Farmers Have Had Enough – Sue California

In the ongoing battle for water and rights, a group of farmers in the San Joaquin Valley have filed a suit against the state of California.

The drought has been agitated and made worse by decisions created by state official’s choices. Therefore, the suit was filed by the Friant Water Authority – a group of about 15,000 farmers – to address these poor resolutions by the state.

Government not helping

The problem is the state has decided that a wildlife refuge north of Los Banos (and others) was more important than the welfare and legal rights of California citizens including growers. The farmer’s rights were denied when the state allowed water for the bird refuge while denying delivery of water to growers. Law states the farmers have higher precedence over wildlife and thus the water should have been delivered to the small towns along with growers in the area.

As a whole, the Golden State is semi-arid and thus has built dams and water project throughout California to cope with a lack of water, especially during dry years. The issue has risen and been compounded because state and federal officials have been using water to help a baitfish and salmon deal with their less than desirable conditions. However, that has led to huge amounts of water being allotted for wildlife while denying Californians water.

Piling on

Causing a man-made disaster, the federal government pushed by environmentalists, allowed water to be diverted towards the ocean so the Delta Smelt would have the correct amount of water to exist. That’s on top of the fact that farmers weren’t allowed to use their own channels because the smelt had worked its way into the farmers waterways. Another reprehensible action by the state was denying farmers the water that was already purchased.

With an iffy weather report for this coming winter, the drought will continue to be front-and-center with the government pitted against its citizens.

The suit by the Friant Water Authority can’t help what has already transpired, but it can negate and/or facilitate future water right’s situations should they arise again.

Cheers,

Daryle Hier

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http://pasowinebarrels.com/

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Wine Industry Struggling?

One of the oldest adages is that alcohol – or more directly in this circumstance, wine – is recession proof.  Is that true or is the wine industry struggling?

The general thinking is when times are good, everything in an economy does well, but when there is a dip in the markets, consumers will cut back on all but the necessities.  However, booze has always been a staple of recessional or depression oriented times because folks need an outlet of entertainment and products such as wine are considered as important enough as staples that people aren’t willing to give them up.  That’s why business portfolios often will have ‘sin’ stocks in alcohol related industries.

Here in the United States and for that matter, the rest of the world has been in an elongated recession – depression for places like Detroit and parts of Europe.  This troublesome trend has reared its ugly head and affected many aspects of society and shall we say … egads … the wine industry?  How could this be?

Top down

Some would say that even the alcohol oriented business is susceptible.  And recently, the biggest news yet seems to agree with that assessment, because the largest wine company in the world, Treasury Wine Estates has been hit hard and as such, will be slashing jobs and costs (source: Sydney Morning Herald).  Here in the U.S., Treasury Wine owns California based Beringer Vineyards, which is one of the oldest wineries in California.

Beringer Vineyards is one of the oldest in Napa Valley but they along with their parent, Treasury Wine, are struggling.

An interesting side note to the troubles at Treasury Wine is the fact that last year, the company destroyed older and aged wines.  Yes, that’s right, the company felt compelled to destroy large amounts of wine because they felt there was too much wine on the U.S. market.  Net profits for the company had tanked and in-turn, their CEO was pressured to leave.  By the way, most of the wine destroyed was from Beringer.

This is an odd situation because if you’ve paid attention to the news in the wine business, there appears to be a shortage in wine supply.  I’m not an expert in this field but still, destroying wine because you have too much of it in a certain markets doesn’t mean it couldn’t be sold somewhere else given the supposed world-wide scarcity of wine.  Yes, this information is contradictory and we may not know the exact answer, but my thought is if an extended recession has forced the largest wine producer to destroy wine, a shortage is a bit far-fetched.  And a report just came out saying Bordeaux wholesalers feel the market is soft (source: Harpers) and that “current demand is ‘dead’”.  Ouch!

