Agriculture + Viticulture in the Columbia Basin
2018-19 specialty publication of the Tri-Cities Area Journal of Business
Leading producers photo: RoBin WoJtaniK
Milk is the second-highest agricultural commodity in Washington, with a total production value of $1.1 billion in 2016. Ed Zurcher, owner of Zurcher Dairy in Basin City, one of about 400 dairy farms across the state, said his cows are milked twice a day, with the process beginning at 4 a.m. and cycling through all the cows before starting again at 4 p.m., seven days a week.
Agriculture adds billions to state’s economy BY ROBIN WOJTANIK
ashington state is an agricultural powerhouse, leading the nation in the production of apples, grapes, cherries, pears, hops and blueberries. Supplying the world with millions of tons of apples each year, Washington fills nearly two-thirds of the entire apple market in the United States. It’s expected the current planted acreage of wine grapes could swell from 55,000 acres to 200,000 acres eventually. But it’s not just about fruit. While Idaho would like consumers to associate its state with potatoes, Washington grows nearly a quarter of the potato crop for the country. Washington agricultural production topped $10.6 billion in 2016, according to the U.S. Department of Agriculture. The state also ranks in the top 10 when it comes to production of milk, thanks to hundreds of
dairy farms in operation across the state. Ed Zurcher owns one of those farms, milking more than a thousand cows a day at his property near Basin City. The 53-year-old has owned Zurcher Dairy since 1990, but in that time, milk prices have fallen drastically. “Prices suck,” said Jay Gordon, policy director for the Washington State Dairy Federation. “They’re horrible, terrible, rotten.” Gordon said the payments that farmers, like Zurcher, receive — known as “milk checks” — hit record lows in January 2018, following a steady decline during the past year. Gordon blames the nation’s lack of a supply management system, which is common for other crops like sugar and peanuts. He said it’s led to a worldwide oversupply that he describes as a “free market free-for-all, survivalof-the-fittest system.” Zurcher and other milk producers likely will soak up the short-term operating losses by
supplying more milk. There’s been a 13 percent increase in the past decade on the average amount of milk produced by a cow. It’s now up to 24,000 pounds for Washington, calculated on a 305-day lactation cycle. Zurcher’s cows are milked twice a day, with the process beginning at 4 a.m. and cycling through all the cows before starting again at 4 p.m., seven days a week. A two-man crew can milk about 150 cows an hour at the dairy, which is part of the Northwest Dairy Association Cooperative, selling under the Darigold name. Milk from Zurcher’s farm could end up across the state. A refrigerated tanker arrives once or twice a day to pick up milk and may drive it to Sunnyside, Spokane or Bellevue. The daily grind that comes with being a dairy farmer results in an industry that new farmers aren’t generally getting into. Gordon’s family has been in the dairy industry for 150 years, u
Focus | Agriculture + Viticulture in the Columbia Basin 3
Agriculture + Viticulture in the Columbia Basin
Table of Contents Agriculture overview Apples Exports Cherries Labor Viticulture overview Wine grapes Juice grapes Hops Potatoes Wheat Asparagus Mint
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photo: Washington potato commission
Washington grows nearly a quarter of the potato crop for the U.S. The state’s potato production value reached record highs in 2017 ($888 million) and 2016 ($813 million).
and he knows at least one farmer who boasts a family farming history going back 600 years. As milk prices are drained, Zurcher has been able to retain the 10 full-time workers at his farm. But he said issues like the proposed state carbon tax could have a detrimental effect on an industry already struggling. “It’s a challenge being an agriculture entity in a blue state,” Zurcher said. For those trying to weather the storm and stay in business, the main strategies are to increase efficiency or specialize in the product offered. With about 400 dairy farms across the state, some conventional milk farmers have begun to focus on organic milk. But even that specialty has been hit with oversupply. Milk remains the second-highest agricultural commodity in Washington, with a total production value of $1.1 billion in 2016, but that is the lowest annual value since 2010. Milk is second only to the stronghold on value provided by Washington apples. That domination started in the late 1800s when settlers arrived and
found the state, especially the central region, to have naturallyfertile soil. The first orchards were established around water sources, and the Columbia Basin irrigation project helped spread the apple industry throughout Eastern Washington. And state apple production has been on an upward trend since. “Acreage has gone up slightly, but production has doubled in the last 30 years,” said Rebecca Lyons, international marketing director for the Washington Apple Commission. State growers produced 80 million cartons of apples in 2004, compared to about 130 million today. Lyons said the “intensity of the planting” has changed, drastically increasing the number of trees in an orchard. They can now be planted much closer together, which allows for greater ease in picking. In the past, 300 trees were typical per acre. Today, it’s in the thousands. “When you think about an apple orchard, you think of idyllic trees with a canopy you could have a picnic under. But, today, it’s really just a wall of fruit,”
Lyons said. Using a rootstock with an apple variety grafted directly onto it, Lyons said the result is a more manageable orchard that can be harvested more easily. Every single Washington apple is still picked by hand, which makes labor a key issue for the apple industry. Research is constantly being done to figure out more effective and efficient ways to harvest. “A robot that could pick apples is kind of the Holy Grail,” Lyons said. No inventions have been commercially viable, with the closest being a motorized platform, known as a “platform picker,” eliminating the need for ladders. With a 2016 value of $2.39 billion, the apple crop represents nearly a quarter of the total agricultural value for the state of Washington. The Washington Apple Commission has found that the overall consumption of fresh apples in the United States remains stable. About two-thirds of what’s grown stays domestic, while the other third is exported. Washington is responsible for about 90 percent of apples sent u
Focus | Agriculture + Viticulture in the Columbia Basin 5
outside the U.S., with demand highest in Mexico, Canada and India, where apples are considered exotic. For the U.S., there’s a lot more competition in stores when it comes to fresh fruit. Crops that were once offered only seasonally can now be found year round. The apple industry works to stay relevant by increasing the types offered. “Consumers today have more choices than at any time in history on what variety to buy,” Lyons said. The state’s potato production value reached record highs in 2017 ($888 million) and 2016 ($813 million). What’s hard to measure with potatoes, though, is the value added through jobs created by the potato industry. Chris Voigt, executive director for the Washington State Potato Commission, said potatoes are a unique crop because 90 percent of what’s grown is processed into something else. Those processing jobs make up
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part of the 36,000 people employed by the potato industry in the state. A January 2016 study by Washington State University-Pullman found that the state’s potato industry generates $7.42 billion in economic output for Washington. Despite this, potato growers are concerned about the erosion of potato consumption. People tend to eat fewer potatoes as they don’t make home cooking a priority. But the demand for potatoes is still growing on the international front, increasing about 6 percent to 7 percent a year, especially in the Pacific Rim. Voigt set out to remind people of the health benefits of the basic potato in 2010 when he vowed to spend 60 days eating potatoes for every meal. The decision came as the USDA was poised to kick potatoes out of federal programs like school lunches. “I can’t say it translated to sales,” he said, but people’s attitudes toward potatoes saw a small bump around the same time the story
made national headlines. “I’d like to think it reminded people just how healthy and nutritious potatoes are,” he said. Using that star starch, there’s a goal of increasing the state’s potato production by 25 percent over the next 20 years. This could come through increased yields on current land, but also by finding additional ground to plant and potentially increasing crop rotation through new advances in soil management. Voigt said he believes Washington potatoes can play a key role in supplying food to an ever-increasing worldwide population. “We’re at a point where we’ve got to provide food to this growing world,” he said. As the growing population puts increasing demands on products delivered by farmers and ranchers, Washington continues to be front and center in providing hundreds of millions of tons of fruit, vegetables and dairy products throughout the continent and across the world. l
State sends fruit to more than 60 countries
BY LAURA KOSTAD
ashington’s $3 billion apple industry is not just the state’s biggest crop, but it also accounts for two-thirds of total U.S. apple production. Proactive international marketing campaigns, coupled with intensive breeding programs, are key factors in making the state the nation’s apple capital. Washington’s “nutrient-rich soil, an arid climate, plentiful water and advanced growing practices provide the right ingredients for producing top-quality fruit,” according to the Washington Apple Commission. Eastern Washington also offers room to expand, where the more developed, competing states of New York and Michigan do not, said Todd Fryhover, commission president. Some 1,700 growers with orchards averaging 100 acres in size make up Washington’s industry, contributing to the production of about 130 million, 40-pound boxes, or 10 to 12 billion individual apples, annually, which equates to about 3 percent of international 8 Tri-Cities Area Journal of Business
production, Fryhover said. Though it might not sound like much market share, Washington exports one-third of its apples to more than 60 countries around the world. “We really are dependent on international trade. … Our No. 1 objective is to promote Washington apples in foreign countries to assist in pulling the product through the marketplace,” said Fryhover, who said Washington has an $8 million international marketing budget. “We have 11 reps around the world running promotional and marketing concepts within their countries to assist importers, wholesalers and retailers,” he said. Canada and Mexico take the top spots for U.S. export markets, with the third and fourth spots being India and Taiwan, Fryhover said. At Pasco-based Douglas Fruit, a family-owned orchard and packing house operation that serves 25 other orchards in the area, co-owner Jill Douglas said the company exports about onequarter of its apples. “Can’t complain; the market movement is pretty good. We
have good export markets. … India and Taiwan have been great to us,” Douglas said. Fryhover said Asia and the Middle East present new market opportunities, especially thanks to the proximity of Washington’s growing region to ports in Seattle and Tacoma, the gateway to the Pacific. “When we look at the world, we see Asia as value-plus markets. Places like China are where we’re focusing our attention; Vietnam is another place, along with Indonesia,” Fryhover said. China is responsible for 45 percent of the world’s apple production, with two billion bushels harvested this past year, versus 139 million bushels produced in the U.S. “Every day we’re fighting to get access, maintain access and expand on that access,” Fryhover said. The European Union remains a tough market to enter due to its high level of production. Despite having a smaller population than the U.S., the region produces three times as much volume. Additional opportunities are
being explored in South and Central America as well. “We are competitors out there in a very crowded marketplace,” Fryhover said. A common theme across international markets is the introduction of new apple varieties tailored to consumer tastes. Fryhover said consumers are beginning to show a preference for the new apples on the block over old standbys. Eight varieties have made up 97 percent of Washington’s orchards for decades, out of the 2,500 or so known domestic varieties and 7,500 distinct breeds grown worldwide. Innovations in DNA sequencing and other advancements in apple breeding science are fasttracking the birth of new varieties. One of these is the Cosmic Crisp, a “sweet and tangy” crossbreed between the Enterprise and Honeycrisp varieties developed and patented by Washington State University’s apple breeding program. It will be made exclusively available for 10 years to all Washington growers starting in 2019. Some Cosmic Crisps will become available in retail stores next year. “Cosmic Crisp has a dense cell structure, so the apples have a firm palette texture. No one is interested in eating a soft apple,” Fryhover said. Another focus of breeding programs is the development of higher density varieties. “There’s been a movement away from the traditional 400 trees per acre,” Fryhover said. “We’re now seeing (thousands of) trees per acre. … We’re seeing continued growth; new planting is going in annually.” Another trend is expansion into organics. With consumer demand on the rise for organic produce, growers are responding. “We’ve converted all of our stone fruit to organic, and have converted a lot of apples to organic from conventional,” Douglas said.
