Agriculture + Viticulture in the Columbia Basin A 2020 specialty publication of the Tri-Cities Area Journal of Business
Wine grape surplus may cut into profits A BIG BITE
$3B apple industry is the MVP of Washington ag BREWING STORM
Hop growers pull back as beer drinking shifts
Growers worry about finding enough workers
IN THIS ISSUE
A 2020 specialty publication of the Tri-Cities Area Journal of Business
Cover photo courtesy James Michael/Northwest Cherry Growers
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Uncertainty abounds What does 2020 hold for agriculture? WENDY CULVERWELL
While Lamb Weston and Mid-Columbia potato growers were dealing with an unexpected surplus of spuds this spring, Mid-Columbia asparagus farmers had a different tale to tell. They had the skilled cutters they needed to bring in the harvest and prices were strong. 2020 was a solid year for the iconic first shoots of spring, thanks in some part to the coronavirus pandemic and the stay-home orders it inspired around the globe. “Covid-19 is picking winners and losers. We are a winner right now,” said Alan Schreiber, director of the Washington Asparagus Commission. As the first crop to ripen each spring, asparagus traditionally offers a hint at what the year will hold for Washington’s $10.6 billion agriculture industry. But the coronavirus pandemic has upended the narrative. Some crops, like asparagus, are thriving. Others face an uncertain future. “It’s hit and miss,” said James Alford, a Franklin County farmer and president of the Franklin 4
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County Farm Bureau. If asparagus is an apparent winner, potatoes are on the losing end, at least they were in May. Together, the two crops that are widely raised in the Mid-Columbia tell a story of an industry that is not certain what the pandemic holds for them. It is an unsettling question for the state. Asparagus, potatoes and more than 300 other crops grow in Washington. Agriculture is 12 percent of Washington’s economy and its second-largest export category after airplanes, according to the state Department of Agriculture. Mid-Columbia farmers produce a dizzying array of fruit, asparagus, hay, vegetables, dairy and other crops. Benton and Franklin counties produced a combined 17 percent of the state’s agricultural output, according to the 2017 Census of Agriculture, conducted every five years by the U.S. Department of Agriculture.
Dining in instead of out Asparagus is a popular item to prepare and eat at home, helping drive its success in a shutdown.
Too, Washington-grown asparagus typically competes with asparagus grown in Mexico and Peru. The pandemic slowed shipping, giving Washington asparagus a clearer shot at the domestic market. In contrast, potatoes should have had a banner year — and may still — but the season is off to a rocky start. In January, Northwest frozen potato giant Lamb Weston posted rosy earnings and assured stock analysts it was prepared to manage potato shortages in North America and Europe during a quarterly earnings call. That was before the full impact of the pandemic began to make itself known. Potato processors urged growers to plant as much as possible, fearing border closures could affect supplies. But a week later, the industry did a 180-degree about face, Alford said. The same processors called growers in late March to cancel about 15 percent of potato contracts. Overnight, thousands of planted acres had no buyer. And a potato without a buyer is
of little value. The potato shortage became a potato glut. Surplus potatoes made their way to food banks and high-profile giveaways — 100,000 pounds at Kennewick’s Toyota Center,
200,000 pounds at the Tacoma Dome. Without contracts, some farmers followed the lead of dairy farmers who dumped milk when school closures left them without enough customers: They plowed
potatoes back into the field, walking away from the $2,000 an acre they spent on seed, fumigation and other early-season measures. But Alford, who primarily grows potatoes on contract, said some are “going for broke,”
Focus | Agriculture + Viticulture
agriculture at a glance
Value to Washington economy: $10.6 billion Number of farms: 39,500 Jobs: 164,000 Value of food processing: $20.1 billion Value of ag exports: $7 billion Top crops: Apples and other tree fruits ($3.6 billion), vegetables and onions ($1 billion), milk from cows ($1 billion), cows and calves ($1 billion), grains ($984 million), other crops including hay ($906 million). Source: Washington Farm Bureau, Washington Department of Agriculture, U.S. Department of Agriculture
pressing on without the safety net of a contract. They are betting on selling on the open market when the economy revives. “There are a lot of guys who aren’t sleeping well at night,” he said.
Washington’s big crops Washington leads the nation for apples ($3 billion) and hops ($476 million). It is the second-largest grower of potatoes, asparagus, onions and all kinds of grapes, all crops grown in the Mid-Columbia. Asparagus always has served as a handy bellwether for those that follow. Asparagus cutters become cherry pickers and so forth. Cherries, next on the ag calendar, were being watched on the hope labor and demand will swing their way in June. Alford said cherry growers are hopeful the 6
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same factors that drove at-home consumption for asparagus will transfer to cherries. Coronavirus isn’t the sole worry. Trade wars led to retaliatory tariffs by India and China on Washington’s signature crop: Apples. And wine grape growers were already struggling with a grape glut when the pandemic struck. It was always going to be a challenge to sell more wine. With restaurants and bars closed for an extended period, 2020 sales will be down. And hop growers must contemplate the impact on their sole buyer — breweries. Beer consumption patterns are shifting in the pandemic toward mass-produced brews using less hops. Small and individual breweries face an existential crisis, according to a
Brewing Association economist. Benton and Franklin counties are Washington’s third and fourth largest ag-producing counties, after Yakima and Grant, according to a 2017 Census of Agriculture by the USDA. Benton County had about 1,500 farms that collectively produced about $1 billion in sales, or 10 percent of the state’s total. It is tops for vegetables and potatoes, second for cattle and calves, and third for fruit, hay and livestock. Franklin County had about 772 farms that produced $631.5 million in 2017, or 7 percent of the state total. It ranked third for vegetables and fourth for hay as well as milk from cows. Asparagus, tree fruit and potatoes are widely grown there as well. l
Wine grape surplus may cut into profits ERIC DEGERMAN
While the quality of grapes and winemaking in Washington state remain world-class, the global glut of wine continues to cut into the industry’s bottom line. Consumers stand to benefit, whenever shelter-in-place restrictions and pandemic-affected spending allow. “The Washington grape market is suffering from a structural imbalance between supply and demand that will likely require substantial vineyard removals to rectify,” wine economist Christopher Bitter said during this year’s Washington Winegrowers Association convention in Kennewick. The state’s 59,000 acres of vineyards are an indication of growth the Washington State Wine Commission has pointed to in recent years. Bitter, based in Vancouver, British Columbia, with a doctorate in economic geography from the University of Arizona, suggested Washington’s 400-plus growers remove a combined 8,500 acres of vines to address the projected oversupply of 41,250 tons of grapes each year. Either that or the wineries must find ways to increase de8
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mand and move 15.5 million cases. In 2019, Washington wineries shipped 12.6 million cases. Smaller producers across the state enjoyed 5 percent growth in sales last year. However, Bitter said shipments by industry leader Chateau Ste. Michelle and its sister wineries in Washington have declined by 900,000 cases since 2016. “Whenever the Chateau catches a bit of a cold, it affects things in this state pretty dramatically,” said Rob Griffin of Barnard Griffin Winery in Richland, who has been making wine in Washington since 1977. Bitter’s data indicates Washington wineries have two vintages worth of unsold inventory — 31 million cases. “That’s a big hole to dig out of,” Bitter said. He suggested resetting the vineyard acreage to 2013 levels. That’s when 50,000 acres of vines yielded 210,000 tons, which were harvested by 564 wineries. Contrast that to 2016 when the state amassed a record-setting 270,000 tons of wine grapes, and 2018 when 261,000 tons came into cellars. “We should have seen this coming four years ago,” said Dick Boushey, a grower based in
Grandview. “In 2016 and 2017, there was a lot of fruit that didn’t get picked, and people just proceeded to plant more. As growers, you’ve got to look out for yourself. Know the market. Read the Nielsen reports. You’ve got too much invested to rely on only a few customers.” Last year, growers harvested 201,000 tons, but Bitter estimated that growers ripened 270,000 tons of grapes. About 30 percent of the fruit was not picked because of economic decisions or the unusually early hard freeze Oct. 10-11 that resulted in something rarely seen in Washington — frost taint. Producers cited fears of wines with off aromas such as rose hips or vinyl as reasons for rejecting post-freeze grapes. “It got ugly at the end with the frost and fruit not getting picked,” Boushey said. “Then some places couldn’t get people to help harvest.” Mike Sauer, who began planting wine grapes at Red Willow Vineyard near Wapato in 1971, said he and his sons have reacted to the softening of the market by removing sections of Cabernet Sauvignon, Cabernet Franc and Riesling across their historic site.
