Catch 2002

Back in August 2001, Washington state's wine-grape growers predicted they would harvest 97,500 tons of fruit, up 8 percent over 2000's record harvest. In fact, the harvest topped 100,000 tons. The predictions for 2002 were even headier: a 16 percent crop growth, to an astonishing 118,000 tons. Despite the cheery tone, a lot of the growers producing that growth had good reason to be worried. The state's winemakers steadily added capacity during the booming '90s market for Washington wine, but at nowhere near the rate farmers have added new acreage. It was obvious as early as 1997 that the latter would surpass the former sometime. In 2002 it happened. Nobody knows exactly how much fermenting and storage capacity the state's 200-plus wineries have, but insiders figure that the number translates into just a little over 100,000 tons. Do the math: 118,000 tons of grapes, processing and storage for maybe 105,000. Where does the rest of the crop go? One answer: onto the compost heap. Even while their PR people were trumpeting a new tonnage record, growers were out in the field culling unripe clusters of grapes to avoid ending up with a surplus at harvest time. That, along with the usual spotty heat and weather damage, cut output to nearly 10,000 tons below predictions, with some growers "green harvesting" up to 50 percent of their potential crop. It wasn't enough. Nobody boasts about the grapes they couldn't sell, but some estimate as many as 5,000 tons of fruit may have been left on the vine to shrivel or rot, not worth the picking. During the wine boom, a lot of established growers were able to extract multiyear contracts for their fruit from winemakers desperate for premium product. But many newer and smaller growers eager to cash in invested in new acreage without firm contracts for the fruit they would produce, and these farmers were particularly hard hit, turned away from the winery gate with fruit they couldn't sell at any price. But even growers who thought they had firm contracts at firm prices have found that rules change in a buyer's market. Some winemakers asked for (or demanded) a lower price per ton than they'd agreed to pay; some, mostly small producers, walked away from their commitments entirely. In a business more governed by handshakes than lawyer-drawn contracts, it's embarrassing to find yourself having to sue your customers to make them buy your product. Moreover, under Washington state law, it's not clear whether your contract is valid anyway. Grapes are specifically excepted from the law that ensures vegetable growers they won't get stiffed by the brokers who contract to sell their produce for them. If Washington state were the only place with a grape surplus, the current squeeze might relax fairly quickly and without great pain. But oversupply is a problem worldwide, with countries like Chile, Australia, and Spain all but swimming in wine and aggressively looking for someplace to dump it at just about any price. And you can already see the impact on a supermarket shelf near you. Wait till China's new vineyards come on line.

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