Focus: Agriculture + Viticulture in the Columbia Basin

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A 2021 specialty publication of the Tri-Cities Area Journal of Business

IN THIS ISSUE

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Agriculture Overview

16

Exports

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Potatoes

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Column: Director of Washington State Department of Agriculture

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Cherries

32

Hops

Viticulture Overview

24

Apples

36

Juice Grapes

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Cover photo courtesy Scott Butner Photography

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Positive signs Washington ag is ready to put pests, plague and politics in rearview mirror BY WENDY CULVERWELL

How tough was 2020 for Northwest agriculture? This tough: Discovery+ is streaming “Attack of the Murder Hornets,” a 90-minute documentary about the hunt for bee-murdering, crop-threatening Asian giant hornets in Washington state. The documentary crew followed Sven Spichiger, managing entomologist for the Washington State Department of Agriculture, and his team of hornet huntereradicators as they pursued the devastating invaders in Whatcom County, hoping to prevent them from spreading further and decimating critical honey bee populations. From pests to plague to politics, 2020 was a devastating year for Washington’s $11 billion agricul4

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ture sector and its $22 billion food processing sector and not just because of some plus-size hornets. Exports of Washington-grown agriculture products fell 5% in 2020 – a year that should have seen exports rise as trade wars gave way to new trade agreements with key partners. Now, 2021 is in full swing. Asparagus is in. Hay is being cut, and soon, cherry pickers will get to work. And Washington’s 36,000 farms and ranches and its vast network of food processors and support industries have some reason to be more optimistic. The new trade agreements, Covid-19 vaccinations and even a Mexican Supreme Court ruling on potato imports are signs of a turning tide. “Farmers are always optimists,”

said Pam Lewison, director for the Washington Policy Center Initiative on Agriculture and a Columbia Basin farmer. “It’s an oxymoron, but I always tell people that we are realistic optimists.”

Trade wars ease Trade wars led to, among other things, higher tariffs and a 42% reduction in exports to China from 2017-19. Retaliatory tariffs put hundreds of millions of dollars worth of Washington ag exports at risk. With new deals in place, the wars are receding. The United States-MexicoCanada Agreement (USMCA), known as the “new NAFTA”, took effect in July 2020. The United States-China Phase One Trade Agreement was signed in January 2020 on the eve of the


Courtesy Scott Butner Photography

pandemic, committing China to buying more U.S.-grown products. The deal led to a modest uptick in exports by the year’s end, although not enough to close the gap left by the trade wars. The U.S.-Japan Trade Agreement took effect Jan. 1, 2020, and committed to granting “substantial” market access to the U.S. by phasing out most tariffs. The deal helped offset losses associated with the U.S. withdrawal from the Trans-Pacific Partnership trade alliance. But there is a big hitch in exports, courtesy the pandemic. A shipping container shortage is leaving U.S. produced goods on the wrong shore. The containers that bring sneakers, televisions and other goods to American consumers return to Asia empty. It is not profitable to let them linger long enough to pick up outbound ag

products. U.S. Rep. Dan Newhouse, R-Sunnyside, and more than a hundred members of Congress signed a bipartisan letter dated March 9, 2021, demanding that Commissioner Michael Khouri of the Federal Maritime Commission, investigate and act against predatory practices. “(Ocean carriers) serve as an integral link between American producers and overseas customers, without which contracts cannot be met and the ability to compete in or even access foreign markets is threatened,” it said. In the interim, the Northwest Seaport Alliance, consisting of the ports of Seattle and Tacoma, is developing “near dock” facilities to speed up container loading in a bid to give domestic products a shot at space on boats. The upgrades were expected to be ready in spring 2021.

Key crops Washington’s biggest crops play an important role in the economy of the Mid-Columbia, particularly potatoes, which are grown and processed into frozen french fries and other products here. The state’s potato growers discarded 300 million pounds of spuds in 2020 as Covid-19 shutdowns drove down demand for french fries from restaurants and food service operations. That was better than anticipated. The industry initially expected to discard 1 billion pounds. Massive giveaways and a Midwestern freeze helped use up some of the surplus. Potatoes are the state’s third largest crop with a pre-pandemic value of $934 million, according to the state Department of Agriculture. Demand is expected to revive along with in-person dining. The shipping container short- Focus | Agriculture + Viticulture

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age is the biggest challenge to exporting frozen french fries. But the industry received good news in April 2021, when the Mexican Supreme Court issued a ruling that finally opened the market to U.S. fresh potatoes. It could offer a $100-plus million shot in the arm. Apples are Washington’s top crop with a value of nearly $2 billion. Growers expect to harvest 122 million bushels in 2021, down from 134 million a year ago. The pandemic exacerbated labor shortages and curtailed the rollout of the Cosmic Crisp apple, which made its debut in 2019. Barring bad weather, Northwest cherry growers anticipate a 2021 crop of 23.8 million 20-pound boxes, up from 20 million a year ago. Final figures were not available at press time, but the pandemic was good for the industry as consumers chose healthy fruit to eat at home, said Jon DeVaney, president of the Washington State

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Tree Fruit Association. Washington is the nation’s second leading grower of grapes, thanks in part to its wine industry. 2020 was a challenging year with sales down in every channel and nearly 1 million fewer cases shipped. But economist Chris Bitter gave growers and winemakers something to cheer in March 2021: Shipments of Washington wine packaged for consumers grew by 8% in the first quarter of 2021 compared to the same period in 2020.

The state Legislature Green legislation and new overtime rules passed by the 2021 Legislature will have a significant impact on agriculture, said Lewison of the Washington Policy Center. Lawmakers passed an agriculture overtime bill that she called a “workable” compromise in need of refinement. The new rules required dairies to pay overtime

after 40 hours as of last November 2020. Everyone else had to implement the new pay rate of time and a half after 55 hours on Jan. 1, 2021. It drops to time and a half after 48 hours in 2023 and to time and a half after 40 hours in 2024. The bill shields farm employers from lawsuits seeking retroactive pay to Nov. 4, 2020, which covers all current active lawsuits. Lewison said the agriculture community is looking for seasonable flexibility. The state’s new low carbon fuel standard and cap and trade rules to reduce greenhouse gas emissions will affect farms soon, she said, with fuel prices expected to rise 20 cents a gallon beginning in 2022. Farm exemptions will ramp down, leading to a potential 50-cents-per-gallon new fee by 2030. “It’s almost cost prohibitive for farming,” Lewison said. “That makes it more so.” 


The numbers tell the story of Washington agriculture Compiled by Focus staff

Washington farms and ranches produce more than 300 different crops with a combined value of about $11 billion – a figure that triples once food processing is factored in. Agriculture is one of Wash-

ington’s most important private sectors, along with aerospace and tech. The U.S. Department of Agriculture’s National Agriculture Statistical Service tallied 35,500 agriculture operations in its 2020 Washington survey. Collectively,

they cultivate 14.6 million acres. Big numbers give an overview, but they only go so far. Here is a look at Washington agriculture by the numbers, gleaned from the USDA, the Washington Department of Agriculture and the state Office of Financial Services:

