January 26, 2018
CapitalPress.com
3
Farm Bureau applauds Study: Wine appellations boost prices
Washington ‘Hirst’ fix Price-to-quality
ratios increased
by American
Viticultural Area
designation
By DON JENKINS
Capital Press
OLYMPIA — The Wash-
ington Farm Bureau’s wa-
ter-policy expert said Friday
that the Hirst bill passed by the
Legislature and signed by Gov.
Jay Inslee will allow farmers
to drill wells for homes and
worker housing.
The bill attaches “strings
and extra process,” but averts
building moratoriums, the
Farm Bureau’s associate di-
rector of government relations,
Evan Sheffels, said.
“This is a fix. This is a real
Hirst fix,” he said. “While it’s
not a perfect bill, it is a good
bill for Washington farmers,
and fish.”
The bill that emerged from
back-to-back votes in the Sen-
ate and House Jan. 18 was a
compromise between lawmak-
ers who wanted to repeal the
state Supreme Court’s Hirst
decision and those who want-
ed to implement it.
The bill’s prime sponsor,
Senate Agriculture, Water and
Natural Resources Chairman
Kevin Van De Wege, D-Se-
quim, called it a “fragile agree-
ment” with something for ev-
eryone to dislike. Most of the
“no” votes, however, came
from pro-Hirst legislators,
who said it wasn’t respectful
enough of tribal treaty rights.
Snohohmish County Sen.
John McCoy, a member of the
Tualip Tribes, warned that wa-
ter shortages will come from
“unfettered drilling.”
“I’m extremely discour-
aged,” he said. “The tribes
have tried to work with others
to come to a reasonable solu-
tion. In my opinion, they were
ignored.”
The lead negotiator for Sen-
ate Republicans, Judy Warnick
of Moses Lake, said in an in-
terview that she hopes the bill
will be a long-term solution to
allowing rural landowners to
build.
She noted that the deal in-
cludes $300 million to be spent
over the next 15 years on fish
projects. Tribes will have a
say in how the money is spent.
Watershed plans will be up-
dated or drawn up to protect
streams.
“We did our best to try to
include tribal interests,” War-
nick said. “We certainly made
a commitment with the mon-
ey.”
The Hirst decision pointed
to a well-by-well approach to
keeping growth from lowering
streams. Senate Bill 6091 will
By MATEUSZ PERKOWSKI
Capital Press
TVW
Washington Farm Bureau asso-
ciate director of government af-
fairs Evan Sheffels speaks Jan.
16 before the House Agriculture
and Natural Resources Com-
mittee on legislation responding
to the Hirst court decision.
focus on watersheds that need
the most attention, Sheffels
said. “The bill takes us to a
much more logical approach.”
The bill’s effect will vary
in the state’s 62 watersheds.
In more than 40 watersheds,
the bill affirms that pre-Hirst
rules will prevail. Landown-
ers will not face new fees or
lower limits on daily with-
drawals.
“It’s a big win to get that
cloud of uncertainty removed
from those watersheds,” Shef-
fels said.
In seven watersheds, land-
owners will pay a new $500
fee to drill a well. Average
annual withdrawals will be
limited to 3,000 gallons a day.
There is no prohibition on wa-
tering outdoors, as proposed in
earlier Democratic versions.
The seven watersheds
are the Nooksack, Nisqually,
Lower Chehalis and Upper
Chehalis in Western Washing-
ton; and the Okanogan, Little
Spokane and Colville in East-
ern Washington. They already
have watershed-management
plans, though the plans must
be updated.
In eight watersheds, the
new fee will apply and the
withdrawal limit will be 950
gallons a day. Committees
made up of state and local gov-
ernments, tribes and interest
groups, including agriculture,
will recommend fish projects
and could change fees and
withdrawal limits.
“We’re going to work with
tribes and work with the agen-
cies to see that these groups
deliver the best possible out-
comes for everyone,” Sheffels
said.
The eight watersheds are all
in Western Washington: Sno-
homish, Cedar-Sammamish,
Duwamish-Green,
Puyal-
lup-White, Chambers-Clover,
Deschutes, Kennedy Golds-
borough and Kitsap.
Convincing the feder-
al government to officially
recognize a wine region’s
unique “terroir” can sub-
stantially boost the price per
bottle, according to a recent
study.
The study found that
certain geographic regions
within Oregon’s Willamette
Valley saw statistically
significant wine price pre-
miums due to their federal
designation as “American
Viticultural Area” appella-
tions.
Average prices and wine
rankings were compared
across six sub-appellations
within the overall Willa-
mette Valley AVA as part
of the research, which was
headed by economics pro-
fessor Omer Gokcekus of
Seton Hall University in
New Jersey.
After obtaining their
sub-appellation
designa-
tions, wines from four of
those areas — Chehalem
Mountains, Dundee Hills,
Ribbon Ridge and Yam-
hill Carlton — saw their
price-to-quality ratio out-
pace the rest of the Willa-
mette Valley.
All other things being
equal, the sub-AVA des-
ignations contributed to
higher prices ranging from
$1.43 to $14.13 for a bottle
with a 90-point score from
Wine Spectator, an industry
publication that rates wines.
