JUNE 2008: SMALL BUSINESS FEATURE
Going for the Grape
More and more acreage around the state is converting to
vineyards, and it’s changing the face of
agriculture, land values and the environment.
By Jamie Hartford
Pheasant Valley
Winery in Hood River has replaced some orchard land
with vines.
PHOTO BY STEPHEN FUNK
|
|
Christie and Dick Reed’s home on Blue Chip Farm in Hood
River used to be surrounded by eight acres of Gala apple trees.
But the husband and wife, who were formerly partners in a local
winery and purchased their own vineyard in 1998, envisioned
another use for the east-facing slope where their orchard lay.
Eight years ago, they cleared the trees and replaced them with
rows of pinot noir grapes.
On a smaller scale, the transformation of Blue Chip Farm
mirrors that of many other properties around the state, where
acreage dedicated to growing wine grapes has nearly tripled
over the past 15 years. As Oregon’s burgeoning wine
industry continues to gain recognition, growers are stepping up
to increase the supply of grapes. The result is not just a
change in landscape; the conversion of land to vineyards also
affects agriculture, land value, tourism and the
environment.
Since 1992, land dedicated to growing wine grapes in Oregon
has jumped from 5,950 acres to 17,400, according to a report
compiled by the National Agricultural Statistics Service Oregon
Field Office and funded by the Oregon Wine Board, which
promotes the Oregon wine and grape industry. Vines are
replacing everything from pasture and forestland to orchards
and crops such as grass seed and wheat.
Dick and Christie Reed have replaced their apple
trees with pinot noir grapes, which are more
profitable.
PHOTO BY STEPHEN FUNK
|
|
“It was a prudent financial decision at Blue Chip Farm to
pull out the Gala apples because there was no way we could sell
the apples profitably,” Christie Reed says.
The grapes are a different story. Last year, Oregon
wine-grape growers received an average of $1,880 per ton for
their harvests, according to the NASS report. Clive Kaiser, a
professor with the Oregon State University extension service in
Milton-Freewater, estimates that the return on each acre grown
is around $5,000. Processed into wine, though, the value can
increase five to 20 times.
“There’s not a vineyard owner out there who
doesn’t, at some point, start thinking about making
wine,” Christie Reed says.
Three years ago, the Reeds produced their first pinot noir
under their own label, Wy’East Vineyards, and this year
they plan to put out 2,500 cases of wine from last year’s
vintage. They sell most of it from a tasting room on their
property off Highway 35.
Making and selling wine isn’t the only way vineyard
owners realize a profit from their land, though. Many people
buying vineyard land today are buying it on the assumption of
appreciation, says Kurt Wittman, vice president of commercial
lending for Northwest Farm Credit Services, a lender for
farmers, ranchers, fishermen, timber harvesters and rural
residents. What we’re seeing, he says, is a conversion to
the highest commercial value of the land. A plot that was
previously thought suited only for pastureland or low-value
crops is now prized as a more-valuable vineyard.
“The market is a lot more aware of the vineyard
potential of land compared to 10 or 15 years ago,”
Wittman says.
Property values in prime grape-growing areas are climbing. In
Yamhill County, which — at 5,550 acres — leads the
state in vineyard acreage, the average value per plantable acre
increased more than 45% from 2004 to 2006, according to
Northwest Farm Credit Services.
That’s keeping Mike McLain, a broker with Albany-based
vineyard real estate company McLain & Associates, busy.
“I’ve had two successive years that were
definitely the highest-volume years for my company,”
McLain says, adding that transactions have been up about 25%
from the previous couple of years.
He says about half of his clients are lifestyle buyers, such
as retirees looking for a home site surrounded by a few acres
of grapes or people who have made their fortunes in other
industries and are looking for a change of pace.
Others, though, like the Reeds, are in the wine industry to
turn a profit.
“We’re not doing this as hobbyists or just to put
our name on a label,” Christie Reed says.
“We’re trying to run it as a business.”
They aren’t alone. Patty Skinkis, viticulture specialist
at Oregon State University, says the steepest growth in
vineyard acreage has occurred since 2000. That coincides with
the entrance of larger investment-backed ventures into the
state, says Michael Crabtree, a resource conservationist with
the Yamhill Soil and Water Conservation District.
The average size of a vineyard in Oregon is around 22 acres.
Larger operations, however, are planting bigger tracts of 50
acres and up. It’s that size that Crabtree says can
create problems for the environment.
“We get pretty nervous when we get these big 100-acre
developments going in,” he says.
