WSU Extension - Small Farms Team

Resource Guide

Ed Hellman, Ph.D.
Formerly with Oregon State University Extension Service
North Willamette Research & Extension Center
phone: 503-678-1264 ext. 226
e-mail: edward.hellman@orst.edu

Paper presented at the Business of Horticulture Workshop, Clackamas Community College, Oregon City, Oregon, November 13, 1999

Snapshot of Small Farm Production of Wine Grapes

Rationale:

Expanding Northwest wine industry with increasing market demand
Enjoyable lifestyle
Desire to produce own wine

Characteristics:

Market niche is high quality fruit – premium wine from cool-climate grapes
Site selection is critical to success
High start-up costs, minimum of $7,000-$10,000/acre up to $15,000/acre, NOT including land, equipment, or irrigation
Returns start in 3rd year, vineyard may gross $2,500-$3,800 per acre in Oregon.
High annual production costs: $1,800-$2,800 per acre
Low profit potential unless also produce & sell wine
Winery development also is expensive, plus many government regulations
Very labor intensive, somewhat difficult to do well on weekends & evenings
Owners sometimes do not "pay" themselves for their own labor, rather they consider that income as "profit"
Fruit quality demands from winery are high, requiring extensive knowledge and intensive management
Wine market is sensitive to fluctuations in disposable income levels
Oregon Statistics: 9,500+ acres, 136 wineries, 400+ vineyards
Washington Statistics: 20,000+ acres, 102 wineries

Outlook:

Favorable market for at least the next few years
Not for the profit-seeker unless can get into it in a BIG way. For small farms, wine grapes are generally suited for tax-shelter or non-income activity
Don't invest your retirement savings!
Perhaps an untapped small local market for home winemakers

Overview of the Oregon & Washington Wine Grape Industries

Oregon and Washington have established worldwide reputations for producing high quality wines that are among the best in the world. Although the states are neighbors, there are many differences in where and how the wine grapes are produced. The Washington wine industry is primarily located in the hot and dry climate of the eastern part of the state. Irrigation is an absolute necessity and winter freeze damage periodically occurs. Warm climate grape varieties such as Merlot, Cabernet Sauvignon, Cabernet Franc, Sauvignon blanc and are very well-suited to the area, but some cool climate varieties, particularly Chardonnay and Riesling, are also grown to a great extent. Larger vineyards and mechanization of many vineyard operations east of the Cascades contrasts with western Washington vineyards which are generally small and managed to a large extent by hand. Western Washington wine grape production is more similar to the Willamette Valley of Oregon.

Oregon's industry is mostly west of the Cascades; it's largest region is the Willamette Valley. Until recently, most Oregon vineyards have been relatively small, less than 100 acres and commonly less than 20 acres. Many production practices, such as training, pruning, suckering, leaf-pulling, and harvest are done by hand. Western Oregon is considered a cool climate location for winegrapes and is therefore best suited to varieties such as Pinot noir, Pinot gris, Pinot blanc, Chardonnay, Riesling and Gewurtzraminer. Production regions south of the Willamette Valley and the Umpqua Region near Roseburg and the Rogue Region in southern Oregon have significantly warmer temperatures and can produce varieties with higher heat requirements such as Merlot, Cabernet Sauvignon, Zinfandel, Sauvignon blanc, and others.

For a good overview of the wine industry in both states, see the following web sites:

The Oregon Wine Advisory Board and the Washington Wine Commission actively promote and help develop new markets for wine from their states. Wineries often choose to join a nonprofit organization, the Northwest Wine Coalition, which was created in 1990 to give this unique winemaking region a stronger, more unified presence in the international wine market. By providing market development and promotion in a growing number of countries around the world, the Coalition is helping the region enjoy increased exports and the worldwide recognition it deserves.

Economics of Grape Production: Statistics and Trends

The Agricultural Statistics Service Office in each state prepare annual statistical reports on grape production volume, prices, and acreage. Reports often are broken down by grape variety and production statistics, in some cases by county. Oregon also produces a Winery Report that details wine production volume and sales.