Crop land values: Ag land was worth $2,610 per acre in 2020, or $7,650 for irrigated acres and $1,240 for dry ones. Pastureland was worth $740 an acre. Earnings: Of the 35,500 farm operations, 1,450 earned $1 million or more while 21,000 earned less than $10,000. Nearly 90% of Washington farms sell less than $250,000 worth of product per year. No. 1 in the U.S.: Washington is the nation’s leading producer of apples (69% of the U.S. total), hops (73.2%), spearmint oil (69%), sweet cherries (67.5%) and pears (45.3%). It lost its No. 1 ranking for asparagus to Michigan in 2020. No. 2 in the U.S.: Washington is second to Idaho for potatoes (25% of the U.S. total) and to California for grapes (5.7%). Top 10 commodities in 2019: Apples ($1.95 billion), milk ($1.28 billion), potatoes ($934 million), wheat ($792.5 million), cattle ($698.7 million), hops ($475 million), hay ($468 million), cherries ($393.5 million), grapes ($308 million) and onions ($180 million). Top trading partners in 2020: Canada ($1.2 billion), Japan ($1.1 billion), China ($518 million), South Korea ($459 million), The Philippines ($343 million), Mexico ($316 million), Taiwan ($268 million), Indonesia ($258 million), Hong Kong ($231 million) and Vietnam ($199 million). Top 10 exports in 2020: Fish and seafood ($1 billion), frozen french fries ($784 million), wheat ($663 million), apples ($637 million), hay ($508 million), dairy ($500 million), fresh sweet cherries ($342 million), hop cones and extracts ($268 million), beef ($214 million), pulses ($170 million). Head of cattle slaughtered: Washington is the Northwest’s leading processor of beef, slaughtering twice as many animals in 2020 as No. 2 Idaho. The headcount was 1.1 million in 2020, down from 1.15 million in 2019. The U.S. total was 32.7 million. Focus | Agriculture + Viticulture

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WSDA fills food pantries with farmer-grown products As we reach the midway mark of 2021, many of the adjustments made in response to the coronavirus pandemic appear likely to remain with us for some time, from ongoing public health measures, teleworking for many workers who used to report to offices and efforts to recover from a financially devastating year. The pandemic prompted the Washington State Department of Agriculture (WSDA) to boost its work in food assistance, find new ways to assist struggling farm operations and other agriculture businesses and keep a close eye on the volatile international market. But we also had our customary body of work to maintain, supporting Washington agriculture.

Feeding the hungry For more than a decade, WSDA has had a food assistance program, providing both food and funding to contractors around the state, who in turn distribute food directly to those in need. Before Covid-19 struck, it was estimated that one in every six Washington residents sought assistance from a local food bank. In 2020, that number almost doubled, reaching an estimated peak of 2.2 million Washington residents at risk of going hungry. While food banks saw a huge increase in need, donations of food dropped as much as 50% during the first peak of the virus. 8

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WSDA responded by working to secure more than $75 million in state and federal dolDerek Sandison lars for food Washington State assistance and Department of Agriculture supporting GUEST COLUMN philanthropic organizations that raised another $10 million. WSDA worked with nonprofits and government agencies and tapped our own emergency funds to buy food, personal protective equipment and everything from paper boxes to refrigerators to help ensure that food assistance continued to flow. This work was recognized during the 2021 legislative session with lawmakers providing almost $80 million in new funding for WSDA over the biennium to help expand food assistance capabilities. Some of this money will help augment existing programs, like our Farm to Food Pantry project, which connects local farmers with food banks seeking fresh produce for their pantries. Some of the funds will pay for new initiatives, such as the development of a state-led alternative to the USDA’s Farmers to Families food box program.

This new program will prioritize procuring food from Washington’s farmers, fishers and food processors to boost regional economies while coordinating distribution to families through a network of established hunger relief organizations and a new crop of innovative programs that have emerged in response to Covid-19. This new funding ensures WSDA will continue to play a significant role in making sure no one goes hungry in Washington state, while also providing farmers with new markets for their products.

Trade Washington is a trade dependent state. Overseas markets are vital for Washington agriculture, which exports much of what it grows to customers around the world. This is why WSDA keeps such a close eye on the international landscape. It is also why I agreed to chair the marketing and international trade committee of the National Association of State Departments of Agriculture (NASDA). But commodity groups and ag businesses that depend on overseas customers have had some rough years recently. Even before the pandemic struck, disputes with some of our biggest trading partners, like China and India, caused turmoil in the international


marketplace. These disputes and the tariffs many countries imposed in retaliation for tariffs the U.S. imposed, hit Washington exporters hard. Ag exports to China decreased 42% from 2017-19. The Covid-19 pandemic made things even tougher for ag businesses, with exporters among the first to feel the effects of the pandemic as countries in Asia

closed ports or placed public health restrictions on their citizens that meant little to no work done at the ports. While retail demand returned, the food service industry has been much slower to reopen. Exporters of products into this sector continue to face significant financial losses. As markets have begun opening, Washington agriculture Photo by Kimberly Teske Fetrow

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Photos courtesy Scott Butner Photography

companies continue to face difficulties getting their products into international markets. One factor is that shipping firms have cut back or even stopped carrying our products to these export markets. Instead, ships delivering imported goods to Washington have headed for home to retrieve yet more goods for U.S. consumers, without waiting to load agriculture products bound for export. Container shortages, port congestion and unreasonable ocean carrier fees are making matters worse. This remains an ongoing problem that has drawn the attention of our congressional representatives. WSDA will continue to monitor developments like this and work with businesses to find new markets for their products through the work of our International Marketing Program.

Soil health While the pandemic pushed WSDA to work in new areas or just expand what we had been doing, the agency continued working on other issues of concern for agriculture, such as soil health, the 10

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foundation of agriculture viability. In 2020, WSDA’s Natural Resources Assessment Section began work on a soil health initiative, joining Washington State University and the Washington State Conservation Commission (WSCC) on a long-term effort to address soil health concerns across the state. Washington has a diverse climate and in some parts of the state, soil health is threatened – from drought, over tillage, compaction or erosion, just to name a few of stressors on the health of our soil. Good, healthy soil retains water better, provides more nutrients for growing plants and is better for the environment as well as beneficial to farmers. One goal of the soil health initiative is for the three agencies – WSU, WSDA and WSCC – to collaborate on research and the development of demonstration projects with farmers and commodity groups. Then, use what has been learned to promote education on how to improve soil health and the practices most likely to improve key components of our soil.

The pandemic made in-person planning and discussion impossible, but the organizations still managed to work together extensively on this effort through conference calls and virtual meetings. One task for WSDA was to bring a soil scientist on board, hiring Dani Gelardi this spring as the soil health initiative soil scientist to lead the multi-agency and agriculture industry effort. She has extensive experience with on-farm research, working with farmers, grant writing and management and began working at WSDA while completing her doctorate in soils and biogeochemistry with an emphasis in soil health. The year ahead promises to be an active year in Washington agriculture and WSDA remains committed to its mission of supporting agriculture and serving the public.  Derek Sandison is director of the Washington State Department of Agriculture.



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Courtesy Scott Butner Photography

Washington wine industry cheers as shipping revives in early 2021 BY ERIC DEGERMAN

There’s been a retrenching of the Washington wine industry in recent vintages as a result of overproduction, a slippage in sales and the pandemic. However, reasons for optimism continue to grow even though the state crushed only 175,000 tons in 2020 – its lightest harvest since 2011. For analysts craving statistics, there is economist Chris Bitter’s latest Washington Winery Report, issued just as bloom began in vineyards throughout the state. “The Washington wine industry appears to have turned the corner following a challenging year that included a severe 7% contraction in shipment volume,” wrote the former University of Washington assistant professor. Shipments of Washington wine packaged for consumers grew by 8% in the first quarter of 2021 compared to the same period in 2020. A more telling sign of confi12

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dence in the future of the state’s wine industry can be found in the recent acquisitions and investments by Josh Lawrence and Tom Merkle. Neither is a hedge fund manager nor foreign investor. Rather, they are two of the Columbia Valley’s most respected grape growers. Each family owns and operates their own winery. “The Washington wine industry definitely has a wide range of confidence levels from extremely bullish to pretty bearish,” Lawrence said. “We have a tendency to be glass half full, but I believe the indicators are backing that view up at the moment.” This spring, they announced the purchase of Desert Wind Winery in Prosser, an acquisition from the Fries family in Oregon that included more than 400 acres of vineyards on the Wahluke Slope near Mattawa. The deal included the $2.4 million purchase of the hotel, restaurant and other commercial buildings. In 2019, Lawrence and Merkle teamed to buy 150-acre Conner

