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Oregon acreage turns to grapes

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Sunday, June 01, 2008

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


PheasantValleyWinery1.jpg 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.


DickChristieReed.jpg
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.

Winechart.png 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.

PheasantValleyWinery2.jpg
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.”



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