photo: washington apple commission
Some 1,700 growers with orchards averaging 100 acres in size make up Washington’s apple industry, contributing to the production of about 130 million, 40-pound boxes, or 10 to 12 billion individual apples, annually.
“The organic market’s been growing at a pretty steady pace and the demand’s there.” Douglas said Douglas Fruit has been growing organics for about 11 years. “We’re converting some of our best (apple) varieties and orchards to organic,” she said. Washington Apple Commission officials report more than 25 percent of apple packers in the state hold organic handlers’ certificates and that Eastern Washington’s “dry climate and ideal temperatures reduce the number of disease and pest problems,” aiding the cultivation of organic produce. “It costs more to grow it, no doubt about it,” Douglas said. “But … people have a choice and we’re
giving them that choice.” Like others in the agricultural sector, apple growers and packers are feeling the pressure of increasing production costs, primarily due to the scarcity and rising cost of labor. “It’s our No. 1 issue by far and largest constraint by far,” Fryhover said. All Washington apples are picked by hand. This is not only due to the stringent quality and grading standards Washington enforces, which are stricter than others used throughout the world, but because there aren’t machines for harvesting apples, he said. u
Focus | Agriculture + Viticulture in the Columbia Basin 9
photo: washington apple commission
With a 2016 value of $2.39 billion, the apple crop represents nearly a quarter of the total agricultural value for the state of Washington.
Fryhover said the industrywide crusade for higher-yielding apple varieties is directly linked to the issue of labor. “There are only two things growers can control: the amount of product and the yield per acre,” Fryhover said. “We’ve been here 30 years,” Douglas said. “And the last year (to) year and a half have been the toughest ever. … We’ve had high turnover, which usually is no problem at packing plants. … We have more jobs available, but the people just aren’t there.” Douglas said Douglas Fruit uses the U.S. Department of Labor’s H-2A program to acquire enough workers to get them through all seasons. She said the company needs a consistent labor force all year long. Douglas Fruit’s workers arrived March 15. “We’re bringing them in (one to two months) earlier 10 Tri-Cities Area Journal of Business
than last year. … They will work all through harvest,” Douglas said. “It takes 60,000 people to harvest the apple crop in Washington. Fifteen to 20 percent come through (H-2A),” Fryhover said. “We’re still heavily reliant on transitory labor. … Someone who is proficient can very easily make $150 to $200 per day.” He said typical U.S. workers don’t like the difficult physical labor and that it’s seasonal work. “Smaller farms can’t (afford to do H-2A) though; it doesn’t make sense, and (their crops are) often not diversified, so it’s very difficult,” Douglas said. “All costs have gone up,” Fryhover said. “Even at minimum wage, we can’t even remotely compete.” One of the growers Douglas Fruit works with is Denny Hayden of Hayden Farms in Pasco. “The capital costs are tremen-
dously high on developing any orchard right now; it’s $25,000 to $40,000 per acre just to establish it,” he said. “This is not corporate America, it’s families that run these organizations,” Fryhover said. “This is a default system, not a preference. … Could there be a better solution? Absolutely. We’ve been asking for a better solution for a long time and haven’t gotten one.” As the region prepares for the upcoming season, Douglas said the apples are on schedule for this year’s harvest, though she said there are still “a couple months of weather to get through to be in the safe zone.” “The state of Washington is still one of the best places in the world to grow apples,” she said. “Hopefully we’re going to be in business a long time.” l
Focus | Construction + Real Estate in the Tri-Cities 11
photo: noRthwest seapoRt alliance
The Port of Tacoma recently received eight new cranes as part of $250 million in improvements being made to the Husky Terminal. The Northwest Seaport Alliance led the U.S. in exports of eggs and dairy, vegetables, coffee and tea, oil seeds and prepared fruits and vegetables in 2017.
Recent changes in trade policy cause worry BY JENNIFER L. DREY
ashington’s agricultural exports increased significantly in 2017, but uncertainty surrounding U.S. trade policy has some producers worried the state may be on the verge of losing its competitive edge overseas. Although the numbers are still being finalized, Washington’s agricultural exports appear to have increased by at least 10 percent in 2017. The increase adds to the $6.8 billion of Washingtonproduced agricultural goods exported in 2016, said Rianne Perry, international marketing manager for the state Department of Agriculture. Double-digit increases were seen in cherries, which were up 18 percent year over year; hops, where export numbers jumped by 20 percent; and beef, which increased by nearly 50 percent.
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“Things are looking really good with exports,” Perry said. Long-term trading partners Canada and Japan were the top two destinations for Washington’s agricultural exports, but Washington exports to China also increased significantly, with year-over-year growth of about 30 percent. The number of cherries exported to China grew by almost 75 percent. “China is just growing so significantly,” Perry said. “The middle class is growing and consumers are able to spend more on our products.” About two-thirds of Washington’s agricultural exports are destined for Asia, in part because its proximity means that ships can arrive at key ports up to two days sooner than those coming from other areas. After China, the next three destinations for Washington exports were the Philippines, South Korea and Taiwan, coming in
fourth, fifth and sixth places, respectively. In total, $14.5 billion of goods were exported through Washington’s ports in 2016, a figure that includes $7.7 billion of exports coming from other states. As the third-largest exporter in the country, behind California and Louisiana, Washington has a complex but well-designed system to support its agricultural exports. Key to that system is the Northwest Seaport Alliance, or NWSA, which manages the marine cargo business and facilities for the ports of Seattle and Tacoma. The operating partnership between the two ports is the first of its kind in North America. In support of agricultural exports, NWSA has more than 40 companies offering cold storage and refrigerated cargo-handling services near the ports, which includes more than 2.3 million square feet of temperature-controlled warehouse space, according
to Tara Mattina, communications director for NWSA. The international container terminals have about 5,200 plugs for refrigerated containers and more are on the way, she said. The fourth-largest container gateway in North America, NWSA invests in projects that will support Washington’s export market. The alliance is working on upgrades to handle larger ships being introduced into the marketplace. Two key container terminals, the Husky Terminal in Tacoma and Terminal 5 in Seattle, are undergoing improvements. The Husky Terminal is a bit ahead with $250 million in improvements, which includes eight new cranes, Mattina said. Despite the state’s many strengths in the ag export market, some growers and industry representatives are concerned about recent changes in U.S. trade policy. The country’s formal exit from the Trans-Pacific Partnership, or TPP, is chief among those concerns. Eleven
other Pacific-touching countries, including Canada and Japan, are proceeding with a new trade agreement to lessen tariffs for member countries over the nineyear period of its implementation, in turn making U.S. products more expensive by comparison. “We will begin to start seeing more disadvantages to us on price versus our competitors who are in the TPP because they’ll have no tariffs on their products; whereas, our products will be more expensive,” Perry said. In the absence of being a part of the TPP, bilateral agreements—or one-on-one agreements between the U.S. and each of the member countries—will be an absolute necessity for strengthening the U.S. trading position, she said. Separate agreements will need to be written, a process that will take time. As farmers wait for clarity on trade policy in the Pacific, renegotiations of the North American
Free Trade Agreement, or NAFTA, have taken front and center, adding additional uncertainty for those in the export market, Perry noted. NAFTA is the agreement that regulates trade between the U.S., Canada and Mexico. The concern in both cases is that competitors from foreign markets will be quick to fill any void left by the U.S. “With NAFTA renegotiations and the TPP, trading partners that we’ve had stability with and that we’ve had long-term relationships with are starting to look elsewhere and explore other options,” Perry said. “They’re negotiating free-trade agreements with our competitors.” The European Union, for instance, is already negotiating free trade agreements with Japan and Mexico. That’s particularly concerning to the potato industry, where 70 percent of what’s grown in Washington is exported out, mostly to the u
Focus | Agriculture + Viticulture in the Columbia Basin 13
Pacific Rim, said Chris Voigt, executive director of the Washington Potato Commission. Japan, which is the biggest market for Washington potato products, has indicated the country isn’t interested in forming bilateral agreements with the U.S., he said. “(Potato growers) are definitely concerned. This is their livelihood,” Voigt said. Washington has a tremendous amount of infrastructure to support potato growers, such as processing and storage facilities that can’t be used for anything else, he said. “If exports go away, it would be devastating to our industry. Everybody is definitely nervous,” Voigt said. Representatives from the wheat industry also expressed concern. Nearly 90 percent of wheat grown in Washington is exported, much of it to Asia, which has a strong preference for soft white wheat grown in Washington state. Of the 6 million metric tons of wheat imported by Japan each year, more than 3 million metric tons are imported from the U.S. That long-held 50-percent U.S. market share in Japan is expected to drop to 23 percent following implementation of TPP-11. “We’re really concerned about trade right now,” said Michelle Hennings, executive director of the Washington Association of Wheat Growers. Her organization is hopeful the U.S. will reconsider its position and re-engage the TPP. In the state Department of Agriculture’s view, the critical factor is simply that the U.S. get some sort of agreements in place, Perry said. “For us, either (the TPP or bilateral agreements) is good. We just don’t want to be without either,” she said. “We absolutely need one or the other.” l
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A gambler’s crop photo: James michael/noRthwest cheRRY gRoweRs
Cherry orchards at mercy of Mother Nature BY LAURA KOSTAD
he Northwest saw one of the most perfect cherry crops last year, setting new production and export records. In 86 days, the nation’s leading cherry region shipped 26.4 million, 20-pound boxes of cherries to eager markets around the world. “We had fantastic weather last year,” said Denny Hayden, owner of Hayden Farms in Pasco, which grows cherries and apples and operates a packing house in Yakima. “Lots of warm, humid temperatures. … The flowers lasted a long time, and bees were able to work every day. … (There wasn’t) a lot of wind and rain that inhibited pollination.” He reported most of the Northwest’s cherry orchards had a full crop last year, but this spring’s weather is forecast to adhere to typical regional weather patterns. Despite advances in technolo-
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gy, cherry orchards still are very much at the mercy of Mother Nature, Hayden said. Helicopters to dry cherries on rainy days; wind machines to generate warmer surface temperatures when there’s frost; electronic soil monitoring; real-time weather reports; the application of edible films to protect fruit; fungicides to prevent powdery mildew; and natural compounds to help cherries avoid absorbing excess moisture are some of the defenses orchardists deploy to protect their fruit. “It’s a gambler’s crop,” said James Michael, who, as vice president of marketing at the Washington State Fruit Commission, is devoted to working with his team to find new ways of promoting Northwest cherries domestically and abroad. “It’s an exciting fruit that’s full of risk and occasional reward,” Hayden said. So, what made 2017 a bumper
year? The Northwest in general is well-suited to growing cherries, with an estimated 61,000-plus acres under cultivation—42,198 acres of which are in Washington. “What we have going for us is a more temperate climate and water,” Hayden said. “We have reliable (water) systems … a more stable supply.” Additionally, microclimates throughout the region enable cherries throughout Eastern Washington to ripen at different times, lengthening the season. “The 2017 Northwest cherry harvest was one of extremes – record crop volume, record shipping volume and record dry weather that came with extreme heat from mid-June through July,” said B.J. Thurlby, president of Northwest Cherry Growers and the state fruit commission. Last year was the driest ever in Washington and the greater
photo: james michael/northwest cherry growers
Washington grew 255,000 tons of sweet cherries and 25,300 tons of tart cherries in 2017.