Lee Vineyard, one of the state’s most historic plantings with roots stretching to 1980. These are the types of transactions that typically generate headlines for corporations such as Precept Wine in Seattle, the Northwest’s largest privately owned wine company that also positioned itself to grow during the pandemic. “I cannot discount the fact we are inherently opportunistic in our approach to business and specifically acquisitions,” Lawrence said. “The downturn over the past few years has provided us with some great opportunities to purchase very high-value assets at beneficial pricing. We know we won’t always catch it as the upswing starts, but we’d rather struggle for a season or two than buy at the top of the market.” Their combined expertise spans much of Washington wine country. Lawrence and his wife, Lisa, own Gård Vintners, an 8,000case brand with three tasting


rooms that are fed by their 450 acres of vines on Royal Slope. Merkle – the Honorary Grower for the 2017 Auction of Washington Wines – and his wife, Tami, are partners with famed winemaker Jessica Munnell in Wautoma Springs Winery in Prosser. Their brand’s namesake estate vineyard is near historic Cold Creek Vineyard and a short drive west of the Wahluke Slope, where Merkle manages several sites for Zirkle Fruit Co. “Tom has been a great partner with his ability to manage a ton of moving parts along with producing extremely high-quality grapes at high yields for Ste. Michelle,” Lawrence said. “He is also very in tune with the industry and has a similar perspective on the trajectory of this industry as well.”

Surviving a pandemic The early returns for 2021 indicate an increase fueled by

out-of-state shipments, according to Bitter. Last year, it was directto-consumer (DTC) sales and in-state shipments to wine club members that sustained smaller producers such as Gård Vintners.

The Washington wine industry definitely has a wide range of confidence levels from extremely bullish to pretty bearish. Josh Lawrence grape grower, winery owner “Our DTC approach with Gård really paid off last year during the pandemic as we had a record year for sales,” said Lawrence, who operates retail outlets in Walla Walla, Woodinville and Ellensburg. “The tasting rooms pivoted amazingly this last year,

and I give our tasting room staff and marketing team all the credit. We were incredibly flexible with curbside, take-home tasting experiences, discounted shipping, etc., and it definitely paid off. The loyalty of our wine club members was the difference, especially with distribution struggling.” The reception for their estate wines produced by Walla Walla winemaker Aryn Morell has the Lawrences looking to increase production to 10,000 cases with the 2021 harvest, launch the Gård Public House tasting room and restaurant this spring in Royal City, and open at least one more satellite tasting room for Gård – perhaps in Vancouver, Washington, but not at their latest acquisition in Prosser. “We do not plan on having Gård available at Desert Wind, except possibly at the restaurant,” Lawrence said. “We’ve been in

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Walter Clore Wine and Culinary Center in Prosser closed. It had spent 10 years as a tourist attraction and tasting room for wines produced throughout Washington state.

Tinte Cellars adds Red Mountain vineyard

Photo by Jess + Nic Photography/Courtesy Lawrence Estate Wines Josh and Lisa Lawrence of Gård Vintners in Royal City stand in Solaksen Vineyard, one of their estate plantings in the newly established Royal Slope American Viticultural Area.

shared tasting room situations in the past and haven’t been real happy with them. Desert Wind’s brand is strong enough that it deserves having the tasting room to itself.”

Sinking more roots Between negotiating the Desert Wind purchase and farming for themselves and their winemaking customers, the Lawrences raised a toast on Sept. 2, 2020, to the federal government’s establishment of the Royal Slope American Viticultural Area. “The Royal Slope AVA, although a long process, has been great,” Lawrence said. “We believe it has had quite a bit to do with our increased demand this offseason for grapes. In fact, we are essentially sold out and wished we had been more aggressive on planting the past couple years.” It’s an emerging region that’s been a longtime breadbasket for acclaimed winemaker Mike Januik at Novelty Hill in Woodinville. Morell uses Royal Slope fruit in wines he crafts for famed Napa Valley vintner Dennis Cakebread’s Mullan Road Cellars label. Mellisoni Vineyards in Chelan – Wine Press Northwest 14

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magazine’s 2021 Washington Winery of the Year – pulls heavily from the area as well. “One of the reasons we are starting our Royal City tasting room and restaurant is we are bullish long term on Royal City above and beyond just crop production,” Lawrence said. “We have many customers who want to visit the vineyards, and this gives us an avenue to do so and then sit down and have great wine and food.”

Hospitality plans It’s often in a farmer’s nature to diversify their holdings, and the Lawrences and Merkles now are in the hospitality industry by taking over Desert Wind, an 11,000-case winemaking facility in Prosser that came with a full commercial kitchen and a boutique hotel featuring rooms that overlook the Yakima River. “Desert Wind is an unparalleled destination in the Yakima Valley, and we are excited to expand the offerings there with an even greater emphasis on food and wine pairings, private events and lodging experiences,” Lawrence said. Desert Wind lost a valued neighbor last fall when the

The Lawrence and Merkle families weren’t the only vintners to invest in Benton County this spring. Seattle natives Tim Gamble and wife Teresa Spellman Gamble of Tinte Cellars in Woodinville bought Corvus Vineyard on Red Mountain. The former owners of Nutraceutix in Redmond purchased William Church Winery and Cuillin Hills in 2018, then opened a satellite tasting room for Tinte last fall in Seattle’s Georgetown neighborhood. They’ve rebranded their 5-acre site as Tinte Estates Vineyard and the adjacent fourbedroom vacation rental as Tinte Red Mountain Retreat. Spellman Gamble’s late father, John, was the 18th governor of Washington state, and she spent three decades on the clinical faculty at the University of Washington.

Changing industry leaders Last fall, Ste. Michelle Wine Estates, one of the largest producers in the country, brought in global wine executive David Dearie as CEO, its third change in leadership since 2018. Earlier in 2020, its parent company, Altria, wrote off $292 million in wine inventory and $100 million in non-cancelable grape purchases. This spring, Ste. Michelle reshuffled its winemaking team, marked by the departure of Bob Bertheau as the longtime head winemaker at Chateau Ste. Michelle. He was replaced by Katie Nelson, while Will Wiles took


over for Nelson at Columbia Crest. Leah Adint – a product of Washington State University’s viticulture and enology program – moved from Chateau Ste. Michelle to Erath Winery, a sister property in Oregon. According to research by Bitter, Columbia Crest now stands as the state’s leading producer at 1.8 million cases in 2020. Chateau Ste. Michelle is next at 1.4 million cases. Goose Ridge Winery in Richland produced 914,162 cases, making it No. 5 on the top 10 list. Bitter’s company, Vintage Economics, determined that overall production among Washington wineries fell from 17 million cases in 2019 to 12.75 million in 2020. His data, available via a paywall at Vineconomics.com, indicates that 70% of the state’s wine comes from the cellars of the leading 10 producers, a list that is rounded out by West Richland’s Vinmotion Wines, owned by Pacific Rim Winemakers, with 236,127 cases. And in an effort to raise consumer awareness, the Washington State Wine Commission and Washington Winegrowers Association have created the Washington Sustainable certification program. A pilot project is scheduled to roll out by harvest 2021 with the full program implemented in 2022. The goal is to have wineries label their bottles as “sustainably farmed” with a Washington-specific brand. Growers are seeding the program at a cost of $6 to $10 per acre.  Eric Degerman owns and operates GreatNorthwestWine. com, an award-winning website that covers the Pacific Northwest wine industry.