I do know that while the U.S. and China are consuming more wine year-in and year-out, Europe, where the biggest consumers were based, has shown a fairly sharp decline in wine consumption.  With poor economies in much of Europe, it would seem obvious that wine consumption is being directly affected.

The South American wine industries have suffered due in part to the world-wide recession and high inflation.  Argentina in particular, has seen inflation raging and therefore has instituted price controls.  The country has surged to the left politically in the past decade with government intervention at every level.  Politics may be one of the problems with the wine industry but there’s another issue: demographics.

Competition & other issues

There are a myriad of alcoholic drinks that wine is competing against.

The beer industry has seen a shift from standard beers like Budweiser, Coors et al, to microbrews.  That shift is also impacting the wine industry (source: London Wine Fair).  Young adults aren’t enamored by wine and there’s seems to be a detachment and “an overall lack of engagement”.  Hard booze such as multiple flavored vodka’s have also become popular with the young adult population.

Other problems like China which has too seen a drift into a flat pattern of wine drinking after a steady climb up, is also affecting wine industry.

California has its own problems with drought and a lack of support from state and federal regulators who have hurt farmers recently with peculiar rulings that have exasperated the water situation.  The lack of farming has led to a drastic increase in unemployment as well as hammering the economy as a whole.

So while the wine industry struggles against a constant recessional pounding, they’re also being attacked by other liquors that appeal more to younger generations, while governments confound the problems further.

We hear so many positive stories about the wine industry especially here in the Paso Robles where we garnered the top spot as the number one wine region in the world.  However, troubles loom and even the winery business world needs to look deep as the situation maybe emerging that indeed the wine industry is struggling.

Cheers,

Daryle W. Hier

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http://pasowinebarrels.com/

 

Water Versus Food?

The state of California is in a severe drought and though we just had a drenching rain on Super Bowl Sunday, the fact is one storm does not end what still is the driest year on record.  Governor Jerry Brown declared a state-of-emergency and then to exacerbate the situation and make matters worse for farmers, specifically in the San Joaquin Valley, the state has cut off all water from the State Water Project.

Essentially, the Governor and state of California are saying ‘you’re on your own’.  And yet this serious situation doesn’t appear to be making the major headlines with the media who seemed more concerned with toilet fishing in the Olympics than a major food source being driven to the brink.

Farmers still taking the brunt

Farmers helped build canals for their farms that eventually the endangered delta smelt now inhabits.

Many cities across the Golden State will be hamstrung for water, but those feeling the pinch the most will be farmers.  The region had been already hit hard when water restrictions were imposed to purportedly save the delta smelt that had worked its way into farmer’s canals.  That created unemployment figures that in some areas were 50% and produced losses in the billions of dollars for the state.

The San Joaquin Valley is or at least was considered one of the most productive food regions in the United States if not the world.  However, the valley has been devastated economically by the supposed dangers to the smelt.  Now, with the state denying farms any water at all, the likely destruction of farmland could be catastrophic.  It should be noted that even with the cuts, Fresno County still leads the nation in farming.

The San Joaquin Valley is a large representation of what is going on all over California.  With only urban cities receiving limited deliveries of water, farming communities as well as small towns could be left without.  The state is leaving waters in reservoirs for fish to survive but not farmers.  As was mentioned in our story last week, cities all over the state our nervously looking for water such as what sits underneath the Paso Robles ground water basin.

Pulling out

Ironic sign for farmers

Nut farms which use more water than say vegetable crops will see owners prone to pull the trees for crops that don’t require as much water.  Such may be the case with grapes as well.  Vineyards are more efficient than nut trees but vintners are getting anxious and in some small instances, vines are being pulled.

Concerns of Californians are all about the lack of water.  The question though has to be asked as to whether some fish and urban populations should take more of the brunt of this problem or are we going to risk farms and food instead.

Although there are questions about just how much more storms are is in store for the state, even if the rest of winter was steady with rain, major issues will continue, as sides are being taken between water and food … and farmers.

Mahalo,

Daryle Hier

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http://pasowinebarrels.com/