, reached
a record $1.62 billion in win-
ery revenues in 2016 despite a
nearly 10 percent drop in vol-
ume, according to new figures
released by the San Francis-
co-based Wine Institute.
“This is a trip that we had
planned for a long time, long
ahead of the election,” Linsey
Gallagher, the Wine Institute’s
vice president of internation-
al marketing, told the Capital
Press by phone from Los Ca-
bos, Mexico.
“It’s interesting to be here
in Mexico this week with one
of the largest delegations we’ve
ever had,” she said. “The inter-
est on behalf of vintners is very
strong.”
Gallagher said the vintners
have been reassuring buyers
that California wineries value
their relationship with Mexi-
co even as President Donald
Trump has vowed to renego-
tiate the North American Free
Trade Agreement and clamp
down on immigration from
Mexico.
“It’s been an opportunity
for us to bring a positive mes-
sage from California ... and to
reiterate our long history (with
Mexico) and how important a
role Mexico has played in the
wine business,” she said.
The vintners held several
events for restaurant and retail
buyers in Mexico City, which
has what Gallagher calls a
“burgeoning wine and food
culture,” and Los Cabos, whose
industry caters more to Amer-
ican and Canadian tourists
“who know and love California
wine,” she said.
U.S. exports in 2016 rose
slightly above the $1.61 billion
By CAROL RYAN DUMAS
Capital Press
Courtesy of the Wine Institute
Representatives of restaurants and distribution companies in Mexico listen to a presentation on California
wines during a seminar Feb. 14 in Mexico City. Some 40 California vintners traveled to Mexico to bolster
wine exports to that country and to reassure trading partners in light of recent political changes in the U.S.
Courtesy of the Wine Institute
California vintners showcase wines for representatives of restau-
rants and food distribution companies during a trade event Feb.
14 in Mexico City. Some 40 vintners were in Mexico to bolster
California wine exports.
in wine shipped in 2015, which
was also a record, even as last
year’s volume — 45.9 million
cases — was well below the
51.2 million cases sold in 2015,
according to the institute.
California wine exports
have grown 78 percent by val-
ue in the last decade even as
volume has lagged because
of various factors, including
short production during the
drought and trade barriers in
some nations. Winery revenues
rose 1 percent last year despite
challenges from a strong dol-
lar, heavily subsidized foreign
competitors and high tariffs, the
institute reported. Amid these
challenges, the institute and
other wine industry represen-
tatives have been vocal about
U.S. trade policy, voicing dis-
appointment at the demise of
the Trans-Pacific Partnership
and urging the administration
to pursue or maintain strong
agricultural trade unions with
individual nations.
The Wine Institute in Jan-
uary praised the U.S. govern-
ment for proceeding with a
World Trade Organization chal-
lenge against Canada over an
initiative in British Columbia to
feature only locally produced
wines in grocery stores.
With export values totaling
$431 million, Canada is the No.
2 market for California wines
behind the European Union,
which accounts for $685 mil-
lion. Other top destinations are
Hong Kong ($99 million), Ja-
pan ($97 million), China ($82
million), Mexico ($24 million)
and South Korea ($23 million),
according to the institute.
Industry
representatives
say trade agreements such as
NAFTA have helped to dra-
matically grow U.S. wine ex-
ports. They hope the U.S. will
establish individual agreements
with countries such as Japan,
which slaps a heavy import
duty on American wines while
competitors Chile and Australia
already have free trade agree-
ments with Japan.
In the meantime, Gallagher
and others hope industry-initi-
ated trade missions like the one
in Mexico make a difference
in keeping markets open. The
California delegation included
vintners from all of the state’s
major growing regions, includ-
ing Napa, Sonoma, Santa Bar-
bara and Lodi, she said.
“We’re here helping to tell
the California wine story,”
Gallagher said. “I think poli-
tics aside, it’s very beneficial to
have folks here doing seminars
to showcase the best of what
California has to offer. It’s very
effective in creating some buzz
and getting some momentum.”
California dairymen are
nearing the finish line in their
efforts to establish a federal
milk marketing order for the
state, after the USDA Agricul-
tural Marketing Service pub-
lished its recommended deci-
sion.
“It’s been a long process.
We’ve wanted this for many,
many years,” said Lynne Mc-
Bride, executive director of
California Dairy Campaign.
USDA’s proposal isn’t all
that producers had hoped for,
but the process isn’t over. There
will be a 90-day comment peri-
od, and the final proposal will
go to a statewide referendum of
producers.
“We want to make sure we
follow it through. The stakes
are really high,” McBride said.
Led by the state’s three ma-
jor dairy co-ops, the initiative
came from years of frustration
over the price producers receive
for milk going into cheese vats.
That price was consistently and
significantly below the price of
like milk in federal orders.
California Dairies Inc.,
Dairy Farmers of America
and Land O’Lakes developed
a federal order proposal and
petitioned USDA in February
2015. USDA held public hear-
ings on that proposal and three
others in the fall of 2015.
USDA’s proposal isn’t ex-
actly what the three co-ops pro-
posed, but it’s not the final pro-
posal, said Kevin Abernathy,
general manager of the Milk
Producers Council.
MPC is now “looking under
the hood” to understand how
the federal order would work
and how it compares to the
state’s marketing system.
“MPC is really excited
about the process and the op-
portunity. It’s a process we
waited for. … Now we’ve got
something to look at,” he said.
Producers’ goal in a federal
order is to raise minimum pric-
es on all classes of California
milk, particularly Class 4b —
cheese milk, which accounts
for more than 40 percent of the
state’s production.
Two of the anticipated wild-
Online
For more information, includ-
ing an economic analysis of
the proposal, visit: www.ams.
usda.gov/caorder
cards in a USDA proposal were
the co-ops’ provisions to main-
tain the state’s quota system and
the state’s all-inclusive pooling.
USDA was scheduled to
have a public meeting on its
federal milk marketing order
proposal Feb. 22 at the Clovis
Veterans Memorial District,
808 Fourth St., Clovis, Calif.
The meeting was to be web-
cast online with a link posted at
www.ams.usda.gov/caorder.
USDA’s proposal does
maintain the quota system,
which provides additional pay-
ments to Grade A producers
holding quota certificates. But
like the 10 other FMMOs, it
does not require all processors
to participate in the pool and
pay regulated minimum prices
for milk, except for Class 1.
The pooling provision is
something producers need to
learn more about, and the Dairy
Campaign will be looking at
it closely, given utilization in
the state, McBride said.
The co-ops and dairy pro-
ducer organizations have put
a tremendous amount of time
and resources into the effort
to establish a federal order,
and the proposal deserves
close attention to detail and
what it would mean on the
ground to dairy producers,
she said.
MPC will be running
models to determine what
the pool looks like under
USDA’s proposal and how it
would work, Abernathy said.
MPC has been holding
conference calls with people
who know and understand
California’s system and fed-
eral orders and will be making
recommendations to USDA
during the comment period.
In a statement to Capital
Press, DFA said the three co-
ops and the producer commu-
nity continue to support the
effort for a federal order and it
is now reviewing and analyzing
USDA’s proposal.
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