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Empty

containers

Ag exporters left behind as consumers shop online BY WENDY CULVERWELL

A side effect of the Covid-19 pandemic is hurting Washington’s ability to export its fresh cherries, apples, frozen french fries and other signature products to the rest of the world. A shipping container shortage sparked by frenzied online shopping is the latest complication faced by farmers and ranchers, who have been battered by difficult trade conditions in recent years. For 2020, exports of Washington-produced agriculture products dropped 5% to $6.7 billion compared to 2019, according to figures finalized by the state 16

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Department of Agriculture in May 2021. An additional $10 billion of crops grown elsewhere moved through Washington ports in 2020, pushing the total value to more than $17 billion. “It is better than I expected,” said Rianne Perry, international marketing manager for the state agriculture department. “A 5% decrease is better than I would have expected. I was a bit surprised.” Perry was pleasantly surprised a year ago when the 2019 figures showed a modest gain to about $7 billion as tough trade talks gave way to a series of new trade agreements, including the United

States-Mexico-Canada Agreement (USMCA) known as the “new” NAFTA, the United StatesChina Phase One Trade Agreement and a trade agreement with Japan, which eased tariffs and market access for Washingtongrown products. But the Covid-19 pandemic began affecting Asian customers in January 2020 and roiled the U.S. starting in March 2020. “If Covid hadn’t come along, our trajectory was to increase. There was no reason to decrease. I see it as being completely due to Covid,” she said.

A mixed bag The result is a mixed bag for


with China, Japan, Mexico and Canada appear to be improving the overall picture, but a container shortage in the shipping industry is a cause for concern.

Losing to retail

Courtesy Port of Seattle

ag exporters. Four of Washington’s top five crops saw declines. Wheat exports were a bright spot, rising 13% to $663 million, partly because China came under pressure to comply with the new Phase One terms. The news was less pleasant for other products. Fish and seafood fell by 12% to $1 billion. Frozen french fries, which are produced chiefly in the MidColumbia, fell by more than 11% to $784 million. Apples, the state’s signature crop, fell 13% to $637 million. Hay fell 2%, to $508 million. Dairy exports grew 12% to $500 million. Fresh sweet cherries fell by 2% to $342 million. Pulses – dry-harvested grains – had the biggest gain, rising 20% to $170 million. The new trade agreements

Agriculture is competing with – and losing to – retail when it comes to ocean liners. Put simply, shipping containers leave Asia laden with sneakers, electronics and any number of items destined for U.S. customers. Ocean carriers send the containers back to Asian ports as fast as they can, unwilling to sideline them long enough to fill with ag products that ship by container. The number of empty containers leaving Washington ports soared in the first quarter of 2021, according to the Northwest Seaport Alliance, consisting of the ports of Seattle and Tacoma. In its monthly shipping update, it said 154,131 empty containers left the ports in the first three months of 2021 compared to 101,006 in all of 2020. The ports are preparing “near dock” facilities to give faster access to containers to Washington exporters by reducing the turnaround time, said Melanie Stambaugh, spokeswoman for the seaport alliance. The challenge is complicated by the number of containers being transferred by rail to the Midwest, leading to an imbalance. The system, she said, was not designed to handle the volume of imports caused by pandemic-induced shopping on Amazon and other websites – a cultural shift that may prove permanent. The fallout is hardest on ag exporters. “It is really problematic. It’s hindering the amount of exports going out,” said Perry, who added communications issues mean exporters may only learn a carrier

won’t call after products are en route to the port. The Federal Maritime Commission and Congress are reviewing the crisis. In a March 9, 2021, letter signed by more than 100 members of Congress, U.S. Rep. Dan Newhouse, R-Sunnyside, together with U.S. Rep. Cathy McMorris Rodgers, R-Spokane, and U.S. Rep. Kim Schrier, a Democrat whose district extends from Bellevue to Yakima, called on the chair of the maritime commission to act quickly to stem the tide of empty containers. American exporters are grappling with delays, bottlenecks and increased port fees, the bipartisan letter complained. Delivering shipments to U.S. ports and leaving without refilling empty containers is unsustainable and “simply unacceptable,” it said. “Should it be found that (carriers) are predatory or unreasonable in refusing to export these American agricultural products or imposing unreasonable fees, they must be held accountable.” Perry is grateful for the support, but said immediate relief is not a realistic expectation. “It won’t help right now,” said Perry, who added that the inability to ship products hurts relationships with partners who view their U.S. suppliers as “unreliable.”

Trade deals take hold The container shortage is the latest challenge to beset the Washington ag industry’s modern export saga, which dates to 2017. Then President Donald Trump removed the U.S. from the TransPacific Partnership (TPP) and escalated conflict with China, leading to retaliatory tariffs on many Washington products, and renegotiated trade deals with Canada and Mexico. Focus | Agriculture + Viticulture

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Courtesy Scott Butner Photography

The TPP deals remain a major challenge for Washington because the remaining countries proceeded with the deal, excluding U.S. exporters from favorable duty treatment. A separate U.S.Japan deal is helping, she said. “Our products are so much more expensive than the competitors (within the partnership). It is continuing to be a problem,” she said. The USMCA took effect July 1, 2020, and left Washington exporters mostly untouched. Perry said Washington wines are getting better treatment in Canadian stores, but Washington dairies won’t reap the benefits of favorable terms with Canada because most terminals are in the middle of the country. Exports to Canada were off slightly, while those to Mexico plummeted, which Perry attributes to the pandemic. Exports to Mexico dropped 17% to $316 million in 2020, causing it to slip a spot to Washington’s sixth largest agriculture trading partner. Perry is optimistic Mexico will revive in 2021, as its “chaotic” 18

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Covid-19 situation and recession ease. Exports of WashingtonFrozen french fries were the one bright produced agriculture spot. Mexico bought $38 products dropped 5% million in 2020, a 4.4% to $6.7 billion in 2020, increase. All other categories fell. compared to 2019. Mexico was Washington’s second largest market for apples “The ($114 million) and largest market increases are big, but they’re not for pears ($28 million), malt ($11 anywhere close to where they million) and roasted coffee ($11 were before,” she said. million). Frozen vegetable sales The Phase One deal drove fell 40%, to $6 million. The Phase One deal with increases in hay exports and was China was signed Jan. 15, 2020, particularly helpful for pulses and committed China to buying (dry-harvested grains), which at least $40 billion of U.S. food, grew by 365%; for wheat, which agriculture and seafood products grew by 900%; and for dairy, annually for a total of at least which grew by 400%. $80 billion by the end of 2021. Beef exports to China are Washington exports to China worth calling out. Washington grew 12% to $518 million in exported $13 million worth 2020. China is the second largest of beef to China in 2020, a market for Washington-grown 169,263% gain over the prior hay and the third largest market year’s miniscule number. for its fish and seafood and for “That is not a typo,” said fresh sweet cherries. Perry, who said China only began Perry cautions that the 12% buying Washington beef a few gain does not erase the 42% years ago, so nominal increases decline posted between 2017-19, the height of the trade wars. magnify the impact. 