Photos courtesy Richard Duval Images
Some vines suffered from the gradual drain of leaf roll, but not all of them. “These are definitely tough times,” Sauer said. “We’ve taken out not quite 10 percent of our vineyards. It’s hard to see some of these real old vineyards coming out, and not just ours. We’ve taken out the old ’73 block this past win-
ter. We’ve taken out the ’85 block, a ’79 block of Cab, an ’85 block of Cab Franc, an old block of Riesling planted in ’82.” According to the annual grape report, Cabernet Sauvignon is still king in Washington at 53,740 tons, accounting for 27 percent of the total wine grape harvest, but there was a decrease of 20,660 tons.
Gilles Nicault, the acclaimed French winemaker behind every bottle produced by famed Long Shadows Vintners in Walla Walla, holds a sample of grapes collected from Candy Mountain Vineyard near Richland.
Chardonnay was the second-most harvested grape last year at 33,540 tons, or 17 percent of the total. “People love to blame the millennials, but that’s neither correct nor fair,” Griffin said. “There’s just been a change in focus in the wine industry, so as a small, family winery there was already a challenge. And then came the lockdown.”
Focus | Agriculture + Viticulture
The Monson family owns and operates Goose Ridge Vineyards, which dominates the proposed Goose Gap American Viticultural Area between Red Mountain and the Horse Heaven Hills.
Last year when grapes came in the cellar door, Washington growers charged an average of $1,315 per ton — an 8 percent increase over the previous year — but in many cases that didn’t make up for steep losses. There would seem to be more competition than ever among winemakers for grapes in Washington. In 2012, there were 760 wineries. Last fall, Washington issued its 1,000th license, which belongs to brothers Jens and TJ Hansen, a pair of Air Force veterans who opened Uva Furem Winery near Kent. Overall, 90 percent of the wineries in the state are viewed as “small and independent,” bottling fewer than 5,000 cases. That’s not Griffin, whose winery produces 60,000 cases a year. He worries about the pandemic’s long-term damage on sales because of the shutdown, social distancing restrictions on tasting rooms, closing of restaurants, massive unemployment and the economy’s deep decline. “The reality is that we can’t sustain the amount of wine we made last year because we’re not able to absorb the brunt of missing out on what probably will amount to half a year of sales,” Griffin said. “And I think that will be true across the board.” Tasting rooms throughout 10
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the state closed for two months, resulting in staff either being furloughed or laid off. In some cases, award-winning winemakers went from an annual salary of $80,000 or more to part-time hourly workers because wine sales were not able to support their paychecks. Meanwhile, the Port of Kennewick announced this spring that it has begun to work on the update of its Historic Waterfront District Master Plan, which includes the Columbia Gardens Urban Wine & Artisan Village. Bartholomew Winery and Monarcha Winery opened their tasting rooms a stone’s throw from the Columbia River in 2018. Cave B Estate Winery and Gordon Estate Winery opened early this year but ribbon-cutting ceremonies are on hold. Both multi-generation producers provided curbside pickups. Heading into the pandemic, direct-to-consumer (DTC) sales, already were a lifeblood for many wineries, particularly smaller producers. In 2019, Bitter reported that DTC sales for Washington wineries increased by 10 percent. Support by wine club members sustained wineries during the shelter-in-place restrictions. And Bitter’s presentation, available via his website at VinEconomics.com, noted Ste. Michelle sales have “stabilized” after declines in 2017 and 2018.
Nearly 40 percent of the state’s recent harvest reduction has been attributed to Riesling’s loss of popularity and that explains some of Ste. Michelle’s inventory issues because it is the world’s largest producer of this white German grape. Many Washington wines made from the 2019 vintage will go on to earn international acclaim. Odds are that a few will earn a spot on Wine Spectator’s Top 100. Last year, Washington placed two reds in the magazine’s top 50 and seven in its 100 Top Values, a group paced by Ste. Michelle with three wines on that price-sensitive list. “People in Seattle still drink a lot of French and Italian wine,” Boushey said. “Those countries have had a pretty good deal shipping their wines in so cheaply but try getting our wine into Europe. “You don’t need to compromise,” he added. “In Washington, we have a great wine at every price point.” Griffin agreed. “I think it’s fair to say that the overall standard of quality has come up to a pretty exciting level. There used to be some particularly ‘not good’ producers, but I can’t think of anybody at this point, so by broad and general strokes Washington wine is excellent.” To assist with marketing and consumer education, Washington winemakers, growers and scien-
Courtesy Richard Duval Images
tists have a number of proposed American Viticultural Areas pending federal government approval. Three are in the Tri-City area — Candy Mountain, White Bluffs and Goose Gap. Public commenting on the Candy Mountain petition closed Oct. 18, 2019, nearly two months ahead of that for the proposed Royal Slope AVA near Othello. The petition page was last updated Feb. 28 by the Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau, so further delays in the official establishment of any AVA could be significant in the wake of Covid-19. And this spring, the Cascadia International Wine Competition, the largest international judging of wine staged in the Pacific Northwest, was postponed and moved from the Tri-Cities to the Lewis-Clark Valley after the economic downturn led to the temporary closure of the hosting hotel. “Most of us in the industry will weather this,” Boushey said. “And the grapes will still need to be farmed. They are not going to walk away.” Eric Degerman owns and operates GreatNorthwestWine.com, an award-winning website that covers the Pacific Northwest wine industry. Focus | Agriculture + Viticulture
Exporters turn to new trade agreements, Zoom WENDY CULVERWELL
Washington’s agricultural exporters faced brutal headwinds in 2019 and they are facing them again in 2020. Trade wars, retaliatory tariffs targeting the state’s most iconic crops and a new Pacific Rim trade alliance that didn’t include the U.S. marred the 2019 season, driving producers to seek new markets in Vietnam, the Philippines and Indonesia, among others. The Covid-19 crisis brings a fresh set of challenges in 2020 — shifting demand and consumption patterns, difficult shipping conditions, potential farm worker shortages and little ability to meet prospective buyers face to face on trade missions. The good news is Washington weathered 2019’s trade storms surprisingly well. Trade increased in 2019, according to preliminary figures released in mid-May by the Washington Department of Agriculture. A total of $15.4 billion of agricultural goods shipped from Washington ports in 2019. Washington-grown crops represented a little more than $7 billion of the total, topping 2018’s $6.67 billion and 2017’s $6.8 billion. The $15.4 billion figure includes products such as rice, wheat, corn and soy that are cultivated outside of the state but pass through Washington ports on their way to foreign markets. “The big story for last year was that, miraculously, our ag industry was able to essentially maintain our exports by finding new markets,” said Rianne Perry, manager 12
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of international marketing for the state Department of Agriculture. She expected to finalize the 2019 export figures by late May, after the deadline for this publication.