Northwest region in more than 100 years, said Cliff Mass, a professor of atmospheric science at the University of Washington. Thurlby said “a wet spring gave way to a rapid switch to summer and pushed the late crop ahead dramatically,” resulting in the fastest acceleration to ripeness observed in almost a decade. “For the first time in four years, the industry saw a significant increase in volume in August,” Thurlby said. “Most industry crop experts expect that the Northwest production region will see significant volume in August in the years ahead.” This is partly due to changing seasonal weather patterns, but primarily a result of decades of experimentation and innovation leading to the development of early- and late-ripening cherry varieties more resistant to mildew and other pests. Michael said a gradual, steady increase in acreage and tonnage has occurred in the past 10 to 15
years. Industry studies show cherry acreage in the Northwest increases by 2 percent per year, on average. He noted that 20 millionbox seasons are becoming the norm. In 2017, this culminated in breaking monthly shipping records and daily shipping averages. The industry averaged 286,280 boxes per day, for 42 days straight, shipping out 500,000 boxes per day. Over the next five years, the market is projected to continue to produce 200,000 to 250,000 tons of fresh cherries per year. Based on U.S. Department of Agriculture data, 300,000 to 350,000 tons might be realized under ideal production conditions. But the industry still has its challenges. Hayden said increasing the efficiency of labor while maintaining the high standard of quality the Northwest is known for is the goal.
He said scarcity of labor puts cherry growers in a tough spot, especially small operations that often don’t have the capital to cover additional costs during the short, four- to six-week picking period when orchard employment can easily increase tenfold. To streamline the process, many orchardists are doing away with ladders and instead maintain smaller, more compact trees accessible from picking platforms. “They’re much more efficient, at least 30 percent more, sometimes even more,” Hayden said. Hayden said the federal government’s H-2A guest worker program, which legally sources workers from around the world, has been helpful in supplying laborers, where domestically, demand far exceeds the available work force. He added that though Washington’s high minimum wage attracts workers to the area, it’s made it hard on smaller orchards to spread out their costs. u
Focus | Agriculture + Viticulture in the Columbia Basin 17
photoS: james michael/northwest cherry growers
Over the next five years, Washington growers are expected to continue to produce 200,000 to 250,000 tons of fresh cherries per year.
Northwest cherries ripen following California’s long season, so many laborers follow the work north to the Columbia Basin and Yakima Valley regions, which peak earlier in the Northwest season. The introduction of opticalsorting systems at packing houses within the past five years is phasing out hand-sorting. As Michael explained, a dozen pictures are taken of each individual cherry,
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looking for defects or blemishes. The machines can even detect internal bruising using infrared. “The technology has enabled us to put out an even more reliable product,” he said. The industry’s biggest focuses right now are capitalizing on new markets, especially in Southeast Asia, and continually improving advertising strategies. “The healthy snack trend is
driving business to the produce department, and products from all around the world are competing for the same shelf space,” Michael said. He explained that grocery store circulars still reflect what shows up on the American plate—whether viewed online, in the newspaper or via smartphone app. “It’s still how food decisions get made in America,” he said. Michael said communicating with retailers as cherry season approaches and before it ends is key. “The first half of the season is extremely important for Tri-Cities growers. Studies have also shown that for the second half of the crop … it’s every bit as important to tell (consumers) it’s the last chance to get Northwest cherries,” he said. “If we could get people to buy two bags instead of just one before (the season’s) over, it could change the industry. … Growers can only do so much; the industry and retailers have to be ready,” he said. l
photo: Washington state wine commission/andréa johnson photography
The average annual wage for those working in agriculture in Benton County in 2016 was $27,300, and in Franklin County it was $28,150.
Fierce wage competition Farms compete for laborers as worker shortage continues BY JENNIFER L. DREY
n ongoing shortage of agricultural laborers is forcing some Washington farms to get creative in their efforts to attract and retain workers, while others are looking to the federal government’s guest worker program to bring in the help they need. More than 96 percent of Washington farms experienced a labor disruption in 2016, while 58 percent of farms reported they were affected by labor shortages that year, according to a recent Washington Policy Center farm survey. Farms have reported that the situation only intensified in 2017, said Madi Clark, Washington Policy Center’s agricultural policy research director. “The number of workers available to work in the ag industry has slowly been decreasing, and depending on
who you ask, there’s a lot of reasons why that’s happening,” said Ignacio Marquez, regional assistant to the director at the state Department of Agriculture. One of the primary drivers of the decrease is that fewer people are crossing the border from Mexico, both legally and illegally, as potential laborers are deterred by a strengthened economy in Mexico and increased border security, Marquez said. The resulting jobs simply aren’t being picked up by U.S.born workers, who find them unattractive due to the intensity of the labor and seasonal nature of the jobs. In the past, migrant workers from other parts of the U.S. have come to Washington to fill the gap. But that too has slowed, as agricultural workers who are already in the country have become more likely to prioritize
staying in one community than they were in the past, Marquez said. “The workers that did this work in the past are getting older or in some cases have moved on to different types of work in different industries,” Marquez said. “As people get more situated, they move to different industries.” Potential farm laborers often look to the construction industry for year-round work, where pay can be significantly higher. The average annual wage for those working in agriculture in Benton County in 2016 was $27,300. Construction laborers earned an average wage of $57,017 that same year. Franklin County numbers were similar with average wages for agricultural workers at $28,150, versus $47,167 in construction in 2016, according to figures provided by the state Employment Security Department. With fewer people available to meet the demand for agricultural labor, wage competition has become fierce among farms, u
Focus | Agriculture + Viticulture in the Columbia Basin 19
photo: james michael/northwest cherry growers
More than 96 percent of Washington farms experienced a labor disruption in 2016, according to a recent Washington Policy Center farm survey.