Cherries on top

Consumers crave their fresh fruit BY ROBIN WOJTANIK

The 2021 cherry crop is shaping up to be larger than last year’s but with the usual caveat for the sweet, fragile fruit: A single weekend of wind or rain could cause widespread devastation. The cherry industry didn’t miss a beat when the Covid-19 pandemic arrived a year ago. Washington growers harvested nearly 20 million boxes, even as new safety protocols rolled across the Pacific Northwest in the early days of the coronavirus outbreak. Cherries are an early crop, and the harvest coincided with the new rules. The 2021 crop is likely to be around 23.8 million, 20-pound boxes. Most cherry growers profited in 2020 despite increased costs associated with managing around coronavirus, said Jon DeVaney, president of the Washington State Tree Fruit Association. Final tallies for 2020 will be released in the fall, but the 2019 crop yielded sales valued at $393 million for the state. But 2020 sales were strong, DeVaney said. Consumers shopped heavily at grocery stores for in-home dining, taking advantage of fresh fruit with big health benefits. “People who might have normally been inclined to have food cooked for them found that easy20

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to-consume fruit did very well,” he said. “People became more health conscious and thought, ‘Maybe I should eat fresh fruit to support my health.’ ”

Labor challenges Cherry pickers tend to be quite mobile, often arriving in Washington from California in June looking for the farm paying the highest wages and with the most fruit available. “They show up at the farm gate on a Monday morning and may only stay a few hours until they hear the farm down the road is paying more or has more to pick,” DeVaney said. Many cherry workers live in the community temporarily, staying with friends or relatives, while others rely on employer-provided housing. Cliff MacHugh operates two seasonal labor camps at Jackass Mountain Ranch, north of Pasco. He’s had to follow strict guidelines for safety. “Trying to keep the government happy and the people happy at the same time is a nightmare,” MacHugh said. Advancement in phases of the governor’s Healthy Washington Roadmap to Recovery didn’t come with a relaxation of the safety rules. Social distancing and barriers remained at packing houses, along with mask requirements,

including in the orchards. Growers have worked through logistical challenges related to housing, placing people in cohorts or limiting residents. “Every business has their issues they had to work through, and we’re no different,” MacHugh said. A push to vaccinate workers against Covid-19 ahead of the cherry-picking season starts before participants in the government’s guest worker program, H-2A, arrive in the country. Industry leaders tout a nearly 100% vaccination rate, yet some worry about those workers already living domestically and potentially bringing the virus to Washington’s orchards after arriving from another state. “The guys coming here from California are considered U.S. workers. They have no obligation to be tested and vaccinated, and they’re often living in unlicensed facilities,” said Dan Fazio, president of Wafla, formerly known as Washington Farm Labor Association. “Growers are required to hire these guys. So you’re in a tough position if you want them vaccinated. Employers are doing everything they can to cajole the workers, short of mandating it.” Some have offered cash bonuses or additional time off for workers who voluntarily receive a Covid-19 vaccine. Still, Fazio is worried about a potential spread


as 5,000 cherry workers are expected to arrive in Washington from California for the harvest. Citing the daily mobility of workers who move between farms, DeVaney said it’s not possible to easily track which workers are fully vaccinated.

Harvest costs Cherry workers are generally paid based on how fast they pick. This often results in earnings well above the minimum wage. “To get enough people in this region, our normal rate has exceeded $30 an hour,” MacHugh

said. “Most people don’t realize it’s that expensive, but it is. It’s still hard to get people to pick at that rate. We’re buying their housing, too.” He expects his 2021 harvest costs to be “very, very high,” while harvesting a smaller crop compared to the previous year. “A light crop always costs more. It’s a lot of movement for a little bit of production,” he said. The cost for workers is just a fraction of the expenses, as growers have to pay for personal protective equipment for staff, as

well as additional staff to monitor workers and keep them adequately distanced, especially as many rush to the scale at once. Growers make their money by how much their fruit sells for after all the packing costs, DeVaney said. “Any safety changes were passed onto the growers and come out of their bottom line as well,” he said. DeVaney predicts that as the second full cherry season commences under Covid-19 safety regulations, growers and workers

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will have had another year to get used to the changes and increase efficiency. MacHugh said it remains a challenge to make a living in a labor-reliant industry.

Health benefits Washington cherry farmers have a reputation for producing high quality fruit, yet still work to increase awareness of new varieties and health benefits as a way to keep consumers interested. DeVaney said the perception of implied safety with bagged fruit helped keep sales high in 2020, as consumers expected less handling of the product before purchase, and pre-packaged amounts made for ease of sale with curbside pickup routines. Driving consumer awareness of the health benefits of cherries remains a top priority. James Michael, vice president of marketing for the Northwest Cherry Growers, said the organization’s board signed off on its largest promotional program ever to push this message. The group’s survey of cherry buyers found more than half were influenced by the immuneboosting or anti-inflammatory properties of cherries.

International markets The pressure on international markets eased a little in 2020 with a smaller crop, and much of Washington state’s cherry harvest 22

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stayed in North America, said Keith Hu, director of international operations for the Northwest Cherry Growers. “Southeast Asia didn’t need to absorb a lot of fruit,” he said. Cherries have a short window for freshness and usually ship by air in the cargo holds of passenger planes to reach consumers in time.

People became more health conscious and thought, ‘Maybe I should eat fresh fruit to support my health.’ Jon DeVaney, president of the Washington State Tree Fruit Association Yet passenger flights were limited and the industry expects to rely more on ocean liners for distribution. “Time is of the essence for us,” Hu said. “It will be interesting to see how the industry plays out with sea shipments. Packers will do their best to secure as much air freight as possible.” On arrival overseas, cherries may be subject to a 20% duty, plus a 10% value-added tax in some markets. But Hu is optimistic, since most markets and economies are running “almost normal” in Asia with full capacity in public

places, and in-store promotions can go forward as planned. California works as an early predictor on cherry demand. Based on that, Hu expects about 70% of Washington’s sweet cherry crop will stay stateside this year. A complex of viruses known as little cherry disease has become an increasing concern to sweet cherry farmers. Infected trees produce little cherries, which cannot be sold to consumers. Likely spread through root contact or insects, there is no cure. A diseased tree cannot be salvaged by limb removal. It has to be removed entirely. Washington State University’s tree fruit experts say little cherry disease has been found in commercial sweet cherry orchards in a number of Washington counties, including Benton, Franklin and Yakima. Each spring, cherry growers know there’s “a lot of weather still ahead of us” but remain overall optimistic about the development of the fruit on the trees. MacHugh expects to pick about five to six days later than last year’s start of the harvest. It will take about three weeks to pick the hundreds of acres on a farm his family first planted in the 1980s. He grows Bing, Chelan, Santina, Rainier and Sweetheart varieties. Chilly temperatures over Easter weekend in early April 2021 seem to have left frost damage. “Some blocks I wonder if we’ll pick, and other blocks are fine,” he said. MacHugh’s canvassing team expected picking to begin at the beginning of June, with shipping volumes expected to outpace the previous year. 


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Signature crop Fewer apples heading to market BY ROBIN WOJTANIK

Fewer apples are going to market in 2021, but this isn’t really a complaint. “This has proven to be very advantageous as far as Covid and trade issues go,” said Todd Fryhover, president of the Washington Apple Commission. The industry expects to harvest 122 million bushels in 2021, compared to 134 million in 2020. Apple growers struggle with the same challenges as other crop tenders, and the challenges tend to repeat year to year, with the exception of Covid-19 arriving on the scene in early 2020, upsetting not just the apple cart, but creating long-lasting impacts on an industry already pushed to the brink with labor shortages. “It was a very difficult year for Washington apple growers,” Fryhover said. 24

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Safety requirements to prevent the spread of Covid-19 have resulted in major capital expenditures that couldn’t be solved overnight. “The orchards were being impacted heavily, just as workers were coming in,” Fryhover said. “A grower who might have an eight-bed facility can now only put four people in there. A bus that used to carry 40 can now carry 20. To their credit, they figured it out.” Growers using the federal government’s H-2A guest worker program saw costs skyrocket last year to maintain mandatory safe distancing standards while working and in housing quarters. The program allows for the temporary employment of foreign workers in the ag industry. It comes at a hefty expense for the employer, requiring them to

cover travel costs and housing. It’s an investment that has paid off as cases of Covid-19 remained low among workers brought to the U.S. through the program, said Dan Fazio, executive director of Wafla, formerly known as Washington Farm Labor Association. “We’re the best in the country by a long shot,” he said. Those coming to the state through the H-2A program are tested for Covid-19 within 48 hours of arrival, and then scheduled for a vaccination. Workers are aware of the testing and vaccination requirement before signing on for employment. This contributes to a high compliance rate. Fazio said since the start of the year, less than 20 positive Covid-19 cases have resulted from nearly 8,000 H-2A workers


transported, keeping the workforce safe while fulfilling the ongoing demand for labor.