The big story for last year was that, miraculously, our ag industry was able to essentially maintain our exports by finding new markets. Rianne Perry, Washington Department of Agriculture The positive news was welcomed in the export industry, even though not all commodities benefited. Commodities such as soybeans had a rough year, said Andrew Anderson, executive director of the Western United States Agricultural Trade Association (WUSATA), which is based in Olympia. “Trade was surprisingly good considering all the tariff issues and renegotiating of NAFTA and all the things going on. It turned out to be a pretty good year for most people,” he said. Perry said there was more surprising news in 2019. China, the focus of much of the trade conflict, remained the state’s third largest trade partner after Canada and Mexico. China, India and others retaliated against U.S. tariffs designed to protect the steel and aluminum industries by targeting apples, cherries and other Washington-grown products with steep tariffs. Perry
expected China to drop in the rankings and was surprised when it held its place, even as overall numbers dropped. Tariffs were not the only cloud in 2019. The North American Free Trade Alliance was renegotiated as the agreement between the United States, Mexico and Canada, or USMCA, and takes effect this summer. USMCA and other agreements are critical to reviving the economy, U.S. Rep. Dan Newhouse, R-Sunnyside, said in a May 20 call organized by the Association of Washington Business. He cautioned that it will take time for markets to return. “As our economy has suffered, other countries have as well, so it’s not going to be turning on the light switch and all of the sudden the trade is going to be there,” he said. The USMCA was a win. But agriculture is potentially affected by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which took effect at the end of 2018. The U.S. is not a party to the agreement, which lays out favorable trade terms for 11 participating countries, including Australia, Canada, Chile, Japan, Mexico and others. President Donald Trump, fulfilling a campaign promise, withdrew the U.S. from its predecessor, the controversial Trans-Pacific Partnership, in January 2017. It was signed but not ratified during the Obama administration. Perry said a later bilateral agreement between the U.S. and Japan
mitigated some of the concerns about the impact on U.S. wheat exports to Asia. Successive phases of the agreement will help further. Anderson said there still are issues as American exporters face steeper tariffs than countries that are part of the new agreement. Perry said Washington exporters were able to pivot from China to emerging markets last year. Vietnam, Indonesia and the Philippines have rising middle class markets which translates to a growing appetite for American products. Washington-grown, Washington-produced products such as apples, cherries, french fries, beef and blueberries are finding new markets.
“They’ve started buying our products,” she said. Anderson of WUSATA said the trade wars may have helped U.S. exports find new markets by lowering prices in a way that appeals to the emerging middle classes in developing countries. “One of the first things they spend that money on is better food,” he said. The chaotic trade battles of 2019 delivered a painful if useful message on the value of a diversified customer base. Exporters do well to cultivate new, emerging markets, but China is too big to ignore, Perry said. “Nobody is willing to stop exporting to China,” she said.
The 2020 season will pose as many if not more challenges. The U.S. Department of Agriculture raised its 2020 export forecast by $500 million, to $139.5 billion, in February. Exports to China alone were expected to climb to $14 billion, an increase of $3 billion over the November forecast, released prior to the pandemic. Soybeans, wheat and poultry were behind the export increases. Soybeans pass through Washington but are generally not grown here. Soft white wheat is a key Washington crop but a small part of the national production. “A slowdown across the Eurozone, declining growth rates in
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Focus | Agriculture + Viticulture
Photos courtesy state Department of Agriculture Washington posted a modest increase in agricultural exports in 2019 even with trade wars and other challenges. The Covid-19 crisis poses a new set of challenges in 2020 to a sector that is second only to airplanes for export activity.
China and the recent damaging global impact of the Covid-19 outbreak is expected to dampen growth prospects worldwide,” the USDA said. The fallout is creating both heartburn and some opportunity in the Mid-Columbia and elsewhere. The Franklin County Farm Bureau reported asparagus farmers had a strong spring both in terms of having enough cutters to bring in the harvest and strong demand from customers dining at home. Washington-grown asparagus faced less competition from Mexico and Peru because of shipping slowdowns. But the Northwest potato industry is reeling from a striking reversal in demand for frozen french fries, the main outlet for Washington-grown potatoes. In March, processors advised growers to plant all their seed potatoes. A week later, they called to cancel contracts, leaving thousands of acres planted but with no buyer. What had been a shortage quickly became a glut that led to high-profile potato giveaways and reports that farmers were either plowing under crops or going for broke on the hope they can sell their crops on the open 14
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market later. Lamb Weston, the Eagle, Idaho-based frozen potato giant, supplied useful insight into how the pandemic played out for its Chinese operations during an earnings call in April. Executives said demand in China fell by half during the worst of the pandemic stay-home crisis. As restrictions eased, demand revived to 70 percent. They cautioned against reading too much into the revival, but it offers a hopeful view that french fry demand will come back as economies reopen. Northwest sweet cherries are another crop that relies on foreign markets, including China. The harvest typically begins in June. Exports will depend on steady growing conditions and the availability of workers to pick a crop on track to produce 20 million boxes in 2020, according to the Northwest Tree Fruit Association. Sweet cherries are Washington’s sixth most valuable crop, with a production value of more than $500 million. Shipping to customers in Asia and China hinges on getting them to customers within days of being picked because they are so highly perishable. Cherries travel by air and will depend on
a revival of air travel. Blueberries could have a strong year. China and the Philippines both granted market access, which could translate into more demand for another signature Washington product. “I think our fresh blueberries are going to have a good season,” Perry said. For WUSATA, the inability to meet face to face with importers and distributors is the biggest challenge. Clients still worry about getting paid for products they ship overseas, but in-person contact is their top worry, Anderson said. Exporters with established relationships should fare well. But for those trying to break into new markets, the face-to-face meeting is invaluable. How, he said, do you sell a customer on your barbecue sauce if you cannot meet in person? WUSATA has canceled trade missions but is facilitating virtual meetings, as is the state Department of Agriculture. “I think I’ve been on more Zoom meetings in the past week than I have been in the last three years combined,” Anderson said. Washington is one of the most trade-dependent states in the U.S. and agriculture plays a big role. Agricultural exports are its second largest export category, after airplanes. Fish and seafood are the state’s top export, with Canada, China and Japan being the top three buyers. Frozen french fries are next, with an export value of more than $750 million. Japan, South Korea and China are the top buyers. Apples, soft white wheat and hay, worth $720 million, $532 million and $500 million, respectively, round out the top five exports, according to the state agriculture department.
Growers worry about finding enough workers BY ANDREW KIRK
Covid-19 could hurt southeast Washington’s cherry crop by limiting the number of fruit pickers allowed in orchards. The fickle crop is healthy, delicious and highly profitable, but a litany of factors can threaten its success. If weather cooperates and diseases are kept at bay, the fruit must be picked, packed, shipped, stocked and bought before its short shelf life expires. Covid-19 presents new challenges to the industry as it’s limiting the number of available pickers and flights, which means fewer chances to fly boxes of cherries to market. And fewer shoppers browsing produce aisles also present marketing challenges. All things considered, Jon DeVaney of the Washington Tree Fruit Association predicts a harvest of close to 20 million boxes. That’s good considering 20 million was a dream harvest for decades. “Early indications are down slightly from the last few years, but still good sized since we’ve been trending up,” he said. 16
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Mother Nature always plays a role in cherry harvest success. James Smith of the National Weather Service station in Pendleton, Oregon, said summer 2020 is forecast to be hotter and drier than average, based on current trends and historical data. That’s good news for the cherry crop. “The biggest risk with summer weather to our cherry crop is unforeseen rain followed immediately by high heat. That can lead to splitting,” said James Michael, vice president of marketing for the Northwest Cherry Growers and Washington State Fruit Commission.