Though wine grapes require fewer pesticides and, in some
cases, less water than many other crops, Crabtree says
converting natural habitat to vineyards can cause soil erosion
and harm wildlife. When a vineyard is established, he says, the
area is clear-cut and the soil ripped six feet deep. With no
plant roots to slow rainwater as it runs down watersheds and
into rivers, streams and creeks, sediment builds up.
That’s bad for fish, especially threatened and endangered
species, such as cutthroat trout and salmon.
The district has been working with vineyards since the late
1980s to minimize the threat, but as more land is converted to
vineyard, Crabtree says erosion has become more of a problem.
Michael Powers, compliance and planning leader with the Oregon
Department of Agriculture water quality program, says the
department received two complaints about runoff from vineyards
in the winter of 2006–2007. This year, there were none,
though he admits that formal complaints are not really
indicative of the problem. Local districts often handle
informal complaints before the ODA becomes involved.
Crabtree says smaller vineyards aren’t typically as much
of a problem as larger operations. (Neither the ODA nor the
Oregon Wine Board tracks the size of individual operations.)
Often backed by shareholders eager to turn a profit, the
companies putting them in are pressured to develop large tracts
of land quickly. Their size exacerbates the problem, and even
though they take precautions, heavy rains can still cause
significant erosion. Staggering development of the larger plots
could help, but that cuts into profits.
Another environmental problem arises when forest land is
converted and wildlife habitat is destroyed. Of particular
concern, Crabtree says, is the decline of oak habitat in the
Willamette Valley, home to the endangered Fender’s blue
butterfly and other species. Only about one-tenth of the native
oak habitat in Oregon remains.
But Crabtree says he thinks Oregon vineyards largely are
committed to environmentally safe practices. Chris Serra,
program manager for Low Input Viticulture & Enology, a
non-profit organization that provides education and
sustainability certification for vineyards in Oregon and
Washington, says almost a third of the vineyard acreage in
Oregon is certified as sustainable.
The impact on the environment will grow as the industry
continues to grow. Sales of Oregon wine reached $207.8 million
last year — an increase of about 9.5% over 2006 —
according to the NASS report. Experts say that number could be
higher.
“A lot of the wineries don’t have enough grapes to
meet their needs,” says OSU’s Skinkis. She says
harvests are not keeping up with the demand from wineries. As
more vineyard acres come online, the state’s 370 wineries
(and counting) can ramp up production.
That’s profitable for more than just the wineries. A
2006 study, conducted by Full Glass Research on behalf of the
Oregon Wine Board, found that the wine industry generates
around $1.4 billion in economic activity in the state. In 2004
there were 8,479 wine-related jobs in Oregon, with wages
topping $203 million. The industry also contributed $92 million
through tourism that year.
One area that has seen some of those dollars is
Milton-Freewater, just across the Oregon border from Walla
Walla, Wash., where the wine industry has been thriving. In
that town and all of Umatilla County, vineyard acreage has
increased by more than half since 2004, to 688 planted acres.
Kaiser, with OSU’s extension service in Milton-Freewater,
credits the wine industry with helping the local economy after
pea production largely moved to the southern hemisphere.
Acreage dedicated to growing wine grapes has nearly
tripled over the past 15 years.
PHOTO BY STEPHEN FUNK
|
|
“We’ve seen a complete uplifting of Walla
Walla,” he says. “Tourism is booming. People are
coming in from all over the place. That’s been a major
spinoff for the valley.”
But tourism also has its downsides. Besides dollars, tourists
also bring traffic, and attempts to accommodate them bring
development to land previously used for agriculture.
“When you start doing residential overnight developments
in farmland, it becomes a concern,” says Scott Chapman,
land use and transportation issue coordinator for the Oregon
Chapter of the Sierra Club, an environmental advocacy
group.
“It’s a slippery slope,” agrees Eric
Stachon, director of communications for 1,000 Friends of
Oregon, a nonprofit organization involved with issues of land
use and planning that opposes uncontrolled growth. “When
you start building non-farm uses into farmland, you just
increase development pressure and that’s not a good
thing. It’s a challenge, but it’s a challenge our
land use system is up to meeting.”
At least for now. McLain & Associates estimates there are
between 200,000 and 250,000 plantable acres just east of the
Willamette Valley — not to mention the rest of the state.
If that is accurate, less than 10% of those acres are currently
used for growing grapes. In other words, there’s still a
lot more room to grow.
“As the wine industry grows, there will continue to be
challenges,” Stachon says. “But the benefits far
outweigh the drawbacks.”
To comment, email feedback@oregonbusiness.com.