State’s top crop Apples are Washington’s top crop with a 2020 value of $1.95 billion. The crop continues to face growing threats from other markets due to taxes leveled during the Trump administration that are unlikely to be rolled back right away. “It doesn’t appear that this administration is going to do anything different in China than what’s been done,” Fryhover said. “There’s so many more important things to tackle. They acknowledge the situation and would like to have it corrected, but it’s going to take time.” For the last few years, both apples and cherries from Washington have faced a 50% duty on imports to China in what’s

considered a retaliatory tariff to counter taxes placed on imports like steel and aluminum. The taxes are higher in India where a 50% tax is leveled on all imports, regardless of origin country, with an extra 20% duty added just for U.S. products. “A 70% duty is nearly doubling the cost of your product,” Fryhover said. This creates an increasing

danger to the Red Delicious market, which makes up 90% of the apples shipped to India. Fryhover said the taxes have opened up competition with countries offering substantially lower apple prices, like Turkey and markets in the European Union. Other countries continue to encroach on the Washington state-dominated apple industry,

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It was a very difficult year for Washington apple growers. Todd Fryhover, president, Washington State Apple Commission Covid safety.” But farmers are still in the business to make a living, and Fryhover said last season was “one of the worst” from a pricing standpoint. “If you think about packing a box of fruit and it costs you $10 to pack it, and now you need 20% more people and bags, the cost goes up to $12,” he said.

New varieties Photos courtesy Washington State Apple Commission

which represents 95% of all apple imports, even as interest in apple varieties diversifies. “We’re growing more Galas now. It’s the No. 1 variety grown, and we’re seeing more interest in Galas in India,” Fryhover said. “Galas are also being serviced by Poland, Turkey and Italy, which are closer, and don’t have the additional duty.” Mexico remains the top buyer of U.S. apples, but is considered almost an extension of the domestic market due to its proximity.

Changing buyer habits The shipment of apples saw a pivot in 2020, not just from a continued shortage of shipping containers and port shutdowns, but from the way the pandemic created a shift in consumer buying habits. Shoppers were making fewer trips to grocery stores, and when they did go to the store, they often wanted to buy apples in a larger quantity, quickly and ef26

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ficiently. This increased the demand for pre-packaged bags of apples. “They could basically walk in and pick up three pounds, four pounds, five pounds, whatever they wanted, and keep right on going,” Fryhover said. “So that’s been a big change, and the reason it’s been difficult in our industry, is that we’re not set up to do bags.” Shipping apples in pre-packaged bags is a departure from the typical “trade pack,” or carton, of fruit usually packaged in cardboard. The change in packaging came on top of previous adjustments by shippers to allow for social distancing on the packing line, creating inefficiencies and greater costs. “None of the farmers had any problem spending whatever it took to keep their workplace safe,” Fazio said. “The farmers knew they weren’t going to make any money last year because they were going to spend it all on

Washington Tree Fruit Association President Jon DeVaney is hopeful the state will be “moving out of a Covid environment by apple harvest.” Excitement remains for Cosmic Crisp apples, a new variety exclusive to Washington growers that burst onto the scene with much fanfare at the end of 2019, following years of promotion to pump up anticipation. Prices started high for the first shipment and have since come down. DeVaney said many planned in-store samplings were canceled in 2020, but the industry still hopes to find ways to introduce customers to niche varieties like these. “The good thing is people generally know what an apple is. It’s still easy and familiar to them,” he said. Fryhover pointed to limited data on Cosmic Crisp and worries about displacement of other varieties as the per capita consumption of apples remains the same. The next bestseller might still be on a tree, as there are dozens


more proprietary varieties in production in Washington, offering improved texture and a specific taste. “Which one’s going to win? Which one isn’t?” Fryhover mused. “Out of the 40, there might be 10 or 15 losers in there.” It’s a gamble for a grower to bet on the capital costs, which are often substantially higher with new varieties, and hope to have a market winner.

Moving beyond Covid-19 As the 2021 growing season nears its conclusion and fall harvest begins, Fazio would like to see easing of Covid-19 safety rules, citing the stringent testing and vaccination process. “We licked Covid with this H-2A program. But we can’t do the program with half the beds,” Fazio said. Wafla is part of a lawsuit filed against the state over its Covid-19 restrictions in the workplace. Despite the smaller crop volume forecast for 2021, the industry expects the remainder of the season to transition smoothly from one crop year to the next, running from August to August, with most apples harvested in September and October. The disruptions created in the last year have, at the least, made many consumers more aware of supply chains and what it takes to even get products onto shelves and into homes. “Whether it’s public policy, weather or other issues, our growers and packers do an amazing job getting safe and healthy food out year-round despite these challenges,” DeVaney said.  Focus | Agriculture + Viticulture

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Hot potatoes

Courtesy Lamb Weston

Growers look to Mexico for export recovery BY WENDY CULVERWELL

In 2020, Washington potato growers faced a staggering surplus of potatoes. In 2021, they’re banking on a revival of the food service industry, including in-person dining, improved shipping conditions and a just-opened Mexican market to help reverse the chaos left by the trade wars and Covid-19 pandemic. The pandemic brought restaurant dining to a standstill starting in Asia in January 2020, leading processors to cancel orders for Mid-Columbia spuds. The Washington Potato Commission predicted growers and potato sheds would be forced to throw away a billion pounds that would not be used – one-tenth of

Washington’s annual potato crop. “We were giving away potatoes left and right,” recalled Chris Voigt, executive director. Fears that a billion pounds of potatoes would be discarded were unfounded. A Midwestern freeze led to demand from processors in North Dakota, good news for Washington producers if not their Midwestern peers. The final loss: 300 million pounds. Potatoes are Washington’s third largest crop with a prepandemic value of $934 million, according to the Washington State Department of Agriculture. About 90% is processed into frozen french fries and other products, and 70% is exported, chiefly in the form of frozen french fries.

In 2020, frozen fry exports were worth $784 million, down about 11%, thanks to falling demand from restaurants, cafeterias and other “food service” customers, according to Department of Agriculture figures finalized in May 2021. Japan, South Korea and Taiwan were the leading buyers of Washington-produced fries, according to the state. The Philippines, normally in the top three, fell off during the pandemic. Potato chip makers in Japan and South Korea began buying chipping potatoes from the U.S. about five years ago. Going into 2021, the picture is improved. “We’re not quite back to where we were pre-pandemic, but we’re getting closer,” Voigt said. Focus | Agriculture + Viticulture

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Courtesy Washington Potato Commission

Russets dominate Under normal conditions, the russets grown in Washington are sold to processors such as Lamb Weston Holdings Inc. or on the fresh market. In April 2021, Lamb Weston, which is publicly traded, reported net loss of 4% in the third quarter but noted that through March 28, 2021, North American shipments were at 90% of pre-pandemic levels, European ones were at 85%, and “other” international shipments were at 75% compared to 2020. Russets dominate the state’s potato crop. The pandemic appears to be receding as an economic force. Washington state is expected to fully reopened in June 2021, with restaurants and retailers able to operate at full capacity after a year of shutdowns and restric30

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tions. Nationally, the picture improved enough that the Centers for Disease Control said it was OK for people who had been vaccinated against coronavirus to stop wearing face masks under some circumstances. But the outlook is not all cheery for 2021. In May 2021, potato prices were low, below the cost of production. “But at least we are not giving them away for free,” said Voigt, who said he was “a notch above” being cautiously optimistic about the coming year. “You wouldn’t be in farming if you weren’t an optimist in the spring,” he added.