Price premiums for
wines produced in the
Dundee Hills AVA were the
highest found in the study.
Russell Gladhart, whose
family owns Winter’s Hill
Estate, said the Dundee
Hills AVA benefits from
being densely planted with
vineyards within a relative-
ly compact area.
The resulting lack of
variation makes wines from
the region more distinct, he
said. “The customer knows
more precisely where the
wine came from.”
Gokcekus, the study’s
author, said he became
intrigued by the phe-
nomenon while attend-
ing an academic confer-
Mateusz Perkowski/Capital Press File
Winegrapes grow in the Willamette Valley. A university study looked at the impact of American
Viticultural Area appellations and sub-appellations on wine price.
ence in Oregon.
“There should be a rea-
son for this,” he said.
For wineries to petition
the U.S. Alcohol and Tobac-
co Tax and Trade Bureau for
a sub-AVA, there must be an
economic motivation, Gok-
cekus said.
“I was expecting to see
an increase, otherwise, why
should you bother?” he said.
Even so, Gokcekus said
he was surprised by the size
of price premiums some
wines commanded solely
due to their appellation.
The range of grape-grow-
ing conditions is narrower
within a smaller appella-
tion, leading consumers to
believe they’re at less risk
of buying a lower-quality
wine from that region, he
said.
There’s also a sense of
exclusivity that comes from
purchasing wine from an
area that only has a limited
number of bottles available,
Gokcekus said.
“We are talking about
wine. In my mind, we are
talking about perceptions,”
he said.
Creating
ever-smaller
appellations probably stops
making economic sense at
some point, though.
As the number of winer-
ies within each area shrinks,
they must each spend more
money to promote the re-
gion and can’t pool their re-
sources as effectively, Gok-
cekus said.
“On the one hand, there
is exclusivity. On the other
hand, there is cost,” he said.
“It’s a kind of balancing
act.”
Wineries won’t gain
much from a sub-AVA des-
ignation if they’re located
within a larger appellation
that hasn’t won many acco-
lades, he said. In this case,
the Willamette Valley had
already established a solid
footing in the wine industry.
“It’s a prerequisite,”
Gokcekus said. “The AVA
you are in should already
have a certain reputation.”
Although a sub-AVA
designation may boost
prices higher than they’d
rise based on quality alone,
it’s also necessary for
wines from the region to
stand out, he said.
For
example,
the
price-to-quality ratio for
two sub-AVAs, Eola-Amity
Hills and McMinnville, did
not meaningfully surpass
the rest of the Willamette
Valley despite the designa-
tions, he found.
While the price-to-qual-
ity ratios increased in both
regions, they largely kept
pace with the larger appel-
lation — probably because
their average wine ratings
didn’t exceed the Willa-
mette Valley’s average,
Gokcekus said.
Being located within a
well-known sub-AVA, such
as Dundee Hills, is associ-
ated with a premium but
winemakers must source 95
percent of their grapes from
that appellation to promote
it on their label, said Denise
Flora, co-owner of the Na-
tive Flora winery.
That requirement isn’t a
problem for Native Flora,
which is a boutique winery
that relies entirely on the 16
acres of vineyards growing
on its estate, she said. “It
fits our business model.”
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Whitgro to merge with Northwest Grain Growers
Capital Press
Whitgro Inc. will merge
with Northwest Grain Grow-
ers in May as part of a plan
to update facilities and move
grain using 100-car shuttles.
“Market economics is a big
reason,” said Heath Barnes,
general manager of Whitgro
Inc. “Really, (it’s the) same
reason all the other co-ops are
consolidating — mainly mar-
ket economics, a shift in some
of our freight options and our
ability to remain competitive
for our members.”
Whitgro has 390 members.
Northwest Grain Growers has
1,700 members.
Chris Peha, general man-
ager of NWGG, said the com-
panies have worked together
for a long time. The majority
of Whitgro’s facilities are on
a short-line railroad owned
by the state. NWGG has an
agreement with the short-line
operator to move and load
grain at Whitgro’s facilities
and ship it to NWGG’s facil-
ities along the river, to load
onto barges.
The railroad has ap-
proached NWGG about using
100-car shuttles on the short-
line railroad, which will re-
quire a $6 million to $8 million
investment to update facilities
and receive the railroad’s pro-
posed lower rate, Peha said.
The company plans to make
the changes in the next 12 to
24 months, he said.
Whitgro and NWGG’s
boards determined the best
move was to merge the com-
panies, Peha said.
Barnes and Peha did not
provide an estimated value of
the combined businesses.
Barnes doesn’t expect
farmers to see much impact as
a result of the move.
“They’re going to contin-
ue to remain at a competitive
freight rate and competitive
patronage levels,” he said.
Peha said the change will
also provide administrative ef-
ficiency and savings on insur-
ance and banking.
NWGG has five barge-load-
ing facilities, but members are
“river captive” with aging in-
frastructure and occasional
river closures for lock mainte-
nance, he said. The merger will
allow the flexibility to ship by
rail or barge, he said.
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