Risks to cherries
“At one point our crop looked to be heading for our earliest start to harvest on record. Then the weather cooled back down, which has adjusted our projected start back to the last few days of May,” Michael said. Keeping the so-called “little cherry disease” from ravaging Northwest cherry orchards as it has for several years, also is critical. The name comes from the stunted, bitter fruit that results. The only solution is tearing out whole trees or entire sections, and sometimes, entire orchards. “There may be a 2.5 million-box reduction due to frost and little cherry disease,” said DeVaney, who is president of the tree fruit association. “But that’s still within range of what we’re expecting to see for a full and normal crop.” “Little cherry disease is more concentrated in some areas around
It is common to see helicopters buzz the Tri-Cities after a summer rainfall to blow droplets off the fruit. Perhaps the second-biggest crisis is a spring freeze that damages new buds and blossoms. This happened a few times this year. An especially warm February woke the trees from dormancy, Washington typically making them vulnerable ranks No. 2 or No. 3 to cold snaps over the following several weeks. in the nation for
sweet cherry harvest.
Tree fruit is in a better place than some other crops because a much higher percentage goes to supermarket shelves, which are still open. Jon DeVaney, president of the Washington Tree Fruit Association the state, but nowhere is free from its effect,” Michael said. “Behind the scenes it’s required some aggressive intervention by our growers. There is no cure yet. … Even after removal, the ground must be attended to and the local source of infection must be addressed, otherwise growers risk re-infecting their replanted orchard.” The culprit is likely insects, but experts haven’t yet pinpointed how they’re traveling or how to prevent them. The loss of trees might result in a 3 million-box decrease, Michael said, but the good news is the average Northwest sweet cherry has been getting bigger. The five-year size averages have beaten the 10-year and 15-year averages. So little cherry disease is an expensive problem but it’s not interfering with hitting the 20-million-box goal, or the overall quality of the fruit. “What we do know is that our industry’s orchard practices and packing technology ensure none of the small and bitter fruit is shipped for consumers. The high quality of Northwest cherries is Focus | Agriculture + Viticulture
a standard throughout the world, and we are committed to maintaining that bar,” Michael said.
Finding pickers Also worrying farmers for the 2020 harvest is finding enough pickers to bring in the fruit. “Everyone’s worried about labor shortages,” DeVaney said. “Will workers be able to travel? Will they be able to cross the border in time? Will there be restrictions as to what they can do when they get here?” Labor shortages for the past several years have pushed farmers to request an increasing number of H-2A visa workers. Visa workers, usually from Mexico, are an expensive workforce, but they are skilled, dedicated and loyal. Local pickers are preferred, DeVaney said, but the harvest season is short, so domestic workers often migrate, following the work. Professional cherry pickers must work quickly and not bruise the fruit or damage trees. They start in California in May and move north, arriving in Washington in June. It can be tough to hire enough for the right weeks and keep them until the job is done. Once hired, it is not uncommon for them to leave before all fruit is harvested if another orchard is paying better since they’re attempting to make the bulk of their annual income in just a few months. “By and large agricultural employers would like to employ anyone they can, whomever is available to work and work hard,” said Pam Lewison, agriculture research director for the Washington Policy Center. “In Washington state we have a perennial labor shortage, which is where the H-2A applications always come in.” The number of workers for each farmer who requested them is already approved, but new hous-
Photos courtesy James Michael/Northwest Cherry Growers
ing and transportation requirements could pose a challenge. The state Department of Health announced in mid-May new emergency rules for temporary farmworker housing to increase worker safety and reduce the spread of coronavirus. The rules spell out several required steps to increase physical distancing, improve cleaning and sanitizing and outline physical distancing for all beds. “What happens if we don’t have half our workforce? What happens to crops?” wondered Bre Elsey of the Washington State Farm Bureau. If social distancing is relaxed, or rules softened, there’s still a question of getting a profitable price for the fruit once shipped. Trade wars have prompted some countries to put tariffs on Washington’s sweet cherries, DeVaney said. And because airlines are offering fewer flights, there is less opportunity to get boxes of cherries to southeast Asia and other hungry markets. So much uncertainty lies ahead, even if weather cooperates, he said. “Cherry growers are used to making last-minute decisions and changing to circumstances,” DeVaney said. “Luckily there is strong demand for fresh pro-
duce… and tree fruit is in a better place than some other crops because a much higher percentage goes to supermarket shelves, which are still open.”
Cherry consumers Michael said fruit marketing experts are relying more on digital advertising, but the short cherry season means the fruit is not in anyone’s “recently bought” metrics. When people order groceries online, will they remember a bag of cherries? The produce inserts in newspapers or direct-to-consumer mailers used to be the most effective marketing tool because it alerted consumers that cherries were available, he said. The good news is grocery stores and fruit stands make high profits selling fresh, sweet cherries. “Fortunately, retailers will be looking to promote fresh cherries to help offset the chaos they’ve been weathering. As the No. 1 dollar-per-square-foot item in July and a top-earner all summer, cherries should be able to leverage some extra attention,” Michael said. The key to success is investing in online and in-store marketing that promotes cherries as a healthy and delicious impulse buy, he said. Focus | Agriculture + Viticulture
$3B apple industry is the MVP of Washington ag BY JEFF MORROW
The Washington apple industry has had a challenging year. Retaliatory tariffs. Labor shortages. And now a pandemic that has contributed to a slowdown in the supply chain. On the other hand, growers of Washington’s top agricultural product produced another large crop featuring a new star — the Cosmic Crisp, a new variety that is quickly becoming popular. The 2019 harvest ended with 138.2 million 40-pound boxes. That’s up from the 116.7 million boxes produced in the 2018 harvest. The all-time record was 141.8 million boxes, set in 2014. Toni Lynn Adams, spokeswoman for the Washington Apple Commission, said revenue from the latest harvest — mid-September to November 2019 — was solid. “Revenues are in the neighborhood of $3 billion. It’ll change from year to year,” Adams said. Add another $3.25 billion in value-added products of apples, such as applesauce or instant oatmeal, among other items, and it’s easy to see why apples are one of Washington’s most important industries, said Jon DeVaney, president of the Washington Tree Fruit 20
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Association, “An apple stores really well in cold warehouses,” he said. And that’s why apples can be sold year around. It’s also why those in the industry continue to fight.
Problematic tariffs “We’re still having a problem with tariffs,” Adams said. “It’s the biggest issue for Washington apples.” Washington exports a third of its annual crops to 60 countries. “We represent 95 percent of all U.S. exports of apples,” Adams said. But right now, retaliatory tariffs from other countries — the protective tariff on steel and aluminum and the tariff on Chinese goods — drew retaliatory tariffs targeting the apple market. India, for instance, has a 70 percent tariff on apples from the U.S. “Fifty percent is standard, and then 20 percent (retaliatory) on top of that, which results in increased costs to the consumer,” Adams said. China raised tariffs on imported apples from 50 percent to 60 percent on Sept. 1, 2019. Mexico is the United States’ top customer, buying 13 million
boxes annually. Canada is next at 5 million. “They’re in close proximity to us,” Adams said. “They’re almost an extension of our domestic market.” Adams said India still is getting the Red Delicious variety from Washington, which she says is the most popular.
More labor is needed Dan Fazio, executive director of the Washington Farm Labor Association, said concern about export markets is affecting labor. “That is one of the reasons labor is tough right now,” he said. Fazio said there have traditionally been three types of workers in agriculture. “The first are those who work 12 months of the year,” he said. “The second are those who are semi full time, working about nine months. Then there are the masses of people who come in for the May to October time frame.” Fazio said the third category used to add 100,000 people to the agricultural workforce. “That workforce has shrunk,” he said. “It’s down to about 60,000 to 70,000 people. Labor is tight. Seasonal labor is very tight.”
