Apr 7, 2007

Program Could Help Struggling Concord Growers

Concord grape producers may have permanently lost a market for 70,000 tons of grapes, about 15 percent of total supply in a normal year. That may be enough to encourage some growers to quit growing them.

In fact, the government is offering a program to help growers decide whether to do that. Last year, 145 growers in New York and Pennsylvania signed up for the program, designed to help them decide what to do and how to do it. And on Jan. 30, a new petition was filed on behalf of Michigan and Washington growers to extend the program to them. They should know later this spring whether it’s approved.

The petition was filed on behalf of growers by Tom Davenport of National Grape Cooperative, which buys about 60 percent of the U.S. juice grape crop. The co-op, which owns Welch’s Grape and makes juice, jams and other products, has about 1,400 members who grow about 50,000 acres of Concord and Niagara juice grapes.

Jerry White, a Cornell University agricultural economist who has worked with grape producers for 28 years, spoke to grape growers at Southwest Michigan Horticulture Days in Benton Harbor in early February. He described the rather bleak picture for juice grape producers and the government program called Trade Adjustment Assistance (TAA) for Farmers.

The TAA program has been approved for several commodities hurt by foreign competition and other factors. The program has been applied to Idaho fresh potatoes, California olives, Florida lychees, Maine blueberries and three kinds of fish.

“The program tries to get people to take a hard look at their businesses and ask some questions,” White said. “Can I improve efficiency? Can I change to alternative markets or enterprises? Should I get out?”

There’s not a lot of cash assistance involved, but farmers can qualify for up to two full years of paid training if they want to shift to some other occupation. The determination of industry need is made by the Foreign Agriculture Service, but benefits are coordinated through the Farm Service Agency. Training programs are run by Extension.

In tracing recent history, White said Concord growers got pretty good prices through the 1990s. A couple of poor crop-yield years ran the price of Concord concentrate up from about $10 to $15 a gallon. The high price and shortage of product encouraged buyers to look for replacement products – and they found them.

“The high prices of 2001 caused traditional buyers of Concord to source from non-Concord grapes,” White said. “These traditional buyers found that the market would accept grape juice without the strong Concord flavor. These buyers did not come back to the Concord variety as the price declined the last four years.

“Furthermore, low calorie and low carb juice products captured a share of the market,” he said.

Pre-school obesity has been linked to sweet juice consumption.

These factors, he said, displaced 70,000 tons of Concords, even at today’s lower prices. From about $280 a ton in 2001, prices have fallen each year to about $170 a ton last year. Average cost of production is estimated at about $220 a ton.

With consumption flat or falling, imports have been on the rise. Last year, imports of grape juice reached 54 million gallons, three-fourths of that from Argentina. The total market for juice is only about 0.4 gallons per person, or about 120 million gallons, but jams, jellies and wine add to the total consumption figure.

In the TAA program, growers are encouraged to look closely at their individual situations.

Can they improve yields? Growers who can get seven tons per acre are doing well by industry standards, White said, but yields less than five tons make growers vulnerable.

Can they reduce costs? Labor costs run 30 percent of total costs, White said. Growers who use the Hudson River Umbrella training system and mechanized pruning can reduce labor costs by a third. Hiring migrant labor crews to prune, tie and remove suckers may reduce labor costs as well.

Can growers find other markets for their grapes? A few may be able to sell direct into fresh market. Others may find niche markets. Concords have a “special” flavor, natural sugar and proven antioxidant properties, but it takes marketing savvy to capitalize on these traits.

The industry, because most of the production is organized through the National Grape Cooperative, does have a way to muster resources to research new products and new packaging.

Because of their expertise, some Concord growers may be positioned to move from juice grapes to wine grapes. While initial investment in vinifera vines will top $10,000 per acre, prices of $1,100 to $1,500 per ton can generate nearly $5,000 per acre in annual income, while annual variable costs would be about half that. Wine grape yields are lower, less than four tons per acre, but per ton prices are much higher than for juice grapes.

“TAA intensive assistance is designed to help you analyze potential changes to your operation and implement viable business alternatives to improve your competitiveness and profitability,” White told the growers.

That includes providing growers with private consultants to create a business plan or paid training for up to two years at a college or university. The training also can be for higher education for children or a spouse “at risk” in the farming operation.

Cash payments are possible, but they are small. Payments will vary depending upon a formula, but were about $3 a ton for grapes delivered in 2003. The payment limit is $10,000 per farm.