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Update: Economic Impact of Lake Erie Concord and Niagara Freeze Events

By Kevin Martin

In our May issue Extension Focus, Kevin Martin and Tim Weigle presented estimates of the economic impact of early budburst and freeze injury across the Lake Erie grape belt, entitled Economic Impact of 2012 Frost and Freeze Events in the Lake Erie Region.  Since then, the Lake Erie Regional Grape Program team has updated damage estimates, based on additional sampling after fruit set.

Lake Erie Regional Map
Updated map of crop injury in Concord and Niagara vineyards in the Lake Erie region of New York and Pennsylvania and estimates of economic impact from potential crop loss following July 6 assessment. Total farm gate loss increased from an earlier estimate of $13 million in May to $28 million in early July. Grape acreage shown in purple.

In an earlier article, the Lake Erie Regional Grape Program extension team  reported an estimated $13 million loss in farm gate gross receipts, based on our May 15 estimates in vineyards across the grape belt in Chatauqua County, New York, and Erie County, Pennsylvania. These losses resulted from early bud burst and up to 11 subsequent early season  freeze events, where temperatures dropped below 28 degrees F. Based on a follow-up assessment after fruit set (on July 6) across the region, we now estimate a total farm gate economic loss of $28 million dollars. 

To obtain our estimates, we subdivided the region into nine blocks based on their relative location and elevation.  We gathered crop estimation data from nine vineyards within these areas to estimate total loss.  These data were overlaid on our GIS map of grape acreage in the area as viewed by satellite photography, which we last updated in October of 2011. The mapping information allowed us to pinpoint the relative acreage in each site.

As best as we can tell, the crop size this year will be far below average but not the worst crop on record.  Three key variables, however, make this one of the worst economic losses seen in the region: Exceptionally high bulk prices, average commodity prices and above average fruitfulness will increase the total farm gate economic loss in the region to $28 million dollars. 

Yields in two areas in Pennsylvania are higher than initially expected.  Significant primary bud loss was partially offset by above average fruitfulness in the remaining primary and secondary buds.  These estimates, which rely on data from specific sites, could be the result of unusual performance, and may not reflect overall performance of the area at harvest.  What remains clear from our discussion with growers is that there are isolated areas with more crop than we initially expected.

We expected low secondary bud fruitfulness in certain parts of New York.  Once final crop estimation was complete, we were able to assess the damage caused by later frost events.  Based on low temperatures, the final of eleven freeze events significantly damaged the remaining primary buds and an exceptional percentage of the secondary buds that had already pushed.  As a result, some areas experienced near total crop loss. 

Niagara County, New York, was excluded from this assessment.  A few individual growers in that area did experience significant damage, but the overall economic impact should be offset by the above average conditions for vinifera and hybrid wine varieties.  

Assessing crop damage due to spring freeze events is always a struggle.  Due to a large amount of variation, our margin of error will remain high until after harvest.  Through our representative site location and sampling, along with the assistance of GIS mapping, we have put together the best possible estimate at this time. We've found this estimate useful for educating growers and providing advice on varying conditions across the Lake Erie grape belt, and it has also been useful to keep industry, media and legislative representatives informed.

Crop insurance will offset some losses

Full use of crop insurance would have resulted in payments in excess of $20 million dollars.  Nearly 30% of growers do not have crop insurance policies; many vineyards are insured at only low levels of coverage.  Policies known as CAT (Catastrophic) are particularly popular.  The frequency and size of claims are substantially reduced, though collections under minimalistic policies will take place this year.  Despite lower than ideal participation rates, crop insurance payments may exceed $10 million dollars this year.  Participation in crop insurance for grapes is high, relative to other crops in the region.  LERGP has been intensively educating growers about the economic value of crop insurance.

Kevin Martin is the farm business management specialist with the Lake Erie Regional Grape Extension Program and Pennsylvania State Extension.