Domestic workers are all but gone. “There are not as many domestic labor workers,” DeVaney said. “For many people, a 12-month job has its advantages, instead of working six to 10 months.” So growers have had to look outside the country. That’s where the H-2A program comes in. The government’s H-2A temporary agricultural program sets up a way for agricultural employers who expect a shortage of domestic workers to bring foreign workers to the U.S. to perform temporary or seasonal agricultural labor or services. “So if you’re a grower and you do not find enough workers, the Washington State Employment Security Department can certify that you can look for more international workers,” DeVaney said. “Employers provide housing as well.” That’s where Fazio and his organization come in to help get international workers. He said he expects about 20,000 visa workers this year through the program. “People are nervous. It’s a recession. We’re in a deep recession,” he said. Fazio’s organization keeps looking for more labor. “We have a contract with an airline and company in Mexico that sets up the workers,” he said. “We fly workers
from all over Mexico to Tijuana, where they get their visas. Put them on buses, where they head to the farms. We do the paperwork.” Many workers return to the same growers each year. “These are known workers to the growers,” Fazio said. “Some of these workers go to the same farms every year. The growers count on them. About 90 percent plus do that.” Fazio says his organization helps place workers with 200 Washington growers. DeVaney notes that 26,000 harvest jobs last year were not filled in the state. There were about 60,000 people working with tree fruit in 2017, plus a varying number of seasonal workers — about 80,000 people for cherries, apples and hops, DeVaney said. Adams said the labor shortage must be a close second, right behind tariffs, among the top problems for apple growers. “Agriculture is very dependent on the people in it,” Adams said. “If there is a labor shortage, it hurts the supply chain. We just want to applaud the truckers,
farmworkers, the warehouse workers and the farmers for what they do.”
Supply chain disruptions And to complicate matters is the pandemic. The shutdown around the globe has slowed the market considerably. “Our numbers this season to date to India are 1.7 million boxes (in the 2019-20 season),” said Adams in early May. “That’s down 26 percent from last season at this time.” A hay farmer couldn’t get his crop delivered in the Port of Seattle because its company canceled the ship’s call to the port. “What we have observed is that ports are open,” Adams said. “Ports are receiving fruit, but it’s just slowed down. And there are not enough people to work. The chain has slowed down.” Focus | Agriculture + Viticulture
supply of Cosmic Crisp sold out this season.” It was a relatively small volume for its first season, with 400,000 boxes produced. But the crop volume will continue to grow, Adams said. “Next year, we’ll have 2 million boxes, and 6 million by the third or fourth year,” she said. Washington apple growers hold exclusive rights to produce Cosmic Crisps for the first 10 years.
Photos courtesy Washington Apple Commission
DeVaney has seen it too. “It does affect shipping numbers,” he said. But there is an upside. “Because of the coronavirus, there is an effort of a movement of money into the United States from other countries into investments here,” he said.
Reaching consumers The Washington Apple Commission has shifted to more digital marketing to sing the praises of the state’s apples. “People spend a lot of time on their phones. We’ve been reminding them of the benefits of eating apples,” Adams said. “So we’ve shifted to a different platform.” Last year, the U.S. Department of Agriculture gave the Washington apple market $8.4 million to promote apples. It’s been working. Thanks to digital marketing and the stay-home orders, there has been a huge demand for online orders, Adams said. 22
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There are 2,500 known domestic varieties of apples in the United States, but there are 7,500 distinct breeds worldwide. There are eight core apple varieties produced in Washington — Honeycrisp, Granny Smith, Cosmic Crisp, Red Delicious, Pink Lady, Gala, Fuji and Golden Delicious. Gala was the top produced variety last year at 23.5 percent, while Red Delicious came next at 19.7 percent. But Red Delicious remains the top export. In 2018-19, Washington exported 29 million boxes of the iconic red apple. But a new star may be on the rise. The Cosmic Crisp was created through the Washington State University breeding program. It was an immediate hit, debuting in December 2019. “We had a big launch for it,” Adams said. “It was so anticipated by consumers. Everyone is buying into this new variety. The entire
“We’re seeing a transition from older orchards of putting in more trees per acre,” Adams said. Many growers are using the trellis system, which allows more apples to be grown per acre, using less water and fewer laborers. DeVaney said there has been plenty of recent investment in orchards around the state. “Trees last a long time, for many decades,” DeVaney said. “Farmers are taking out old trees and planting more of them per acre. There are more trellis apple orchards.” So the acreage has stayed flat, but there is more production per acre. “With more trees and the trellis system, it’s more easy to pick half from the ground, half from a ladder,” DeVaney said. Fazio said part of the problem is that labor still is needed, and growers continue to produce more apples than may be needed right now. “It costs $1.05 to produce a dollar’s worth of apples,” Fazio said. “The problem is it’s an apple orchard, not a shoe factory. A shoe factory you can shut down, then come back when needed and start up. People still have to bring in the workers to the orchards.” And though the harvest doesn’t begin until September, farmers need workers now.
“If you want an apple in October, you need to have the workers in May. They’re thinning apples. Apple blossoms have seven to nine blossoms, and you need to pick them all but the biggest — the king apple blossom. While you’re harvesting cherries right now, you’re also thinning those apples.” Fazio said. Washington has some of the best acreage in the world to grow apples, DeVaney said. “We’ve got a really advantageous climate to growing apples,” he said. “Apples need a dry, high desert climate, like we have in the east Cascades slopes. And with that high quality soil, that means we can grow so many apples organically.” Organic apples — meaning no chemicals used to fertilize — are getting more popular. The Washington Apple Commission said growers will produce
13.9 million boxes of organic apples, or 252,000 tons. More than 16,000 acres of orchards grow certified organic apples in Washington.
Washington state harvested 138.2 million boxes of apples in 2019. A box weighs about 40 pounds.
DeVaney said the market is used to planning around consistency. “When the stay-at-home order came, people rushed to the store to stock up,” DeVaney said. “We had a record week of apple shipments in mid-March. And then it slowed down because a lot of people quit shopping.” A significant percentage of tree fruit, DeVaney said, was sold in supermarkets. But there was a loss of a higher percentage that usually go to restaurants that had to cancel their sit-down service. Plus the export issues compound the issue. “We’re not
shipping as much as we’d like to,” DeVaney said. DeVaney believes many apples have been — and will continue to be — sent to food banks. Fazio agreed. “The labor situation is a little bit scary right now,” Fazio said. “And we don’t want to lose the domestic fruit market to the foreign market. So everyone needs to go out and buy a bag of apples every day, eat them. And the ones they don’t eat, send those to the food banks.”
Focus | Agriculture + Viticulture
Pandemic exacerbates labor shortage BY ANDREW KIRK
The state of Washington is under pressure to enforce social distancing guidelines at farms and orchards, but farmers say they can’t find enough agricultural workers to hire, and social distancing requirements interfere with plans currently in place. “We might force people into housing conditions that are less safe. If someone comes from another state, will they be camping in unauthorized campsites?” mused Jon DeVaney, president of the Washington Tree Fruit Association. That’s a very real possibility, he said. When workers can’t find beds, they sleep in their vehicles or camp along the river. And if the employer puts them up in a hotel, are they safer there than if they remained with the same cohort day and night? Won’t they have even greater exposure to the virus? DeVaney wondered. Normally the state of Washington requires strict guidelines for worker safety, but offers several routes to compliance, DeVaney said. Union advocates for farmworkers filed a lawsuit seeking safer 26
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working conditions as harvest seasons ramped up amid a pandemic. DeVaney said he believes the plaintiffs are at least partially motivated by a desire to reduce the use of out-of-country visa workers. “They do not believe there is a shortage of workers. They are basing some of their claims on assumptions about a replacement workforce that are not true,” he said.