making high labor costs one of the most challenging factors currently facing the industry. “If farmers can’t afford to pay the premium rate for picking cherries or apples, then they really struggle in hiring their work force,” said Ajsa Suljic, regional labor economist for the state Employment Security Department. Suljic said demand for labor tends to peak in late May or early June with the cherry harvest. While those months tend to bring in migrant workers from other areas, most of them have left the area by the time the apple harvest comes around, she said. The remaining workers will go where pay is highest and are even likely to leave a job unannounced if they find better pay elsewhere. With the intensity of the competition to retain workers, farms are evaluating their operations for factors beyond just pay that will make them more attractive to workers, Marquez said. “I think the ag industry is looking at all options right now and seeing what fits best for 20 Tri-Cities Area Journal of Business
them. In some cases, work sites or orchards are in very remote areas, and they have to be very creative to attract people to drive out miles away from the nearest town,” he said. In the apple and cherry industries, that newfound creativity has taken the form of revamped planting patterns where newer, shorter varieties of trees are replacing older trees. The newer trees are typically planted closer together, which makes harvesting less difficult for the workers. Some farms are also planting additional crops to create work throughout the year for laborers. An apple or cherry producer may choose to add peaches, blueberries and other seasonal fruits, for example, to ensure year-round work, Marquez said. Clark at the Washington Policy Center believes that the market will naturally fill in the labor gap with a certain level of mechanization. Marquez agreed that mechanization will help, but said the industry is at least 20 years from being fully mechanized. “There is some mechanization
out there, but it’s not at the point where the industry can look at this as a solution,” he said. “The machines that are out there don’t produce as fast as a human being, and there’s so many other variables — the terrain, the weather, the type of fruit that you’re picking.” That said, some farms are using mechanization to make work easier where they can, such as offering automated platforms rather than ladders to use during harvest. There are also computerized systems that check the moisture levels of crops in the fields and vacuum systems that take fruit directly to the bin for the worker, he said. In dealing with labor shortages, Suljic said a growing number of Columbia Basin agricultural employers are also turning to the federal government’s H-2A guest worker program, which allows them to legally hire foreign workers to fill seasonal, time-sensitive agricultural positions when there aren’t enough U.S. workers available. Statewide, the number of certified H-2A workers was nearly 14 times greater in 2015 than in 2006, according to a recent state Employment Security Department report. “Americans simply don’t want to do these seasonal, labor-intensive jobs. The guest worker program fills this void,” said Dan Fazio, CEO and executive director of Wafla, a nonprofit agricultural association that provides labor and employment advice for its members, as well as files H-2A applications. In 2017, Wafla filed more than 200 H-2A applications for 14,000 positions, demonstrating a 29-percent increase from 2016. Wafla filed 60 percent of all H-2A applications filed in Washington. In mid-February of this year, 117 H-2A applications had already been filed in Washington versus just 78 applications at the same time in 2017. “H-2A makes sense from an
economic perspective,” Clark said. Under the program, employers and laborers enter into a contract that specifies wages and length of work so that both employer and employee gain stability. “It’s a reliable source of labor because they lock into a contract with one farm and stay with that farm,” Clark said. However, the program also can be expensive, as it requires the employer to pay for the workers’ travel expenses, food, housing, child care and other social services. Additionally, some employers find the program to be difficult and time consuming to use. Large farms often are equipped to bring in workers under the H-2A program without outside help, but the red tape and expense of the program may prove more challenging for smaller farms, which are often hurt the most by labor shortages. Small farms sometimes choose to hire contractors who do the actual work of hiring the H-2A employees, Suljic said. Making H-2A easier and less costly to use will be necessary in solving the labor shortage in Washington, Fazio said. That’s why his organization keeps an open dialogue with state and federal government agencies involved in the process. “We are always looking for ways to work with these agencies where willingness on their side is open to make the process run smoother and more efficiently, especially when we see areas that are causing delays,” he said. Given the programs that are currently in place and the conversations that are happening, Suljic was optimistic about the future of agricultural employment in Washington. “I just think that this conversation and the talks that are happening are critical for every side in order to have a healthy work force going down the road,” Suljic said. l
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Focus | Agriculture + Viticulture in the Columbia Basin 21
Washington production, by the numbers APPLES
2016 2015 2014 2013 2012
165,000 156,000 148,000 148,000 148,000
$2.39 B $2.31 B $1.89 B $2.13 B $2.48 B
2017 2016 2015 2014 2013
165,000 170,000 170,000 165,000 160,000
$888.03 M $813.31 M $772.31 M $771.21 M $792.00 M
2016 2015 2014 2013 2012
52,000 49,000 48,000 45,000 43,000
$313.2 M $254.1 M $251.9 M $233.1 M $195.5 M
2016 2015 2014 2013 2012 2011
21,000 22,000 24,000 24,000 24,000 26,000
$46.4 M $34.5 M $49.8 M $44.4 M $53.5 M $45.4 M
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Vines reign supreme photo: washington state wine commission/andréa johnson photography
Red Mountain, between Benton City and West Richland, was designated a sub-American Viticultural Area in 2001. It now boasts 54 vineyards covering more than 2,300 acres.
State boasts viticulture advantage BY ROBIN WOJTANIK
rowing high-quality wine grapes that become awardwinning wine and millions of tons of juice grapes that become America’s best-known grape juices make up the viticulture industry in Washington state. Washington’s massive grape crop is among the 10 highest-valued crops in the state, ranking ninth in 2016, according to the U.S. Department of Agriculture, after producing nearly a halfmillion tons of grapes valued at $359 million. The 2016 yield was especially abundant, up a quarter over the previous year due to a successful crop of wine and juice grapes. Most of these grapes are destined to become wine as Washington sits behind California as a leading producer of premium wine for the U.S. It’s carved out a niche for premium taste without a premium price. “The inputs are a lot less. The acreage cost is way more in Napa,”
said Steve Warner, president of the Washington State Wine Commission. “Here, you can go in and still plant a vineyard.” New growers are getting into the business without a past history of farming. “There’s still room for growth, whereas California is planted out and they’ve run out of water,” said Dick Boushey, a longtime grower and vineyard manager. “You can come here for a quarter of the investment and get into the business.” Washington has nearly doubled its acreage of wine grapes in little more than a decade, from 30,000 acres in 2006 to 55,000 today. Industry experts predict it will swell to 79,000 acres by 2023. Ste. Michelle Estates President and CEO Ted Baseler envisions even greater growth, of up to 200,000 acres of wine grapes — four times what is currently planted — in 25 years. What’s fueling the rapid growth is a reputation for better wines at a better price.
“Washington knocks it out of the park when it comes to the quality of wine you get compared to the price you pay,” said Trent Ball, agriculture department chairman for Yakima Valley College. “Ste. Michelle is driving the growth. As they grow and expand, the Washington market is competing on a global scale.” Ste. Michelle Wine Estates gobbles up two out of every three wine grapes grown in the state. Much of the expansion of Washington’s wine grape acreage comes from current growers, including some who remove juice grapes to replace them with higher-valued wine grapes. But that doesn’t work for every grower. “There is temptation to do that. The challenge is finding contracts to do that. That’s the struggle with a smaller grower,” said Ryan Schilperoort, owner of Ryan Schilperoort Farms in Sunnyside. Contracts are tied to a wine grape crop, with growers making arrangements to sell the fruit before it’s grown. u
Focus | Agriculture + Viticulture in the Columbia Basin 23
“When you pick other crops, you put them on a truck and hope someone sends money back,” Boushey said. The demand on Washington’s wine grapes is also market-driven, as the increasing popularity of red wine has replaced a dominance of white wine grapes grown in the state in the past few years. It’s a challenge to stay ahead of consumers’ expectations. “If you need more wine, it’s a three- to five-year process,” Ball said. “So you’ve got to be forward-thinking, knowing what’s the demand and where the market’s going so you can bridge that gap.” Sagemoor Vineyards, just north of the Tri-Cities, grows about 60 percent of its grapes for red wine and 40 percent for white. “In five years, we could be close to 70 to 30,” said Kent Waliser, director of vineyard 24 Tri-Cities Area Journal of Business
operations. “The sites we have are warm and there seems to be a trend in Washington to move white wine to cooler sites. As we do that, the white wines are going to get better and more interesting.” It’s not just growing the grapes but providing the infrastructure to process them once picked. “We exceeded what we could actually crush and process. New vineyards are putting out earlier, more per acre and better quality. We left a lot of fruit on the vines last year because we didn’t have room for it,” Boushey said. This can be an added strain as Washington adds two to three wineries, on a net basis, each month. “If a winery wants to grow really quickly, it’s hard to find contracts with growers to meet their demand. Some may start their own vineyard,” Warner said. Despite the growing global
thirst for Washington wine, Warner would like to see more bottles poured here at home. Across all the wine sales in Washington, less than half of the sales were on bottles made in the state. “We have a market share of 40 percent in Washington,” Warner said. “Every other wineproducing region has at least a 70 percent market share in their own market.” He’d like to see wine drinkers get behind local growers and winemakers in the same way many embrace the farm-to-table concept. “Support our local farmers and local winemakers. We’d like locals to demand locals,” he said. Juice grape growers also would like to improve the perception and understanding of the product that comes from their crop. Consumers have moved away from fruit juices in recent years,
photo: Washington state wine commission/ andréa johnson photography
and 100 percent grape juice tends to be the highest priced in the market. Growers say grape juice’s nutritional benefits, like being chock-full of potassium, also are often overlooked. Schilperoort said he gets it, when compared to wine. “There’s not too much romance in a glass of grape juice. But it’s actually good for you. It’s a heart-healthy product with natural sugar,” he said. Grape juice that isn’t certified organic still is likely to be grown mostly naturally, without much need for insecticides or fungicides since disease is almost nonexistent among Washington juice grapes. While still the nation’s largest producer of juice grapes, Washington growers face their biggest competition from spots on the East Coast, where Concords were first planted. New York produces the second most juice grapes domesti-
cally, followed by farms planted around Lake Erie, like Michigan and Pennsylvania. Unlike farmers in the East, Washington’s Concord growers must irrigate their crop. The setup costs for irrigation and trellis systems can cost up to $8,000 an acre, which can be a deterrent for growers looking to increase acreage. As a Concord grape grower, Schilperoort, a third-generation farmer, is confident the dip in demand is only temporary. “Concords have always been a little cyclical as far as pricing. They dip and they climb. We’re in a cycle where it’s been fairly low, but it’s taking a while to climb out of the basement,” he said. He hasn’t reduced any acreage, and recently pulled 10 acres of old Concord vines to replace them with new ones. “Everyone in the industry says it will and I believe it will, it’s just
taking time,” Schilperoort said. Juice grape growers continue to supply to national brands like Welch’s, Smucker’s and Tree Top, while wine grape growers are starting to see their own names on the bottles they had a hand in producing. “Literally and figuratively, the wine is made in the vineyard,” Waliser said. Sagemoor has begun acquiring wines from some of the customers it has sold grapes to as a way to showcase and raise awareness of the vineyards “where the wine is made to start with.” Those vineyards across Washington are crushing their markets, from mass production of Concord grapes to increasing a worldwide appetite for their wine. “It’s amazing how we’ve grown and become a significant player in the world even just in 10, 20 years. Now we can be as big as we want to be,” Boushey said. l
Focus | Agriculture + Viticulture in the Columbia Basin 25
Steady growth photo: Washington state Wine commission/andréa johnson photography
Kent Waliser, director of vineyard operations for Sagemoor Vineyards, just north of the Tri-Cities, grows 60 percent of its grapes for red wine and 40 percent for white wines.