Stored potatoes Washington grows potatoes on about 270,000 acres – its maximum capacity given land and water constraints. Potatoes

can only be grown on a site every four years because of pest issues, and the crops must be irrigated on both sides of the state. About 90% of potatoes grow in the Columbia Basin stretching from the Tri-Cities to Moses Lake and Quincy. In a typical year, the vast potato sheds that dot the region run out of potatoes harvested the year prior around the Fourth of July. Potatoes harvested between July and September go straight to processors. Those harvested later go into the warehouses and the process starts up again in the coming year. Growers and processors typically begin signing contracts in September for the following year’s harvest. Of course, 2020 was not normal. “We still had potatoes in storage until the first of October,”


ocean carrier. It’s so lucrative that Up to 70% of shippers send the containers Washington-grown back empty potatoes are exported rather than routing through in the form of frozen U.S. exporters. french fries. “They really are not interested in haulVoigt said. ing frozen french fries,” He doesn’t Voigt said. expect a return to normal in Mexican market 2021, saying export slowdowns related to container shortages While markets normalize and could help push the date sheds consumer spending shifts back run out of stored potatoes to to spending on restaurants and early August. Under the right services, there’s a lucrative spot conditions, a potato can be held on the potato horizon: Mexico. for about a year before being On April 28, 2021, the Mexiprocessed. can Supreme Court issued a 5-0 The container shortage is andecision that opens the market other symptom of the pandemic. to fresh U.S. potatoes in a longConsumer spending shifted to running case over the role of its ordering online, leading to an federal government in establishavalanche of Asian products ing trade regulations. U.S. pomaking their way to U.S. ports by tatoes had been banned beyond

a 16-mile stretch along the U.S. border since 1996 over concerns about plant disease. The ruling follows decades of litigation following a 2002 agreement that opened the U.S. market to Mexican avocados and the Mexican one to potatoes. Full access was supposed to begin in 2014 but was challenged by the National Confederation of Potato Growers of Mexico, according to the Idaho Farm Bureau. The National Potato Council estimates exports of fresh potatoes to Mexico will grow to $200 million, from the current $60 million. Idaho may be the nation’s leading potato grower, but Washington is No. 2. “That’s huge,” Voigt said. “We have a better-quality potato. If you were to buy a red potato in Mexico, it’s a white potato that’s been sprayed red.”  Paid advertising

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Pandemic

effect

Hop output lower with changes in beer demand, distribution BY ROBIN WOJTANIK

After a chaotic year, Washington’s hop industry is looking for a win. “Things are starting to get rocking and rolling again,” said Jaki Brophy, communications director for the Washington Hop Commission, following a year of Covid-19 restrictions, lower beer sales and punishment by Mother Nature. Wildfires and windstorms took a toll on hop crops in Washington, and also nearby Oregon and Idaho, affecting overall output. Washington produces about 75% of the country’s hops on about 41,000 acres, with the neighboring states making up most of the remainder. All three were affected by windstorms and smoke from wildfires in 2020. 32

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“If we were going to have that happen, which it does every once in a while, it was a good year for it to happen,” Brophy said. It was a good year because hop growers had already tried to prepare for a lower demand, whether through reducing acreage planted or following a farming practice to string the hop bines differently to reduce their overall yield. Washington’s average hop output fell more than 12% compared to 2019 due to these factors, but still increased its standing for the state’s top agriculture commodities, moving from seventh to sixth. The Pacific Northwest contributed about 105 million pounds of hops to the world’s supply, with nearly all of those going to beer making. The 2020 crop for Washington yielded about 74 million

pounds of hops valued around $442 million, down from $475 million in 2019. Most of the nearly 41,000 acres of hops cultivated in 2019 were concentrated in the Yakima Valley. “We don’t have that many growers compared to other industries,” Brophy said.

Labor intense It’s an expensive crop to focus on and labor intensive as the hop bines must be hand-trained at least once a season to grow up the twine. “You not only have to establish the entire hop yard, and all the infrastructure, poles and top wire, and everything else, but it’s fairly expensive to get your acreage established,” she said. Hop Growers of America estimates it costs $13,588 per acre to


Courtesy Double R Ranch

produce mature, standard trellis hops using drip irrigation in the Pacific Northwest, citing updated figures from Washington State University. Jessica Riel is a co-owner of Double R Ranch and a fourth generation hop grower. She works on a 1,000-acre farm started by her great-grandfather in 1945. In 2021, Double R is focusing on Citra and Mosaic hops, two proprietary varieties sought for the aroma they lend to craft beers. “We grow for domestic and international brewers,” said Riel, who also serves as vice president of the Washington Hop Commission. “We don’t always know where our product will end up.”

the market due to the loss of onpremise sales created by the Covid-19 pandemic. That lowered demand for locally-produced hops. “Ultimately, a lot of beer sales were down,” said Brophy, noting more people relied on drinks consumed at home and not at bars or restaurants. Those who benefited likely had already established their distribution. For the rest, it put a squeeze on beer that could be bottled or canned, rather than poured from a tap, while also navigating an aluminum shortage. “Things are just starting to pick back up now,” Brophy said. “We didn’t know what this would look like in the long term, but two years of impact was a conservative guess.” Not knowing a clear demand from brewers led to a delay in decision-making for what variety to plant at Double R. One field

was left idle for 2021. “The timeframe on deciding what would be planted was far later than usual for us,” Riel said. “Typically we make those decisions after harvest the following year. All of us waited longer than usual to give brewers as much time as possible, as well as allow for the vaccine rollout.”

Financial hit The hop harvest generally begins in late August for Washington and can run into the middle of October, while work continues year round on the perennial crop, with often the most labor intensive time in the spring. To keep a consistent workforce, most Washington hop growers rely on the federal H-2A program for guest workers. The state sources about 25,000 agriculture workers annually through this program, filling just under half of the workforce

Beer industry effect The U.S. grows 40% of the world’s hop supply, and the Yakima region contributes about one-third of that total from a limited number of growers. An unknown number of small growers had to withdraw from Focus | Agriculture + Viticulture

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demand for seasonal workers, with the remainder supplied by migrant or local workers. “The workers like the H-2A program because it pays high wages and gives them the dignity of legal presence,” said Dan Fazio, executive director of Wafla, formerly known as Washington Farm Labor Association. He calls it a “well-regulated program that works.” Riel’s farm has used the program for the last six seasons. Hop growers using the H-2A program experienced higher costs due to the need to distance workers during transport to the Yakima Valley and during operations. “It was more challenging to keep up with state rules for temporary housing,” Riel said. Additionally, many farms needed to hire additional workers to fill in for those unable to work due to Covid-19 exposure, and others to complete regular health screenings and sanitization. “It was a lot of financial hits for growers, whether adjusting to the pandemic, hiring extra employees, allowing for extra hous34

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ing to be compliant with health regulations, there was a lot going on,” Brophy said. “On top of that, people lost some of their crop as well. It was certainly a rough year and everyone’s glad to have 2020 in the rearview mirror.”

Popular varieties

CTZ and Mosaic, some of more than 60 varieties grown in the U.S. Hops are mainly used for bitterness and aroma in the brewing process. “You’re going to have brewers that are really interested in one and not the other,” Brophy said. “Just like Merlot and Chardonnay grapes are simply not the same.” For Double R Ranch, Riel said the amount of rebalancing they performed was pretty similar to prior years, expecting about a 10% transition on an annual basis. Hops tend to have a long storage life, depending on the product it’s turned into. What’s in the field is usually dried in a kiln, though storing large amounts year to year can create a supply issue. Riel’s family has a kiln on site and is wrapping up the largest building project the ranch has ever taken on, adding multiple packing facilities. She said they had acquired

The overall acreHop Growers of America age of hops grown in Washington rose just estimates it costs $13,588 under 4% in the most per acre to produce recent totals as growers mature, standard planned for the increase trellis hops using drip prior to Covid-19, but then irrigation in the Pacific yields declined slightly. Northwest. “Prior to the craft beer boom, it was somewhat common to idle a field now and then,” Riel most materials prior to the pansaid. “But most farms have been demic, making it easier to finish adding acreage due to demand. And reduction might have been a the project closer to schedule as they look ahead to the 2021 labor issue in the past, but nowadays it’s directly related to Covid.” harvest. “Last year was difficult but As tastes change and market people were able to make their demands shift along with it, the way through it,” Brophy said. “It popular hop varieties also adjust. will be interesting to see what Growers rebalance their crop people have learned. There’s by pulling out old varieties to always some kind of lesson that’s replace with those currently in still valuable after a crisis is over, favor. even if we don’t know what that Last year’s most popular varieties in Washington were Citra, lesson is yet.” 