No farm would be sloppy with safety right now because no farmer can afford the risk. Bre Elsey, associate director of government relations for the Washington Farm Bureau If American growers can’t find enough employees, they can apply for farm laborers to come from other countries, usually Mexico, on short-term visas through the H-2A temporary agricultural worker program. These guest workers must receive a guaranteed wage and be provided free transportation and housing with central heating and
cooling, plus other basic services. “In Washington state we have a perennial labor shortage, which is where the H-2A applications always come in. We typically hire 20,000 statewide,” said Pam Lewison, agriculture research director for the Washington Policy Center. “It’s an extremely expensive process. It averages $1,500 per worker just to apply.” And that doesn’t include their wage or other services provided. “But they’re absolutely critical,” she said. They’re valued for their loyalty. While domestic workers can leave any time to work at an orchard paying more, the H-2A visa workers have a set wage and must stay for the duration of their contract, Lewison said. Most domestic workers would rather arrange their own housing than live with the H-2A visa workers because it’s a communal setup, she said. And farmers are not property developers. They must supply housing and they’re not always set up for it. They can’t bear these costs, she said. U.S. Rep. Dan Newhouse, R-Sunnyside, helped draft a bill to revise the H-2A visa program and make it easier and more cost effective for growers. But, it’s been
delayed, she said. “Until we address some of the problems with the expenses and its cumbersome nature, we’re in a holding pattern,” Lewison said.
How many needed? Forecasting the number of agricultural laborers farms will need in 2020 is impossible because so many factors are fluid, said Ajsa Suljic, regional labor economist with the Washington Employment Security Department. The first consideration is the size and quality of the crop, which can be at the mercy of the weather. Second, conditions at the border and presidential approval of H-2A visas can restrict the available workforce. All parties involved would like to see a larger domestic workforce, but recruitment efforts have largely failed. Suljic said those in the sector believed they would see more applicants during the Great
Recession from 2008-10, but they did not. “We hope there will be more local interest, but previous experience was, it didn’t work,” she said. Many consider agricultural work “hard labor” and do not apply. Those who did found it not to their liking, she said. Also, tree fruit is unforgiving to rookie hands that bruise the fruit or damage tree limbs. It takes practice to be a skilled and efficient picker. “It’s been a roller coaster,” said Bre Elsey, associate director of government relations for the Washington Farm Bureau. The Trump administration originally put restrictions on the H-2A program as part of a larger effort to curb immigration, then the pandemic hit. Some of the consulates closed. Then the Department of Homeland Security eased some restrictions, declaring agriculture a critical industry.
Photos courtesy Save Family Farming
“So, there’s been a lot of changes recently,” Elsey said. Washington is third in the nation for the number of H-2A visa workers requested for 2020, behind Florida and Georgia. That’s because berries, cherries, apples and pears are labor-intensive crops to harvest, she said. The lawsuit to enforce social distancing in farmworker housing
Focus | Agriculture + Viticulture
would undo all the adjustments the Department of Homeland Security made to ensure the nation’s food supply, Elsey said. The state Department of Health released new emergency rules for temporary farmworker housing in mid-May to increase worker safety and reduce the spread of coronavirus. They spell out several required steps to increase physical distancing, improve cleaning and sanitizing, including having employers provide workers with cloth face coverings and ensure physical distancing at housing sites, which includes all cooking, eating, bathing, washing, recreation and sleeping areas. The rules also outline specific physical distancing requirements for beds and bunk beds. Beds must be at least six feet apart with occupants sleeping head to toe. Farms also must frequently clean and disinfect surfaces in housing, and must identify and isolate workers with suspected or confirmed cases of Covid-19.
Facing new challenges To expand the housing supply to give each visa worker a bed and follow social distancing rules, farmers run into new challenges. Farmers are going beyond state mandates to curb the spread of Covid-19, Elsey said. “No farm would be sloppy with safety right now because no farmer can afford the risk,” she said. Crops are in crisis right now, Elsey said. Potato farmers in Grant County and zucchini farms everywhere are foregoing planting because they can’t risk not having laborers to harvest fields in the fall, she said. The contracts and guarantees that enabled farmers to shoulder huge costs in the planting phase are gone. 28
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“Labor costs in Washington state are astronomically high. These are the decisions the growers are having to make right now,” Elsey said. There are very few domestic workers left who are local, said Dan Fazio, executive director of the Washington Farm Labor Association. Even the ones who live in California and migrate north in early summer are dwindling. Washington agriculture needs about 60,000 workers annually. This year about 22,000 H-2A visa workers were requested. Last year 16,000 were requested but only 12,000 came. One difficulty in reporting these numbers is the difference between agricultural jobs and workers, Fazio said. When visa workers come, they pick cherries in May, June and July, and then work in apple orchards August through October. So the 22,000 workers who may come will do the work of about 30,000. That’s important because sometimes the number of visa workers coming is inflated for political rhetoric, he said. To better secure the nation’s food supply, discussions are persistently underway on how to increase the number of domestic laborers. With rising minimum wage and workers expecting help with housing and transportation, plus basic needs like access to groceries and health care, costs continue to increase. “Unless we do something about that, we’re going to lose our export market, which is one third of our markets,” Fazio said. The lawsuit to enforce social distancing jeopardizes the 31,000 licensed, inspected farmworker beds available in Washington state, Fazio said. One proposal he prefers is
charging H-2A visa workers for their housing. That would level the playing field for domestic workers and lower the financial burden on growers. The expense of the H-2A visa program is why so many farmers nationwide hire workers living in the country illegally, Fazio said. Revising the program is good for domestic laborers and for the farmers. And since the visa workers are usually making 20 times their home wage, they would still accept the invitation were it to come with fewer perks, he said. Aliya Alisheva, a Tri-City immigration attorney, said she agrees the expenses shouldered by growers right now are not sustainable, but she also pointed out the laborers are earning wages that put them at or below the poverty line. “Although they have been deemed essential workers, farm and food workers do not currently receive hazard pay to reflect the risks they face with the onslaught of the coronavirus. As many workers are undocumented, they also are ineligible for health benefits and other important entitlements,” she said. Alisheva worries that a more affordable H-2A visa program will enable growers to replace existing domestic workers with foreign workers. She also pointed out that problems with the visa program are a moot point this summer because Mexico has closed its visa processing offices due to Covid-19. “Farmworkers need clear, specific, enforceable protections from COVID, and they needed them weeks ago, when we first started asking the governor for help,” said Andrea Schmitt, attorney and advocate from Columbia Legal Services in a written statement.
Coronavirus upends potato industry BY ANDREW KIRK
Demand for Mid-Columbia potatoes was growing every year — until coronavirus. Area potato growers specialize in varieties that taste great after freezing, while most Idaho potatoes wind up in the grocery store produce section. Southeast Washington potatoes head to processing facilities like those owned by Lamb Weston or the J.R. Simplot Co. “The majority of our potato products are for restaurants, schools and other food service operations, rather than retail,” said Josh Jordan, senior manager of communications for Simplot. When Taco Bell introduced the Spicy Potato Soft Taco and Nacho Fries, that was good for
Washington state exports $300 million worth of french fries to Japan.
