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January 2004, Volume 10, Number 1

California, Wine

California had farm sales of $27.6 billion in 2001. Almost a quarter of farm commodities by value were exported, with almonds, cotton, wine, table grapes and oranges accounting for over half of the state's farm exports. A.G. Kawamura, an Orange county grower with 600 rented acres, was named by Governor Arnold Schwarzenegger to be director of the California Department of Food and Agriculture.

California's 2,100 dairies produce 20 percent of US milk and cheese; 10 pounds of milk make one pound of cheese. According to the California Milk Advisory Board, each $1 in farm-level milk sales generates $8 in economic activity.

Most US raisins are grown around Fresno, California, and the 2003 price was the worst in decades--$745 a ton. Because of surpluses, many raisins were diverted or stored, so that growers received an average of only $400 a ton for 2003 raisins. The Sun-Maid cooperative urged its 1,000 member growers to mechanize harvesting- a third of raisins are mechanically harvested.

The nursery industry is largest in southern California, where most California residents live. About half of California residents live in four counties: Los Angeles, San Diego, Orange and Riverside, and these counties accounted for 45 percent of flower and nursery sales in 2002.

The California processing tomato harvest was 9.3 million tons in 2003, down from 10.7 million tons in 2002 and a peak 12.2 million tons in 1999. Acreage was 280,000 in 2003, down from a peak of 327,000 in 1999. The value of the crop was $462 million, down from a peak $732 million in
1999.

California has 64,000 acres of avocados that produced $355 million worth of the fruit in 2002; 85 percent are Haas avocados.

California has 1,000 olive growers, and a Trade Adjustment Assistance Program approved in the Trade Act of 2002 offers cash payments to farmers if rising imports contribute to declines in grower prices. Spain and Morocco are the major sources of imported olives, and California olive growers argue that EU subsidies to Spanish growers are the cause of low prices; US farmers say that the EU spent $15 billion on a variety of fruit and vegetable subsidies in 2002. California produced 108,000 tons of olives from 30,000 acres in 2003, down from a peak 136,000 tons in 1999; the value in 2003 was $437 a ton.

California's Department of Pesticide Regulation reported that 172 million pounds of pesticides were applied in 2002, up from 151 million pounds in 2001; some 156 million pounds were applied by farmers, including 29 million pounds in Fresno county.

Wine. Robert Mondavi Corp, the largest publicly traded California wine company, reported its profits rose. Manteca-based Michael Hat Farming was one of California's largest grape growing operations before filing for bankruptcy in 2002.

Bronco Wine Company, with 30,000 acres of wine grapes, makes Charles Shaw (Two-Buck Chuck) and wines, including Estrella, ForestVille and Napa Ridge. Bronco processed 300,000 tons of wine grapes in 2003, 60 percent from its own vineyards, about 10 percent of California's harvest, into 20 million cases of wine, half under its own labels and half sold to other wineries in bulk (a ton of grapes makes about 150 gallons or 750 bottles of wine), including five million cases of Charles Shaw.

Bronco's Fred Franzia, a nephew of Ernest Gallo, says that its winemakers blend Bronco and purchased grapes to maintain consistent taste, and that both Bronco and Trader Joe's make money at $1.99 a bottle.

The Wine Institute reported that wine consumption in France was 370 million cases in 2002, compared to 250 million cases in the US; a case is 12 750-milliliter bottles, or 2.4 gallons. In 1970, France consumed 610 million cases of wine and the United States 113 million cases; in 1990, it was 497 million in France and 214 million in the US. The French consume an average 58 liters or 77 bottles of wine a year, compared to 7.7 liters or 10 bottles in the US. Red wine consumption in the US is rising- 40 percent of US wine consumption was red in 2002.

On December 5, 1933 the 13-year experiment with prohibition ended when Utah became the 36th state to ratify the 21st Amendment. There are now commercial wineries in all 50 states, but only 26 permit direct-shipping of wine to consumers' homes; seven states make such shipments a felony. According to polls, 43 percent of American adults do not drink any alcohol, but about an eighth drink wine at least once a week.

About $2 billion in wine is traded between the United States and Europe each year, but Europe objects to US wineries putting European place names on US wine, such as Champagne, Chianti, Madeira, Port and Sherry. The EU exports $1.7 billion of wine to the US; the US exports $300 million to Europe.

Lewis Perdue, founder of Wine Business Monthly and author of "The Wrath of Grapes" (1999), argues that the US wine industry does not spend enough to promote wine, in part because Gallo, which produces about 35 percent of US wine, "controls" the Wine Institute and prefers a low-key approach that would not, inter alia, increase taxes on what Perdue calls "misery wines," fortified wines such as Thunderbird often bought by alcoholics. Perdue decries the three-tier alcohol distribution system- producers, middlemen, and retailers- allowed by Prohibition, arguing that it discriminates against small wineries seeking to ship their wine directly to consumers.

Perdue argues that the wine business is replete with deception because wine is hard to test after it is bottled, and most consumers can not taste the difference between good and bad wines. For example, he recounts how counterfeit Moet & Chandon champagne was shipped into the US via Cuba and Panama, and says that there may be one fake bottle of Grand Cru for each authentic bottle.

Phillips calls wine "a product, a commodity and an icon," so that wine can be both a gift of the gods and the fruit of the devil, a commodity that paradoxically crosses borders while establishing lines between classes, and a product "of society more than of nature."

Perdue, Lewis. 1999. The Wrath of Grapes. The Coming Wine Industry
Shakeout And How To Take Advantage Of It. Avon-Spike. Phillips, Rod.
2002. A Short History of Wine. Ecco Press.


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