Wine grape demand nearly outpaces supply BY ROBIN WOJTANIK
ashington has developed a reputation for over-delivering on the quality of wine as it relates to the price of the bottle, creating an increasing demand for the state’s wine grapes. “You can’t make good wine with bad grapes,” said Vicky Sharlau, executive director of the Washington Winegrowers Association. In the past five years, acres dedicated to wine grapes have increased by 18 percent to 55,000 acres. A recent estimate from Ste. Michelle Wine Estates president and CEO Ted Baseler predicted the state has room for 200,000 acres of wine grapes. Getting to that figure wouldn’t just come from farming new land, as was the case on Red Mountain, but also by finding new groundwater opportunities or converting other crops to wine grapes. “There’s no stopping Washington,” said Steve Warner, president of the Washington State Wine Commission. “We will become the No. 1 product in the
26 Tri-Cities Area Journal of Business
state.” Apples currently boast the top ranking. Warner pointed to Red Mountain’s barren land and sagebrush before it became a Washington wine hotspot, due to the high quality of fruit coming from this sub-American Viticultural Area, or AVA. It is part of the Yakima Valley AVA, and was identified in 2001. It now boasts 54 vineyards covering more than 2,300 acres. AVAs identify designated wine grape-growing regions with unique and distinguishable geographic features. There are currently four applications for new Washington AVAs in the pipeline, including Candy Mountain in Benton County and White Bluffs in Franklin County. The two others include Klickitat and a portion of Adams and Grant counties. “The addition of sub-AVAs is definitely a trend,” Sharlau said. Wine experts say Washington’s all-important terroir is perfectly suited for wine grapes, from soils, mountain snowpack for irrigation water to a daily shift in temperatures that can be as much as 47 degrees during the
growing season. When those grapes are ready to be harvested starting in mid-September, fall temperatures quickly set in, which helps lock in acidity, creating a better fruit for winemaking. Despite these ideal conditions, Washington is still considered a fairly young player on the winemaking scene. “It’s taken us a long time in Washington to realize we’re a wine state,” Sharlau said. “It’s amazing that we didn’t figure this out sooner,” Warner said. It took trial and error, combined with winemaking pioneers who set the bar high for the rest of the industry to follow. “We have to constantly remind ourselves that even though we’re doing quite well and have huge growth potential, we’ve only been at it for a very short time when it compares to the global wine clock,” Warner said. “We’re still just on a first generation as compared to 25 generations elsewhere.” Dick Boushey is one of those first-generation wine grape farmers. He moved to the Yakima Valley in the late ’70s and planted his first crops in 1980.
“At the time, wine grapes were sort of a sideline. They were not taken very seriously in the early years,” he said. He planted Concord juice grapes at the same time he planted wine grapes. He also was an apple and cherry farmer. “When I first started, farmers looked at it as a novelty,” he said. “Like, ‘This will never really be established.’ Dr. Walter Clore had just finished his 10-year research project where he looked at 100 different wine grape varieties and people were trying to figure out what it meant.” Boushey had to learn along with the rest of the growers. “I planted Merlot in deep soil that was too fertile, where you really want leaner soils. It took me 10 years to figure out what I was doing, and then I’ve spent the last 25 years having to go back and re-educate myself,” he said. Boushey recalled that lack of initial knowledge and insight was overcome by a willingness to learn. Since 1980, his vineyards have sold grapes to about 40 wineries; he manages multiple properties on Red Mountain; and has been named Grower of the Year by both the Washington State Wine Commission and Wine & Spirits magazine. “My little career has grown with the wine industry,” he said. The relationship between growers and winemakers is considered critical to the ongoing success of the industry. “You see more vineyard-designated wines, growers’ names on bottles. That’s a testament to the quality of the grapes,” Sharlau said. “What other product do you buy that you can see where exactly it was grown and the name of the guy who did it?” The partnership between grower and winemaker is underway well before the plants even go in the ground. The high value of Washington wine grapes mean the crop is not aimlessly planted and sold at harvest. Nearly every-
photo: Washington state Wine commission/andréa johnson photography
Winemaker Darel Allwine of Col Solare smells wine at the Red Mountain winery. Col Solare is the partnership between two well-known wine producers: Tuscany’s Marchesi Antinori and Washington State’s Chateau Ste. Michelle.
thing is grown on a contract basis. “This industry is really unique, unlike tree fruit. As a tree fruit grower, you grow it and put it in a bin and you take it to the packing shed or processor and that’s kind of the last time you see it,” Sharlau said. “With wine grapes, you have to have that delicate balance of supply and demand from grower all the way through winery. You can’t grow wine grapes and hope they go someplace.” Growing wine grapes requires more constant care and oversight than juice grapes. While Concords are all about maximizing yield and production, wine grapes require a more detailed pruning and careful harvesting. This increases their value and puts an emphasis on tonnage versus acreage. “You might get 10, 12, 14 tons of juice grapes per acre, but with wine grapes it could be two tons an acre,” Sharlau said. “There has to be an incentive to grow less.”
Based on acreage, about twothirds of Washington’s wine grape crop is intended for red wines. The dominant varietals are Cabernet Sauvignon, Merlot and Syrah. Grapes grown for white wines make up the other third of Washington’s wine grape crop, including Chardonnay, Riesling and Pinot Gris. This is a marketdriven change because not long ago Washington grew more grapes intended for white wines over red. Despite Washington’s youth in the wine industry, there remains a strong optimism for continued success. Multiple experts used the same descriptor, citing a “bright future” ahead. There were 12 wineries when Boushey first began growing wine grapes, and now Washington boasts nearly a thousand. The state adds an average of two to three wineries each month, on a net basis in Washington. “We’re not competing with each other, we’re competing with the world,” Boushey said. l
Focus | Agriculture + Viticulture in the Columbia Basin 27
Concord costs photo: Welch’s gloBal ingredients groUp
The quest to keep juice grapes profitable BY ROBIN WOJTANIK
ashington produces more juice grapes than any other state in the nation, fueling the building blocks for not just juice, but also jelly, fruit leather and syrup. Despite sitting atop the U.S. supply, the state acreage of juice grapes has declined slightly in the past several years. People aren’t buying juice as often as they did, as more consumers worry about the sugar content of the naturally-grown product that’s also rich in vitamins C and K. It’s put “global pressure on the juice grape industry,” said Trent Ball, Yakima Valley College agriculture department chairman. In the mid-2000s, Washington had about 25,000 acres of land dedicated to juice grapes, compared to about 21,000 acres today, according to the U.S. Department of Agriculture. Concords are still the heavily dominant juice grape grown, with only about 1,000 acres of the overall total dedicat-
ed to Niagaras. Concord grapes are a dark bluish-purplish color, creating a dark purple or dark red juice. The Niagara variety is a green grape and may be used for white grape juice. The cash price and overall value for juice grapes has dropped over time as well. Washington has shifted focus to other commodities along the way, which once led to a growth in the production of hops and tree fruit. But not all crops can grow in the same spot where juice grapes once did. For example, Concord grapes are more tolerant of cold temperatures so can’t be replaced with wine grapes in every location. The Yakima Valley still has a hold on the majority of the juice grapes grown in Washington, though a small amount also is produced in spots near the Snake River. The yearly crop can result in about 200,000 tons, though it’s a cyclical fruit with high-bearing years followed by low-bearing years. The 10-year average for state production is about 185,000 tons annually.
Dick Boushey has been growing juice grapes for Welch’s since 1980. He planted wine grapes at the same time as Concords, which allowed him to “watch both industries develop in different directions.” Boushey described juice grapes as a “steady eddy” crop where returns are low, but don’t require a high cost per acre to grow. The biggest challenge tends to be keeping juice grapes profitable. With wine grapes, “There’s a lot more detail and more particular pruning. I don’t make nearly as much on juice grapes,” Boushey said. Sunnyside grower Ryan Schilperoort described being “late to the party” when he bought his first mechanical pruner a few years ago. He had been hand-pruning until then, but increases in minimum wage and labor shortages made it more cost effective to replace people with machines. Minimizing labor costs also is a priority when it’s time to take fruit off the vine. u
Focus | Agriculture + Viticulture in the Columbia Basin 29
photo: RYAN Schilperoort FARMS
Concord grape harvesting is seen at Ryan Schilperoort Farms in Sunnyside. Washington produces more juice grapes than any other state in the nation.