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business. So was McDonald’s allday breakfast with hash browns. Whenever restaurants offer new potato items, the demand for frozen potatoes rises, and Mid-Columbia farmers plant more, said Dale Lathim, executive director of Potato Growers of Washington. “What we have is a situation where the industry has been on a rapid growth curve where we’ve had a hard time keeping up with demand for frozen potato products,” he said. And the foreign market was booming as Asian customers developed a taste for french fries. “We export 70 percent of what we grow. That’s $300 million worth of french fries to Japan,” said Chris Voigt, executive director of the Washington State Potato Commission. “Demand has been growing every year for the past six or seven years.” That all changed in March. “Because the virus has resulted in dine-in locations and schools
closing or to operate on a limited basis, it has caused a reduced demand for those products,” Jordan said. There was no one to watch the Tri-City Americans play hockey — or eat fries at Kennewick’s Toyota Center, which typically serves up 350 pounds of fries during a game, said Rob Chaplin, food and beverage director for the event center. No one in sports bars munching jojos while cheering on March Madness. No one baking Tater Tots at home while tuning into spring training. “As a result of that, our potato inventory and that of other processors is higher than it would be and our forecasted need against future demand is significantly different than it was prior to the pandemic,” Jordan said. “Those inventories will now go farther to meet or exceed expected demand, which requires us to adjust our forecasted product use and our ultimate purchase from farmers.” Farmers no longer have a guarantee the potatoes in the ground now will have a buyer for the early-harvest varieties that mature in July and August. Since
Photos courtesy Washington State Potato Commission
it costs thousands of dollars per acre to water and tend to those plants, some farmers consider it safer to just plow them under and plant a different crop. “About 20 percent of acreage has been cut,” Voigt estimated in mid-May. Final numbers won’t be
available until July 2020. That’s about 3,200 acres. Some growers cut 10 percent of acreage, and at least one cut 100 percent, he said. Some are cutting none, hoping the situation improves by July. Varieties that mature in September and October are seeing
Oscar Tschirky, from front, Ted Tschirky and Tyler Tschirky of Pasco’s Sand Ridge Farms grow potatoes in the Columbia Basin.
less of a reduction, but farmers growing July potatoes have cut half or more, he said. Lathim estimates processing facilities have canceled about 23 percent of contracts for new potatoes. Most farmers will rebound, he said. But Voigt expressed
Focus | Agriculture + Viticulture
concern for small or young operations. “If a smaller- or medium-sized grower borrowed $2 million, they hope they’ll have $100,000 to $150,000 left over for their family,” Voigt said. “So if a grower can’t sell half their crop, they just lost $1 million. If they make $100,000 a year, that’s 10 years of income — that’s devastating.” And insurance to cover “adjusted growth revenue” is expensive and rarely needed. Most growers don’t buy it. Even if most Mid-Columbia potato farms survive, the industry is responsible for 36,000 jobs in Washington. A 20 percent decline in demand hurts employees at farms, processing facilities, cold storage warehouses, truck drivers, fertilizer dealers, irrigation companies and others, Voigt said. Jordan said there is optimism as restaurants in various states slowly resume dine-in service, but it has been hard for the food-service industry. “We echo the calls from the National Potato Council that we must do everything we can at the local, state and federal levels to support the potato industry, including our grower partners, during this difficult time,” he said. Were all businesses and sporting venues to open immediately and begin serving fries again, there would still be a problem at the cold-storage warehouses.
“Every April 1 we have 3 billion pounds in storage. Processors continue to take those… and run out by early July knowing new ones are coming,” Voigt said. “We’ll never get through those 3 billion pounds by early July.” The canceled contracts equal about half a billion pounds. “It likely will be October before the old crop is used up. Half a billion pounds don’t have a home at all. There is no market for them. It’s up to growers to figure out what to do with them,” Voigt said. The best-case scenario is to donate them to cattle lots, but even that is an expense the farmers must bear, Lathim said. As of mid-May, most processing facilities shut down and the few operating ones were producing about half of their full capacity, Lathim said. The contract releases equal about $15 million spread across several farms. Those farmers are out there planting, watering and tending costs and must invest in replacement crops now. “So about a $40 million hit to the growing community,” Lathim said. Optimism means most potatoes in the ground will be harvested, but what should farmers do next year? Past experience does not help forecast the new normal. “What is the consumer demand?” Voigt wondered aloud.
“No one understands anymore. … They used to know how many potatoes and french fries per week get eaten.” How long will it take for China to return to its previous consumption levels? Will Americans eat out as often as they did before? Farmers don’t know how much to plant, he said. “There’s no good data.” And then there are all the familiar factors farmers fret about: weather, yield, quality and regional competition, Lathim said. Cindy Cooper is worried about something entirely different. She is the plant services program manager for the Washington State Department of Agriculture, specializing in the regulation of seed potatoes, the small tubers farmers buy to seed their fields. As growers pivot in response to the current challenges and plant new varieties, will they remember all the regulations to protect the region from diseases and blights that may catch a ride on the new varieties? “Our biggest concern is the stability of the industry,” she said. “As contracts are canceled, will the seed potatoes still be brought in from the usual places?” Growers are in a demanding situation, she acknowledged. “No one is sure what will happen next,” she said. Focus | Agriculture + Viticulture
Courtesy USA Hops
Hop growers pull back as beer drinking shifts WENDY CULVERWELL
Growing conditions are strong on Washington hop farms but growers are curtailing expectations of modest growth as beer-drinking patterns shift and an entire industry is disrupted by the Covid-19 pandemic. The unknowns mean 2020 will look a lot like 2019, when the National Agricultural Statistics Service said Washington growers produced about 82 million pounds of hops with a collective value of $476 million. Washington produces 75 percent of the U.S. hop crop, with about 50 percent to 60 percent exported in a typical year. Whether hops are shipped overseas or remain on U.S. soil, the destination is invariably the same: a brewery. “Hops are grown for beer and that’s it,” said Jaki Brophy, spokeswoman for Hop Growers of Washington, with offices in the Yakima area. Brewers consume 99 percent or more of all hops produced. A fraction is used in one-off products such as hop-infused teas and candies. But as the brewery industry goes, so goes the hops industry. And the brewing industry is struggling along with the rest of the economy after pandemic-inspired stay-home orders closed 34
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restaurants, taphouses, and sports and entertainment venues. The National Beer Wholesalers Association in Alexandria, Virginia, said increased in-home consumption has not offset the sales for on-premises consumption. Major beer-drinking events, such as St. Patrick’s Day and March Madness, passed with millions of gallons of beer locked in venues, untouched. The NBWA Beer Purchaser’s Index in April registered 35, where a reading below 50 shows demand is contracting. Based on surveyed responses from beer purchasers, it noted the high-end beers made with more hops in the mix had record low readings. Lower price point beers saw increases but they tend to use fewer hops than their more expensive counterparts. The index goes up to 100. Brewery sales dropped “sharply,” according to an April survey of small and independent craft breweries by the Brewers Association, which is based in California. Its survey measured the impact of the Covid-19 pandemic and social distancing on small brewers who lost access to on-premises sales in breweries and taprooms. The median drop in revenue was 75 percent. The average was not much better — 65 percent.
More than half have curtailed production. Nearly 60 percent said they could survive for up to three more months. Some very small brewers said they would close. It is difficult to assess if that is a business decision that would have occurred without the pandemic. Breweries open and close in the normal
Washington produces 75 percent of the U.S. hop crop. course of business. Bart Watson, chief economist for the Brewers Association, said small brewers face an “existential crisis.” “The results show a sharp drop in craft category sales, massive furloughs or layoffs, and the high likelihood of large numbers of breweries closing without a swift end to social distance measures,” Watson noted. For hop growers, their customers’ problems hit home. “It’s not like if we’re looking at a large amount left over, we could sell them to a hop candy maker,” Brophy said. The uncertainty is prompting growers to pull back in 2020. The industry expected moderate
growth over 2019, when Washington growers cultivated 41,000 acres of hops and their Oregon peers cultivated 7,300. “It’s too early to tell at this point what kind of year it’s going to be,” Brophy said. Indeed, 2020 is shaping up as a good year in terms of plant conditions, water and labor, even as demand remains shaky. The spring was dry, but water is available in the greater Yakima Valley, which is where most hops grow in the state. Growers hold a mix of senior and junior water rights. The Yakima Basin water supply will fully satisfy senior water rights, according to a May forecast by the Bureau of Reclamation. Junior water rights were projected at an estimated 91 percent of their full entitlements. The bureau forecasts the Roza Irrigation District water supply
will be 91 percent, down from 96 percent earlier in the cycle. Hops also grow on reservation land. Worker availability also is strong because of the large number of workers furloughed or laid off by Washington’s Stay Home, Stay Healthy order, which exempted essential activities such as agriculture. Growers told the association they are not as reliant on the H-2A temporary agricultural workers program because locals are looking for work. Brophy, of the Washington hop association, said Washington breweries have gotten creative. Brewers have brought in mobile canning lines so they can sell to retail outlets, something they had not considered because they were not as profitable as taproom sales. Drive-thru pickups are another option. “While we do hear about how
people are drinking at home, the bottom line is less is being consumed,” she said. “Everybody is watching things very closely.” Hops are a primary ingredient for beer, but amounts vary by recipe. It takes less than a fifth of a pound of hops to produce a keg of amber, hefeweizen or lager. It takes a little less than two pounds to produce the same amount of imperial stout and almost four pounds for an imperial IPA, according to USA Hops.