Renewed

optimism

Concord grapes take off with organic approach BY ERIC DEGERMAN

The Miller family’s place in the history of Washington wine is secure, and their Airfield Estates tasting room ranks as one of the most iconic in the Yakima Valley. Along the way, however, Marcus Miller positioned Airport Ranch Vineyards into one of the state’s most important producers of Concord juice grapes. It makes sense that the grape variety native to North America thrives across the farmland that his great grand-father, H. Lloyd Miller, saw transformed into an airbase that trained more than 500 Army Air Corps pilots during World War II. In 1968, the Millers began to plant wine grapes and quickly became one of Chateau Ste. Michelle’s most important growers. Those vineyards within the Roza Irrigation District span 830 acres, but right across Bethany Road are blocks of the Miller family’s Concord vines. Their holdings of that variety cover 355 acres. “Someone recently told me that 36

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we’ve become the largest grower for Welch’s in the state,” Miller said. “And that 355 is a changing number. As we find vinifera (wine grape) vineyards that aren’t performing as well as we’d like, we will transition some of those to Concord for Welch’s.”

Price per pound increases Miller, who serves as president of Airport Ranch Vineyards and managing member for Airfield Estates Winery, says there is renewed optimism among Concord juice grape growers. The market was historically soft for several years, prompting some in the state to remove Concord vines. In that regard, market conditions for wine grape growers and juice grape growers have been similar. Now, however, the economic balance of supply-demand is tilting toward those who held onto their Concord vines – especially if they can sell that fruit as organic to processors in the Yakima Valley such as the National Grape Cooperative, a division of Welch’s.

In 2020, the average price per ton paid to Concord growers in Washington finished at $205. If those grapes were certified organic, then the farmer received $260 per ton. Before the pandemic, Concord growers in Washington got $170 per ton. From 2014-17, growers in Washington earned $110 to $120 per ton for Concord grapes, which are turned into beverages, jams and jelly. The high point for the state’s juice grape industry hit in 2012, when farmers fetched $280 per ton. Three years later, the bottom dropped out at $110 per ton. These days, however, the potential price for organic Concord grapes from the 2021 vintage is particularly exciting for Miller. “I’ve heard $300 and more a ton mentioned for conventional, and there’s a 35% premium for organic,” he said.

Demand for organic Historically, Washington state is responsible for about half of the Concord grape production in the


U.S. On the East Coast, particularly in New York and near Lake Erie, the smaller harvest of 2020 led processors to pay an average $285 per ton – $80 higher than Washington growers. Miller says he’s more bullish on the industry since Welch’s hired Trevor Bynum as its president and CEO in the fall of 2018. Bynum spent four years as president of the food service division at Schwan’s Co. Prior to that, the former U.S. Army captain was a marketing executive at General Mills. “It’s been a very bleak period for growers, but he’s brought some stability and predictability,” Miller said. “Covid also created a spike in demand, and in detailing the returns of the last year – there’s that talk about $300 or more per ton – we might be entering an unprecedented time of good fortune as an industry.

“And I think that’s due in part to a common sense approach by Welch’s management and their increased manufacturing efficiencies,” Miller said. “They didn’t just see the spikes in planting and have the mindset that ‘marketing’ was just going to solve all of our problems.” The array of products in the juice grape industry swelled beyond 100 possible items, but less than half of those translated into much success in terms of sales, Miller said. Meanwhile, store shelves of beverages are more crowded than ever, especially those labeled as organic, natural, lower in calories or lower in alcohol content. “Demand has spiked for organic, and the promise has been made to growers that if you transition to organic farming, there will be a 35% premium on your return for those grapes with

a guarantee of that for five years,” Miller said. For the 2021 vintage, Airfield Ranch will have 160 acres of certified organic Concord grapes to sell. Miller said another 60 acres are in transition, which means more than 60% of his family’s 355 acres in juice grapes would qualify for that premium price.

Juice vs. wine grapes While there’s considerably less stress to farm native grapes such as Concord and Niagara for juice, there’s more money to be made with wine grapes. “You can get $1,000 a ton for your white wine grapes, and you can crop those to six to seven tons per acre, so that’s about $6,000 to $7,000 per acre,” Miller said. “On Concords, we always hope for a 13-ton crop per acre.” That’s where the transition to organic Concord is so appealing. If Airport Ranch can earn $400

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Courtesy Airport Ranch Vineyards Marcus Miller, president of Airport Ranch Vineyards and managing member for Airfield Estates Winery in Prosser, stands in Block B-1 of his family’s 355 acres of Concord vineyards. The block along Bethany Road in Sunnyside was planted in 2000 and is in the process of transitioning to organic.

per ton, that pencils out to $5,200 per acre. Last year, when a grower was receiving $205 a ton for noncertified organic Concord grapes, that’s $2,665 per acre. Juice grapes aren’t nearly as sexy as wine grapes, but they don’t require much hand holding, either. “All the farming is mechanical,” Miller says. “You’ve got to water Concords. You’ve got to fertilize them, and then you pick them and then deliver them. It is pretty simple. Weeds are the No. 1 issue, especially with the organic vineyards.” Growers of wine grapes can see their harvest stretched out from August through November and sometimes into December because varieties ripen at different 38

Tri-Cities Area Journal of Business

times and winemakers target their grapes to have specific profiles of sweetness and natural acidity, typically around 24% sugar content. For winemakers, the term of measurement is Brix – named for 19th century German mathematician Adolf Brix. That’s not the case for juice grapes, which hit ripeness at 15 Brix around the second week of October – in the middle of wine grape harvest. Niagara, a white variety native to the Great Lakes region, typically is brought in ahead of Concord. “It starts getting pretty fragrant in the valley a week or two prior to picking the Concords,” Miller says. “And when the organic Concords are ready, you have five to seven days to get those grapes in.”

Miller’s winemaker, Travis Maple, doesn’t see a single Airport Ranch Concord grape come across his Sunnyside crush pad during the 30-day harvest period for the Concord crop. All of the Concord management is orchestrated by second-generation grower John Niemeyer, and those machine-harvested Concord grapes come off the vine at night. It’s a nearly endless procession of trucks rumbling down the slopes of the Roza to Grandview and back up. “Last year, we were running 14 trucks per night when we were at 100 acres of organic grapes,” Miller said. “Now that we’re at 160 acres, we’re looking at 22 loads a night for a week. The logistics of getting the crop in such a short period at that time of the year is the biggest challenge.” Don’t expect Miller – who graduated from Walla Walla Community College’s famed winemaking school in 2004 – to begin producing a sparkling Concord wine or turn any of those prized organic grapes into an Airfield Estates “frosé,” a slushy, slightly frozen presentation of rosé. And yet, there is a delicious bit of show-and-tell at his winery’s tasting room in Prosser, where photos of Airport Ranch’s legacy are on display. “There’s been a focus on creating an experience for kids,” Miller says. “We’ll get these toy gliders into their hands, and we also have chilled Welch’s grape juice to give them and the designated drivers, so there is a little synergy there.”  Eric Degerman owns and operates GreatNorthwestWine. com, an award-winning website that covers the Pacific Northwest wine industry.