“You can handle the harvest with very few people,” Boushey said. Mechanical harvesting is commonplace with juice grapes. “Even though juice grapes and wine grapes look similar when growing, that’s really the end of the similarity,” said Vicky Sharlau, executive director of the Washington Winegrowers Association. The fruit itself might look similar, but the vines are quite different. With wine grapes, the fruit tends to grow upward, with the fruit exposed to the sun. Juice grapes hang down and have a large canopy, hiding the fruit. The reliability of growing juice grapes tends to make the product naturally organic without the official label. Boushey said he primarily uses water and fertilizer on his crops. Schilperoort might use herbicides for weed control, but that’s about it, he said. Concords often don’t need fungicides, pesticides or insecticides. To know when it’s time to pick, farmers test the fruit for its sugar content, usually looking for a value of 16 degrees Brix. The Brix scale measures the density of sugar in a solution. 30 Tri-Cities Area Journal of Business
Once harvested, juice grapes are sold either through a contract price or a cash price. The most recent values from 2016 were up $10 a ton from the prior year, to $120. But it’s still far from the surge in demand seen for the crop in 2012, which raised the cash price to $280 a ton. The biggest buyers of Washington juice grapes are Welch’s, Smucker’s, Milne Fruit, Tree Top, FruitSmart and Valley Processing. Once grapes are crushed and stems removed, juice is processed to be sold in a 68 degrees Brix concentrate, which amounts to the grams of sugar for every 100 grams of liquid. The price per gallon for 68 Brix concentrate was $10 in 2017, but has been as high as $15 between 2004-12. Ball said a higher price for concentrate isn’t always immediately beneficial to farmers, as it can increase competition from alternative products. In a typical season, Welch’s alone might process 100,000 to 120,000 tons of juice grapes, resulting in 20 to 22 million gallons of juice. The Grandview location stores all that juice, resulting in the largest juice tank farm in all of North America. The juice market isn’t just
being squeezed by consumers. Grape growers in both the wine and table grape industry have to work together to fight some of the regulations that come out of Olympia and Washington, D.C. “When the FDA decided to do the Food Safety Modernization Act, they put in these produce safety rules, which make sense for items that are eaten raw,” Sharlau said. “When the FDA drafted these rules, they determined grapes were eaten raw. Well, table grapes are. And raisin grapes are. Juice grapes and wine grapes are not. They didn’t distinguish between the different crops of grapes, it’s just ‘grapes,’ which we are calling ridiculous. It’s one of those good intentions run amok.” Challenges like this, combined with the profitability risk, may lead to more juice grape growers getting out of the business. Ball anticipates a drop in up to 400 acres statewide before the next season, and doesn’t see the likelihood of existing growers increasing their acreage. “I’m set up to grow juice grapes and I know how to do it, so I’ve decided to stay with it and hope that it all works out,” Schilperoort said. Growers found a bright spot in the 2016 juice grape harvest, which benefited from a warm early season and no frost. Eastern Washington land is still cheaper than in many parts of the country, but if the crop planted isn’t bringing a return, growers may have no choice but to shift to another commodity. Still, Ball remains optimistic. He speaks yearly at the Washington Grape Society annual meeting, and his most recent update included a prediction that the price of juice grapes is likely to rise this year. Other markets in the U.S. and worldwide have been off in their production, leading to a drop in the supply and the chance for juice grapes to be more profitable for Washington state growers in 2018. l
Tops for hops
U.S. dominates world market BY LAURA KOSTAD
fter five years of unprecedented growth, the Northwest hop industry has been almost single-handedly responsible for establishing the U.S. as the No. 1 producer of hops in the world, accounting for 42 percent of all production. Washington boasts nearly 70 percent of U.S. production, with 98 percent of U.S. hops grown throughout the Northwest, according to the Hop Growers of America’s 2017 report. But despite the growing popularity of independently-produced beers, the 2018 season will present a drastically different market than the boon that preceded it. Though craft brew consumption is slowly increasing, demand in current markets has reached saturation, forcing growers in Eastern Washington — the lifeblood of the world’s aroma hop industry — to re-strategize. Graham Gamache, a fourthgeneration hop farmer and owner of Cornerstone Ranches in Toppenish, said he loves growing hops. “I have to though, because it’s been a very volatile industry — it has changed a lot. All of us that are still around — my farm included — have really enjoyed the upturn of the market in the past five to seven years, especially the last three.” Gamache said the industry is facing an oversupply problem. “Typical of any farmer that’s in commodity, when the market is doing well, we react and we plant,” he said. The rapid development of the U.S. hop market and stiff competition internationally has led to several adaptive evolutions within the
industry in the past few years. As a result, the U.S. began to outproduce Germany in 2015, setting new record production highs year over year through the 2017 season. A record-breaking 104 million pounds of hops were produced last year in the Northwest — the first time 100 million pounds have ever been produced in a single season. U.S. hop acreage has increased 79.5 percent since 2012 with production up by 77 percent. From 2016-17, the crop yield jumped 14 percent, thanks to maturing newly-planted hops, and more favorable weather conditions, according to Hop Growers of America. This growth was aided by a transition to cultivate more aroma varieties — the hops responsible for the unique flavor profiles that characterize craft beer — which coincided with the rise in the popularity of smaller label brews. Prior to 2010, about half of the hops grown in Washington’s fields were alpha varieties — bittering agents that offset the sugars produced during the brewing process — and sold as commodity crops. Starting in 2012, U.S. farmers began planting more aroma varieties, shifting the balance. In 2017, U.S. farmers grew 80 percent aroma, or dual-purpose varieties. Last year also was the first time U.S. growers struggled to sell their surplus harvest on the spot market. “If you grow more than what’s contracted for, then it’s considered spot. The spot you can normally sell anywhere you want, but it’s immediately exposed to current market conditions,” Gamache said. He said the spot market is where a saturation point first
becomes apparent. Farmers are still getting fair market value for the part of their harvest committed to contracts, but Gamache said in 2017, surplus crops were very difficult to sell, let alone at fair value. “Three to five years ago, it would have been no problem to get rid of; there was extra demand, and so a good price,” he said. During the boon years, some growers came to favor the spot market, where the crop could be sold at a premium to buyers who had either underestimated how much they would need and not contracted for enough, or were new to the industry and without a solid network of contracts. Those growers may face additional hardship in 2018 as they attempt to find a buyer in a market where supply exceeds demand, said Jaki Brophy, communications director for Hop Growers of America. Industry leaders are recommending growers not add any more acreage this year and contract “cautiously and pragmatically given the unpredictability of craft consumer demand and the recent slowdown of craft volume growth.” Gamache recalled how between 2009-10, “a lot of my fields were idle, waiting for demand. Hop farmers are used to going lean; it’s happened before, and we would just have to go lean again. But craft is here to stay — it’s continuously changing, but still there.” Growers may not have to let excess aroma acreage go uncultivated; a Hop Growers of America report said a timely market trend is developing on the international stage where the industry has finally worked through decade-long alpha surpluses, which had depressed the market since 2009. “Current global alpha inventories are insufficient for market demands,” opening more growing options for Washington hop farmers who, at $10,811 per acre to produce, need that demand to drive a return on investment. The U.S. switch to a larger focus
photoS: hops of america
After hops are separated, they make their way to a conveyor belt where they then move on to a kiln to be dried. Washington boasts nearly 70 percent of U.S. hop production, with 98 percent of U.S. hops grown throughout the Northwest.
on aroma varieties a few years ago created a niche in the alpha market for former lead producer Germany to expand into. The renewed market need for alpha hops makes room for the U.S. to capitalize on those varieties once more. But despite new opportunities, other challenges may become more apparent to hop farmers this season. Brophy said aroma hops generally present lower yields than alpha varieties, requiring more acreage to obtain the same yields. Though high demand is a good thing, increasing the amount of acreage under cultivation also increases the cost of production. And even for those looking to convert acreage to alpha, “you don’t get full production for a few years when you plant hops,” Brophy said. “We do get production the first year here and in Idaho … enough to make it worth harvesting,” unlike Oregon and other parts of the country. She also noted that alpha hops are more of a commodity crop so “the profit margin is very minimal, or at break even,” so farmers will need to budget accordingly when re-organizing field composition. The increasing cost and scarcity
of labor is another factor. Though labor issues are ubiquitous throughout the ag industry, hop growing faces special difficulty. “It’s intensive,” Brophy said. Specialized equipment puts the poles in the ground, then poles are usually treated to help them last longer, permanent wires must be strung at high tension, support strings that secure structures to the ground must be hand-tied, and the hop plants themselves must be hand-trained. “There’s no machine available that does the best job,” Brophy said. But with minimum wage on the rise — $13 to $15 an hour through the federal government’s H-2A temporary farm workers program, up from under $10 an hour just a few years ago, the cost of production keeps rising. “But the future isn’t all that bleak,” Gamache said. “We’re at the saturation point domestically, but I truly believe — and I think a lot of the other growers and merchants are on the same bandwagon — that there is a burgeoning market internationally. International markets are starting to open up for American craft beer varieties.” l
Focus | Agriculture + Viticulture in the Columbia Basin 33
34 Tri-Cities Area Journal of Business
Potato powerhouse photo: WaShiNGtoN potato commiSSioN
A January 2016 study by Washington State University-Pullman found the state’s potato industry generates $7.42 billion in total economic output for Washington.
State ranks No. 2 in nation for potatoes BY AUDRA DISTIFENO
otatoes are Washington state’s third top commodity, behind apples and milk, valued at $888 million last year, up from $813 million in 2016. This year’s outlook looks promising, with most of the state’s potatoes grown in Eastern Washington and the Skagit Valley and producing 20 percent of all U.S. potatoes. “Last year, Washington state produced 165,000 acres,” said Matt Harris, director of governmental affairs for the Washington State Potato Commission. “This looks like a pretty average year. My guess is that we’ll be in the range of 165,000 to 170,000 acres this year, which is about 10 billion pounds of potatoes.” The state ranks second nationally in potato production, but holds the top spot for highest potato yield per acre, thanks to a favorable climate, rich volcanic soil, water availability and long growing season.
More than 300 farmers grow potatoes in Washington and the annual harvest averages 30 tons per acre, “twice as much as the average yield in the United States,” according to the commission. Harris’ forecasted 2018 potato acreage is an average because actual numbers won’t be available until later in the year from the U.S. Department of Agriculture’s National Agricultural Statistics Service. “When we look at a 10-year span, the lowest I’ve ever seen is 155,000 acres and the highest was 175,000 acres,” said Harris, a 13-year veteran of the commission. “About 10 to 15 percent of the total is fresh and the rest goes to processing.” Potatoes are annual plants, with fields planted every spring and harvested in the fall. Although potatoes grow underground, they aren’t considered to be roots. Instead, they’re stems known as tubers. After plants emerge, which
occurs between two and six weeks after planting, the fields must be kept thoroughly watered. Irrigation watering, mostly through the use of pivot machines, is sometimes required 24 hours a day during the hottest summer weather. Some of the state’s potato growers use laser-guided planters, or tractors that navigate fields using satellites, and irrigation equipment that monitors and delivers only the amount of water needed. Seven categories of potatoes exist for cooking, and more than 100 varieties are sold across the U.S. Computing the value of potatoes is a complex process, unlike other crops solely sold as fresh product. Several variables are weighed to determine overall value, Harris said. “It can vary because there are so many different varieties, dug at different times and for different purposes. It also depends on whether it’s a contracted potato, u
Focus | Agriculture + Viticulture in the Columbia Basin 35
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Washington ranks second nationally in potato production, but holds the top spot for highest potato yield per acre.
for french fries, chipping potatoes, dehydrated or fresh,” he said. Potatoes are grown from special potatoes called seed potatoes, which are cut with specialized equipment to make seed pieces uniform in size. The seed pieces are usually treated to prevent infection and rot before being delivered to the field. There, they are loaded into planting machines attached to tractors. Growers plant these like-sized pieces together in a field, which helps grow tubers of approximately the same size in one location. Dale Lathim, executive director of the Potato Growers of Washington, manages the bargaining unit to negotiate with potato processors on behalf of the growers. “We have an intimate relationship with the growers and processors,” Lathim said. “We negotiated 2018-19 contracts in January and February of this year.” The outlook is great, he said, as demand has exceeded the number of available potatoes.