Focus | Agriculture + Viticulture
Juice grape growers step up to meet demand ERIC DEGERMAN
There is no glitz or glamour associated with Concord grape production in Washington state, but the industry is looking better now than in recent years. The reversal stems from growers removing vines, which means they are sending fewer grapes to processors for Concord juice and jelly. But that’s not the only reason for optimism in a pandemic-plagued economy. “It’s been a pretty bleak crop for several years, and now it’s starting to get on the good side of supply and demand — particularly with the stay-at-home orders and peanut butter and jelly sandwiches,” said Mike Sauer, who grows Concord as well as wine grapes at Red Willow Vineyards west of Wapato. “People are eating at home, and what’s quick and easy and wholesome with kids around? A peanut butter and jelly sandwich. This whole shut-in deal has a lot of odd consequences.” Dick Boushey, another acclaimed wine grape grower in the Yakima Valley, sits on the board for the National Grape Cooperative Association Inc., the group of farmers across North America that owns Welch’s. His 40-year-old, 300-acre family farm near Grandview includes 40 acres of Concord and 40 acres of Niagara, another juice grape variety. “The processors can’t keep up with demand,” Boushey said. “I don’t know if it’s sustainable, but 36
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they are running out of supply in some places.” That’s all resulted in measured optimism across the Yakima Valley and throughout Washington state, according to Trent Ball, a member of the Washington State Grape Society and faculty at Yakima Valley College in Grandview, where he also is the Agriculture Department chair. “There was a lot of concern for a couple of years, but now we’re starting to see what’s happened because the acreage planted has dropped,” said Ball, who gathers the data each year for the state’s juice grape industry. “Some of those Concord vineyards have transitioned to hops because of the growth in that sector.” Washington state still dominated the U.S. industry last year with 176,237 tons of juice grapes produced. At the same time, wineries in the Evergreen State crushed 201,000 tons of wine grapes, a 23 percent drop from 2018 as a result of an early frost and a global wine glut. The last time juice grape production in Washington outweighed wine grapes was 2014. For Concord growers, the 2019 vintage brought an average of price of $170 per ton, up $5 from 2018. “You aren’t going to get rich out of it, but you might be able to put some new posts in,” Boushey quipped. However, everyone in the industry looks back fondly upon the halcyon vintage of 2012 when
the price reached a record $280 per ton. Just three years later, growers got a mere $110 per ton. “That’s an awfully low price, and it’s very challenging for the farmer when the price is in that range,” Ball said. Boushey said, “It hit bottom and it’s bouncing back up, which is kind of a neat thing to be a part of.” The Yakima Valley remains the cradle of Concord production in the state. Other significant players in the juice grape arena are New York, which ranked second with an estimated 120,000 tons harvested, followed by Pennsylvania, Ohio and Michigan. However, if state lines are crossed, then the Lake Erie region at 197,000 tons would edge past Washington. “In New York and the Lake Erie regions, they are using some Concords for winemaking, and this is bringing the price up, too,” Ball pointed out. Adding to the appeal of farming juice grapes is they do well in deeper soils and areas where orchard fruit and wine grapes won’t thrive. Sauer’s first commercial vineyard planted in 1971 at famed Red Willow spanned 30 acres of Concord, “along with a few token rows of wine grapes — Chenin Blanc, Sèmillon and Chasselas,” he said. That same year marked the formation of the Washington State Grape Society. Back then, there were about 200 acres of wine grape vineyards vs. 9,700 acres of Concord vines. That’s largely
because Washington residents had for decades been drinking sweet and fortified wines made from Concord. Last year, officials reported 59,000 acres of Vitis vinifera grapes vs. 17,100 acres of Concord — Vitis labrusca. That’s down from the 25,000 acres of Concord in 2002. Back then, the total included Snake River Vineyard near Burbank, which at 2,388 acres was the world’s largest Concord planting. However, the Taggares family has shifted its focus to tree fruit. Sauer and his sons at Red Willow also have pulled back on Concord. “We were up to about 110 acres or so, but now we’re down to about 70 acres,” Sauer said. “We took out 3 to 5 acres a year for the past 10 years or so, which were mainly in weaker parts of the vineyards.” Two decades ago, research by Washington State University indicated the break-even point was
Photos courtesy Richard Duval Images Dick Boushey, whose eponymous vineyard in the Yakima Valley is one of the most famous in the Washington wine industry, also is a leading grower of Concord and Niagara juice grapes.
$122 per ton based on a yield of 10 tons per acre. “The average depends upon the year, but in Washington, it’s generally around 10-12 tons per acre,” Ball said. Boushey noted that while Snake River Vineyard could yield a whopping 15 tons per acre because of its trellising system, he targets 13 tons per acre. Data from last year indicated that the U.S. imported less grape
juice — about 20 million gallons — than the country had at any point in the previous two decades. At the same time, Ball reports an increased interest in organic juice grapes. Last year, that segment accounted for about 9 percent of the state’s total production. The year prior, it was 6 percent. Growers harvest Concord grapes for juice at a ripeness of around 17 Brix, which means the sugar makes up 17 percent of the
Focus | Agriculture + Viticulture
grape’s natural juice. “Some years, we’re able to push it into the 18 Brix range,” Boushey said. The same standard of measurement is used in the wine industry, and most grapes for red wines are harvested at 24 Brix. Whereas a ton of wine grape juice yields about 165 gallons of juice, a ton of Concord grapes produces 190 gallons. Processors typically pasteurize the juice and create a concentrate of 68 percent sugar, which makes it more cost-efficient to transport. And while Ball’s research is dominated by the Concord industry, there are about 1,240 acres of Niagara vines in the state. On average, that white variety represents 6-9 percent of the overall juice grape industry each year. In 2019, its 14,411 tons went down as the second-smallest
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crop from Washington in the past decade. Ironically, the winemaking program at Yakima Valley College — Yakima Valley Vintners — does not work with either Concord or Niagara. “I really hadn’t thought about it before,” Ball said with a chuckle. “There’s no specific reason why because there are so many growers in the valley, but vinifera is king from a winemaking standpoint. In other parts of the country, Concord wine is normal, but the response to Concords is different in Washington. It’s not really what we’re used to drinking.” That’s largely because the profile of the Concord grape naturally contains methyl anthranilate, a chemical compound with aromas often described as “foxy.” But for many in the Yakima Valley, that’s a sweet sense of success. “You definitely know when Concord harvest is near,” Ball said.
“You can smell that aroma. It’s a great time of year because you know harvest is around the corner.” Who knows, but someday Ball and his students might dabble in Concord wine. “The grape lends itself to a fruit-forward wine, and they are usually balanced with a bit of residual sugar,” Ball said. “And because they are just so fruity in their expression, if you did use any oak it would have to be neutral barrels.” The Washington State Grape Society does endorse an adult beverage on its website that features Concord grape jelly. It’s a cocktail called Deep Purple Velvet, and the recipe includes heavy cream, brandy and triple sec. Eric Degerman owns and operates GreatNorthwestWine.com, an award-winning website that covers the Pacific Northwest wine industry.
A 2020 specialty publication of the Tri-Cities Area Journal of Business.