Lake Erie Growers Respond to Markets and Freezing Temperatures
By Kevin Martin
Cornell University 3542 Turner Road
Cooperative Extension Jamestown, New York 14701
JAMESTOWN, NEW YORK --
The Lake Erie Regional Grape Program (LERGP) is a regional Extension team in Portland, New York. The team has been designed to bridge the gap between University research and local grape growers. LERGP has provided critical information and advice to growers, particularly in the past two years. In that time, the severity of market and weather related disasters faced by the grape industry have been unprecedented.
The New York grape, juice and wine market has grown into an economic powerhouse. Statewide, it has an economic impact of 7 billion dollars with fiftypercent of NYS grape production coming from growers inChautauqua County. Over fifty percent of processing, focusing on Concord juice, jams and jellies, also takes place in Chautauqua County. Tourism and wineries remain a smaller part of the industry in the county, but their growth has been critical for industry stability. All of this success has taken a century to build; unfortunately short-term challenges put this economic force at risk.
he Concord grape industry is the foundation of this economic impact, it is currently undergoing a series of significant challenges. It began when ConAgra made the decision to leave the area. The company cancelled marketing contracts and ceased processing Concord grapes. At the same time Cott Corp. began a significant reduction in marketing contracts. The short-term results have had a direct economic impact on Lake Erie region Concord growers estimated at $3.5 million dollars. Before the market was entirely saturated, LERGP worked with growers to find additional markets for an estimated 3,000 tons.
If these long-term trends continue, the impact will be much more significant. In addition to unmarketable crops, we will also see declining equity and land values for growers. Indirect impacts will also increase well beyond $3.5 million dollars, as these growers remain important employers and consumers in Chautauqua County. To survive a long period lower prices growers will need to reduce business expenditures by over $10 million dollars per year. Growers may also reduce personal expenditures as income declines.
Processor cancelations and price reductions are a direct result of a poorly performing juice market. Prices of processed juice have plummeted by 60% - 75%, in the last two years. At these prices processor margins will be razor thin, even if grape prices in 2015 remain extremely low for growers.
Low winter temperatures this past winter are also a cause for concern. With winter lows of 22 to 30 below zero, even the native Concords are showing potentially significant damages as shown by work conducted by the LERGP. Furthermore, those low temperatures will assuredly cause damage and death in more sensitive varieties, such as Riesling and Cabernet Sauvignon. Substantial damage combined with a surplus in demand may lead to a long-term decline in grape acreage. LERGP has analyzed over 12,000 grape buds to determine the extent of damage caused by winter temperatures. LERGP is working with growers to implement this information to modify pruning practices and investment strategies in an attempt to help compensate for potential damage.
This becomes a critical time for LERGP to assist in preserving the business and industry associated with grapes, wine and juice. For most growers, LERGP will continue to provide sound research based information, to enhance the long-term sustainability of the industry. Changing economic conditions may change how research is applied, which will be essential for long-term industry health. In particular, research based information helps growers in making cost sensitive production decisions. Growers balance the delicate precipice of minimal cost and maximum production. The temptation to save sometimes leads growers to a stumble off that edge.
The LERGP Extension team also provides assistance to growers looking at exiting the industry. For some, this becomes a least bad option. The loss in potential future equity is bad, but not always as great as the short-term financial concerns. The demographics of the impacted population make any action particularly challenging. Part-time and older growers are not always in a position to make investments that require long payback periods or learn new skills requiring similarly long payback periods.
Depending on crop size and demand going forward, some growers may not be in a position to maintain vineyards at low prices. The ability to do that will be based on historical performance, current strategies and future planning. More so than canceled contracts, this is an area where research based extension information can prolong survivorship.
The Lake Erie Regional Grape Program is a cooperative effort between Cornell and Penn State Universities; the participating Cornell Cooperative Extension Associations of Chautauqua, Erie, Niagara and Cattaraugus Counties in New York and Erie County in Pennsylvania; and participating industry partners National Grape Cooperative (Welch’s), Constellation Brands and Walkers Fruit Basket. For more information on LERGP, call 716-792-2800 or visit our website at http://lergp.cce.cornell.edu/
The Lake Erie Regional Grape Program is one of many programs offered by Cornell Cooperative Extension of Chautauqua County (CCE-Chautauqua). CCE-Chautauqua is a community based educational organization, affiliated with Cornell University, Chautauqua County Government, the NYS SUNY system, and the federal government through the United States Department of Agriculture’s National Institute of Food and Agriculture. For more information, call 716-664-9502 or visit our website at www.cce.cornell.edu/chautauqua. Cornell University Cooperative Extension provides equal program and employment opportunities.
Kevin Martin is farm business management extension educator with the Lake Erie Regional Grape Program, based at the Cornell Lake Erie Research and Extension Center in Portland, NY.