“The acreage will go up slightly because of the new production line at Lamb Weston in Richland,” Lathim said. “Overall, we need about 5 percent more acreage of potatoes to keep the (processing) lines at their current rates of capacity.” Lamb Weston’s new $200 million expansion of the potato plant on its Richland campus nearly doubled its capacity when it opened last fall. The company can now produce about 600 million pounds of frozen french fries annually across three processing lines. Lamb Weston said 75 percent of the product produced in the Tri-Cities remains in North America. The other 25 percent gets exported to 100 different countries, many in the Pacific Rim, with Japan being a top importer of frozen french fries. During the past 10 years, there’s been a surplus of fresh potatoes, Lathim said. As a result, some previously fresh potato growers now contract with frozen processors.
“I’m estimating a net growth of 2 percent to 3 percent in volume,” he said. “The price on (processed potato) contracts, which accounts for about 80 percent of the state’s potato crop, is up about 5 percent for 2018 and 4 percent in 2019. We have very stable pricing right now.” Starting in 2014, growers gave up some of their profit margins to help processors become more competitive in the world marketplace, Lathim said. “A very significant number of processors export, so as profit margins came down and cost production went up 3 percent, the growers gave up some money to help processors,” Lathim said. “We’re now back to what we believe is a sustainable level, but would like to see a continued increase. It’s currently very healthy for both growers and processors.” This year’s increase is “the first we’ve received since 2013,” Lathim said. “We’re very optimistic about the future of our industry.” l
Focus | Agriculture + Viticulture in the Columbia Basin 37
Looming concerns photo: WaShiNGtoN State DepartmeNt of aGricULtUre
Favorable growing conditions allow Washington wheat growers to produce some of the highest yields in the nation.
Wheat farmers wary of proposed trade policies BY JENNIFER L. DREY
ashington wheat farmers face challenging times as the industry navigates changes in U.S. trade policy and potential cuts to crop insurance and key conservation programs included in the U.S. Farm Bill. Industry representatives have already taken to Washington, D.C., to make sure they have a seat at the table as the four-year Farm Bill is renegotiated in 2018, said Michelle Hennings, executive director of the Washington Association of Wheat Growers. As the state’s fifth-largest commodity, Washington wheat was valued at $657 million in 2016. The state has about 3,715 active wheat and barley farmers, with nearly all wheat farms owned and operated by families. More than 11,000 jobs are tied to wheat and barley farming in Washington, according to the Washington Grain Commission. “Because we are in such an excellent climate here, we have some of the highest yields in the country. This area is just made for growing wheat,” said Scott Yates, director of communications and producer relations for
38 Tri-Cities Area Journal of Business
the Washington Grain Commission. The climate in Washington allows for the state to grow five out of the six classes of wheat that are produced in the country. However, Eastern Washington farmers primarily grow soft white, which has less gluten than other wheats, making it a perfect ingredient for cookies, certain cakes and noodles, Yates said. The majority of Washington wheat is exported, primarily to Japan, which has a strong preference for soft white wheat, as well as club wheat, that grows in Eastern Washington. The U.S. has long held more than 50 percent of the market share for wheat in Japan, with Australia and Canada meeting the rest of the country’s demand. However, concerns loom as the industry waits to see what will happen as those countries, along with nine others, move forward with the Trans-Pacific Partnership, or TPP, trade agreement without the U.S. The agreement, now known as TPP-11, will lessen tariffs over the nine-year period of its implementation for the 11 other Pacific-touching countries that are proceeding with it. That will
land U.S. wheat at a $65-per-ton disadvantage to Canadian and Australian wheat when the TPP is fully enacted. “They want our product because of the quality of it, but if we’re not competitive, we’re going to be out of the picture,” Hennings said. As a non-member of the TPP, the U.S. will need to write a bilateral, or one-on-one agreement, with each of the member countries. For that reason, WAWG would like to see funding levels increased, or at minimum maintained, for the U.S. Department of Agriculture’s Market Access Program, or MAP, and Foreign Market Development, or FMD, program, both of which are used to develop overseas markets. “If we’re not going to be able to participate in these multi-lateral agreements, we’re going to have to work twice as hard to try to come up with bilateral agreements,” Hennings said. “If we do lose those markets, we may never get them back, so this extra funding in the Farm Bill is extremely important to us.” The MAP program helps build commercial export markets for U.S. commodities by pairing
USDA Foreign Agriculture Service partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities. The FMD program promotes U.S. commodities overseas by creating, expanding and maintaining long-term export markets for U.S. agricultural products. Both programs could be used to help wheat growers move into new markets, such as South America, which Yates said the industry is diligently working on. MAP and FMD were collectively funded at about $235 million per year in the 2014 Farm Bill, which expires in late 2018. In comparison, several competing countries in the European Union spent close to $1 billion on their agricultural export promotion programs in 2016, according to U.S. Wheat Associates, a cooperating organization in the programs. “Other governments are investing more in global food and agricultural markets while inflation, sequestration and administrative costs are chipping away at U.S. funding,” Tom Sleight, CEO of U.S. Grains Council, said in a statement. Both USDA and industryfunded research have shown that MAP and FMD generate a return of $28.30 for every $1 spent, returning an annual increase in farm income of $2.1 billion between 2002 and 2014, according to WAWG. In addition to the pricing disadvantages expected as a result of the U.S. pull-out from the TPP, Washington wheat farmers also are bracing for a serious loss of market share in China, which recently announced intentions to impose a 25-percent tariff on all U.S. wheat. China recently has been ramping up its imports of soft white u
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wheat and other U.S.-produced wheat classes, with more than 12.5 million bushels of soft white wheat being shipped to China so far in the 2017-18 marketing year, according to a recent WAWG news release. That flow is expected to be severely curtailed once the tariff goes into effect, the association said. On top of that, looking deeper into the Farm Bill, WAWG also is concerned about cuts to crop insurance that are included in President Trump’s proposed budget for 2019. More than 90 percent of Washington’s 2.2 million acres of planted wheat were enrolled in crop insurance programs in 2016. Funded under the Farm Bill, the insurance is a risk-management tool used for unforeseen events such as weather and quality issues, Hennings said. “For wheat farmers, this part of the Farm Bill is very important
40 Tri-Cities Area Journal of Business
because it’s the only risk-management tool that we have,” she said. The proposed 2019 budget would establish a $500,000 adjusted gross income limitation for crop insurance, commodity and conservation reserve program eligibility. Additionally, it reduces the average premium discount in the crop insurance programs, cutting $22.4 billion over 10 years. It also caps underwriting gains for crop insurance companies at 12 percent, which equates to $3 billion in cuts over 10 years. “It’s very important for farmers to be able to stay competitive even if some catastrophe happens with the wheat crop,” Hennings said. Even without the proposed budget cuts and concern over trade policy, Washington wheat farmers already have been facing adverse conditions in recent years as downward pressure has continued to decrease wheat prices. Washington’s wheat crop was
worth closer to $1 billion about five years ago. Current pricing on wheat falls lower than the cost of production, Yates said. “Farmers are incredible optimists and they’re always thinking, ‘OK, we’re going to get this back.’ But right now, things are pretty bleak,” he said. The pressure on pricing can be partially traced to a world shortage of wheat in 2008, which led to high pricing that lasted through about 2012. With wheat in short supply, many countries that previously did not grow wheat began to do so. Once world weather — and thus world wheat crops — improved, the excess began pushing wheat prices lower, Yates said. Looking ahead, it’s too early to know how the 2018 crop will turn out. Weather may very well be the least predictable of all factors facing the wheat industry. “We’re concerned, but of course, you never can really tell,” Yates said. l
Focus on fresh photo: GARY LARSEN
Asparagus is the first crop of the year to be harvested in the Columbia Basin and appears in stores mid-April through early June. Since the U.S. asparagus industry collapse in 2005, Washington’s growers have turned their attention to the fresh market, providing customers asparagus picked within a couple of days of purchase.
Asparagus yields improving after market collapse BY LAURA KOSTAD
fter years spent recovering from the collapse of the U.S. asparagus industry, Washington has experienced steady growth as local producers find new ways to adapt to the changed market. Thirty years ago, Washington was the world’s center for asparagus production, producing 100 million pounds in 1990, said Alan Schreiber, an Eltopia farmer and executive director of the Washington Asparagus Commission. In 2006, stiff competition from Peru effectively wiped out U.S. processing when companies began moving their operations to the South American country where labor and other production costs were cheaper, ultimately leading to a collapse of the U.S. asparagus industry. In 2014, 15 million pounds of asparagus were produced domestically, Schreiber said. Gary Larsen, Pasco grower and
42 Tri-Cities Area Journal of Business
chairman of the Washington Asparagus Commission, said since the collapse, California has gradually been pulling out of the market because of increasing labor costs and harsh climatic conditions. But Washington is hanging on — in part to an ample water supply, agreeable climate and seasonal weather patterns in alignment with conditions necessary for asparagus’ growth phases. “Our industry re-invented itself,” Schreiber said. Domestic growers have turned their attention to selling fresh asparagus within the U.S. and Canada, with a lesser focus on freezing and pickling. Comparatively, asparagus from Peru, which must be fumigated, is often 15 days or more old before it reaches U.S. consumers. Despite new pressures from Mexico, Schreiber reported that Washington’s asparagus yields have been increasing by 15 percent per year since 2014, with the 2017 season weighing in at 23 million pounds produced.
Growth is expected to continue by another 10 percent in 2018. Larsen said yields are up to double what they were in the 1990s. “Back in ’85, when we started with asparagus, a good yield was 5,000 to 6,000 pounds. Now we are over 10,000 pounds,” he said. He added that 15,000-pound varieties are right around the corner with the current pace of hybridization, which focuses on breeding higher-yielding male asparagus plants. Now, “we are pulling fields out of production at 6,000 pounds,” Larsen said. It doesn’t make sense economically to hold onto those fields, said Jim Middleton, a Pasco grower. “Gone are the days when we could keep an older field in that’s not producing quite as well. All fields have to be high-producing to keep workers interested in working that field, because they know they can make a lot of money,” he said.
Another priority of breeding programs is extending the longevity of crops. “In years past, a field could go 20 years or more” before needing to be replanted, Middleton said. “These days, not even 12 years.” But despite asparagus being a perennial crop, replanting with high-yield varieties doesn’t come cheap at $1,000 per pound, Larsen said. “But farmers have to afford them because if you don’t get these hybrids, you won’t be in the asparagus business. Cutters want a good-producing field to cut,” Larsen said. The industry’s top concerns are availability of labor and high costs, Schreiber said. “Washington has, by far, the highest agricultural labor cost in the Western Hemisphere.” And with the state-mandated minimum wage going up, he said, “It’s pretty horrific for us; how do we pass the cost on?” “(It’s) tightening up profit margins,” Middleton said. “It’s why a lot of people don’t get into asparagus. … Regulations just get to be more and more — paid rest break, paid sick leave — for a temporary, seasonal kind of worker, it’s something that we’ve had an exemption for in the past. “And the paperwork requirements on the payroll side of things is super, super cumbersome. Most of us are small operations; we don’t have lots of levels of people to take over responsibilities like that. It gets to be a real burden for people only employed for eight or nine weeks.” “It makes us not as competitive with places like Michigan and Mexico,” Schreiber said. According to Larsen, on average, asparagus cutters in Mexico get paid $13 per day, while in Washington, they’re sometimes paid more than $30 per hour. “Mexican labor is definitely cheaper, but … what they save in labor, they put into infrastructure for farms and putting water
in,” such as wells and packing sheds, Larsen said. “Sometimes we feel like Mexico is a Third World country that doesn’t have technology or don’t need it because of there being lots of labor available, but that’s not the case at all. I think they’re ahead of us in a lot of ways,” Middleton said. Mexico has about 38,000 acres under cultivation — what Washington boasted in its heyday, which has dwindled to about 4,000 acres today — enabling them two chances to deliver to the U.S. market: once before the U.S. begins harvesting in April, and again in mid-May as the U.S. is winding down. “Our window of opportunity is getting smaller and smaller,” Larsen said. “When I first started in ’85, we would get started around (the) first of April and would go into July. Now, we’re done by (the) first week of June or last day of May.” Another issue big producers like Mexico and Peru present to the market is overproduction. “They’re producing more than the market can move, so the price drops,” forcing U.S. growers to follow suit, Larsen said.
“The farmer is a price taker, not a price maker. We can’t dictate what (price) we’re getting,” Middleton said. “It’s time (big producers) start thinking about curtailing selfproduction for their own survival; they’re selling asparagus at less than the cost to produce it,” Larsen added. Where automation and mechanization have had a hand in reducing labor costs for other crops, asparagus remains a handcut crop. “We’ve tried everything we can think of,” Schreiber said. “We’ve put a fortune into coming up with asparagus pickers or carts that other places use, and we can’t come up with anything better than hand-harvested.” “The economic climate is not good for hand-harvested crops in Washington anymore,” Larsen said. He added, “When things start getting machine-harvested, that’s where you’re going to get lesser quality foods. As a nation, we have to ask ourselves what type of foods do we want. We can put cheaper foods out there, but you’re going to have to modify your quality standards.” l
Focus | Agriculture + Viticulture in the Columbia Basin 43
44 Tri-Cities Area Journal of Business
2828 W. Irving Street, Pasco
Growers help meet world demand for mint BY JENNIFER L. DREY
hen it comes to mint, a little goes a long way. One drop of mint oil can flavor 2.5 tubes of toothpaste, 31 sticks of gum or 125 mint candies. But when it comes to Washington-grown mint, it may be more accurate to say that a lot goes a long way — all around the world in fact. “We’re shipping globally right here out of Washington state. We ship (mint) to customers in every continent with the exception of Antarctica,” said Craig St. Hilaire, president of Harrah-based mint dealer Labbeemint, which buys mint from more than 50 producers in Washington. Washington exported $35 million of peppermint oil and $10 million of spearmint oil in 2016 to markets including China, Japan, Germany and Switzerland. Exports for both types of oils appear to have increased in 2017, said Rianne Perry, international marketing manager for the state Department of Agriculture. “The U.S. producers provide
what is considered by most to be the highest quality mint oils in the world,” St. Hilaire said. Washington produced 2.3 million pounds of spearmint, or 72 percent of all spearmint grown in the United States in 2016, making it the top-producing spearmint state in the nation. The state ranked third in the nation for peppermint production. Of the 250 mint producers in the U.S., about 200 are the Northwest states of Washington, Oregon and Idaho, said St. Hilaire, whose company buys mint from growers in all three of those states, as well as in the Midwest. The two main production areas for mint in Washington are the Columbia Basin, where mint production is concentrated in the Othello and Royal City areas, and in the Yakima Valley from Prosser to Yakima, according to Shane Johnson, executive director of the Washington Mint Growers Association. Washington had about 15,800 acres of spearmint planted in 2016. Primary varieties were scotch spearmint and native spearmint. The warm days and cool nights
of the region, combined with its extended daylight hours, make the area highly suitable for growing mint. The abundance of water available through irrigation districts further helps to create ideal growing conditions for the waterloving plant. “The Pacific Northwest, and Washington in general, is the perfect climate to grow mint,” Johnson said. “Mint loves warm to hot days. You want a little heat before you harvest mint because that stresses the plant a bit, and when it’s stressed, that’s when it goes into oil production mode.” Tall and leafy, mint grows similarly to an alfalfa plant. However, the crop is essentially worthless until it has undergone a distillation process that turns it to oil. That process happens on the farm prior to its sale to companies such as Labbeemint, which buy mint in the oil form. Although not necessarily labor intensive, growing and distilling mint does require specialty machinery, the most important piece being a mint distillery, which uses steam to extract the oil from the mint hay, Johnson said. u
Focus | Agriculture + Viticulture in the Columbia Basin 45
Farmers sell mint to dealers in oil form, bought in 55-gallon barrels. Washington produced 2.3 million pounds of spearmint, or 72 percent of all spearmint grown in the United States in 2016, making it the top-producing spearmint state in the nation. The state ranked third in the nation for peppermint production.
“For mint, the harvest hasn’t happened until it has hit the mint (distillery) and the steam distillation takes place,” he said. Larger farms typically own their own distilleries, but smaller and newer farms often look to their neighbors to do custom distilling for them, he said. Once in oil form, mint is sold to dealers in 55-gallon barrels, which net about 400 pounds of mint oil per barrel. One 400-pound barrel can be used to flavor about five million sticks of gum, 400,000 tubes of toothpaste or 20 million mint candies. Prior to being sold to the end users, mint dealers further refine the oil then blend it to meet consumer specifications. The top buyers of mint are oral care companies, such as Colgate and Procter and Gamble, that use it to flavor toothpaste, mouthwash and other dental products. Flavor and fragrance creator companies that craft customized flavors and fragrances for consumer-goods manufacturers also are big buyers, St. Hilaire said. Looking forward, mint producers and dealers see new growth potential in the emerging aroma46 Tri-Cities Area Journal of Business
therapy market. Home aromatherapy users typically buy essential oils in one-ounce bottles that come at a premium due to their high potency and pure quality. Mint is one of many popular essential oils. “It’s an encouraging development. As more consumers become aware of and use essential oils in different applications like aromatherapy, for making their homes smell nice and certain topical applications, there’s a real great growth potential for American producers,” he said. The global aromatherapy market is expected to grow to $2.35 billion by 2025, according to a 2017 report by Grand View Research Inc., a San Franciscobased market research and consulting company. “U.S. producers produce a great oil, so we’ve got some opportunities to really expand our market share as far as it goes with aromatherapy,” St. Hilaire said. Generally considered a cash crop, mint commands higher premiums than commodity crops, such as grains. Pricing on mint has been relatively stable for the past few years, though it can be influenced by land-rent prices and other commodity
prices, St. Hilaire said. The price of spearmint is stabilized by a federal marketing order that works to match supply and demand, Johnson noted. Peppermint does not have a federal marketing order. For some mint farmers, mint is their primary crop; for others, it is one of many crops they will harvest during the course of the year. Mint harvesting begins in late June and extends through September. In the Yakima Valley, most growers double cut their mint, meaning they get two harvests from their plants, usually 60 days apart. This results in about 200 pounds per acre between the two cuttings, St. Hilaire said. Regardless of whether mint is a primary or secondary focus of a farm, mint growers must use plant-rotation crops to avoid the mistakes of the past, namely verticillium wilt, a soil-borne fungus that greatly reduces oil yields of the mint plant. Once in the ground, verticillium wilt is nearly impossible to get rid of, making it a career ender for many mint growers. For that reason, farmers have been chasing mint west along the 45th parallel in search of clean ground ever since large-scale mint production began in New York state in the 1830s. With nowhere left to go, the Northwest mint farmers are cognizant of the fact they must maintain clean soils. But farmers in the Northwest also have some favorable conditions on their side. For one, the West has a lot of land to rotate through. Plus, many of the best rotation crops for avoiding verticillium wilt grow well in the area, Johnson said. Washington mint farmers also have access to modern research, technology and some crop protection tools that have helped mint producers in the Midwest continue to farm. “All in all, mint production in Washington has a pretty positive outlook going forward for the next few years,” Johnson said. l