LAKES VINEYARD NOTES FINGER CORNELL RESEARCH FOUNDATION PROPOSES LICENSING AGREEMENT. Cooperative Extension IN THIS ISSUE...

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1 FINGER LAKES VINEYARD NOTES Newsletter 2 March 5, 2002 IN THIS ISSUE... Cooperative Extension Finger Lakes Grape Program Cornell Research Foundation Proposes Licensing Agreement for GR-7 Convention and Retooling Thanks California Concentrate Faces Challenges 2001 Grape Production Statistics Upcoming Events CORNELL RESEARCH FOUNDATION PROPOSES LICENSING AGREEMENT FOR GR-7 Timothy E. Martinson and Bruce Reisch The Cornell Research Foundation (CRF) released a proposed a new licensing agreement for varieties coming out of Geneva's grape breeding program at the 53 rd Annual Finger Lakes Grape Growers Convention. First to be released will be GR-7 in Briefly, the CRF is proposing a licensing agreement in which growers would pay a royalty based on tonnage and price. The proposed term is 20 years, and the proposed royalty is 3% of the sale price after subtracting taxes and shipping costs. Copies of this draft agreement are available at our office. Background. The program and research foundation began discussions about this plan in 2000, when Bruce Reisch, Dick Cahoon (Vice President of the Cornell Research Foundation) and Thomas Henick- Kling met with growers and processors at the Wine Industry Workshop. The proposed agreement represents an attempt to find a workable alternative to plant patenting. The patent process used for previous releases (Einset Seedless, Melody, Chardonel, and Marquis) results in well under 50% of revenues returning to the program to support ongoing breeding efforts. This revenue stream only begins after substantial patenting costs and legal fees are recovered. The proposed alternative represents an attempt to reduce administrative costs, increase the income from successful releases, and thereby assure long-lasting support for grape breeding efforts - the original goal of the patent approach. The rationale behind a tonnage royalty is that it would delay costs until the vines were producing income, and provide a steady stream of revenue over several years rather than a higher up-front cost at planting time. If markets for the varieties (e.g. prices, or demand) dwindled, then the royalty would also be reduced. The legal device used to get around patent law requirements and reduce administrative costs is called bailment. Essentially it amounts to a lease in which CRF would retain limited ownership rights, which would allow CRF to establish a royalty structure, and would provide a legal basis for the agreement. What would it cost? Example: A grower produces 6 T/acre of GR- 7 which sells for $375/ton. Shipping costs are $10 a ton [note The draft agreement subtracts shipping and taxes from the purchase price. Its not clear what taxes means, and the shipping cost was something I pulled out of the air] Cost per ton = 3% x $365 = $10.95 / Ton Less taxes and trucking cost. Cost per acre = $10.95 x 6 =$65.70 Cost per vine/year (9x7 spacing, 691 vines/acre) $65.70/ 691 = $ 0.095

2 Your comments welcome. This draft plan was put out for discussion, and is subject to modification. The breeding program along with CRF ask for your ideas and input to help develop a workable plan that will provide benefits both for the industry and the breeding program. It would also provide a means by which out-of-state growers benefiting from N.Y. varieties could support the program. Comments may be addressed either to my office or to Bruce Reisch and Richard Cahoon (contact information below). Grape Breeding Program: Bruce Reisch 204 Hedrick Hall Agr Exp Sta Geneva Geneva, NY Campus Phone: b.reisch@cornell.edu Cornell Research Foundation: Richard S. Cahoon Vice President Cornell Research Foundation 20 Thornwood Drive Suite 105 Ithaca NY rsc5@cornell.edu CONVENTION AND RETOOLING WORKSHOP THANKS Timothy E. Martinson The Finger Lakes Grape Growers Convention and Trade Show is my program s big event of the year. This year was no different, except that we had two separate conventions the Retooling Your Vineyard for the 21 st Century workshop on Friday, followed by the regular convention on Saturday. As I ve told many of you, these conventions involve a lot of effort and planning from a lot of people. My program benefits greatly from volunteer efforts, starting with the Advisory Committee, which decides upon topics and themes. This year, the advisory committee led by coming up with the ideas behind the Retooling workshop. They were right on target with a topic of great interest to many growers replanting decisions for existing growers. We had a great turnout of 150 growers for a program without any pesticide credits. My thanks to Jim Bedient, Tom Collins, and Bob Pool, for serving as the retooling organizing committee. 2 I d like to also thank all of the industry speakers and panelists who volunteered their time to speak at the workshop. These included Burt Notarius, Scott Osborn, Dave Peterson, Gene Pierce, Dana Keeler, Fred Frank, Tom Mitchell, Art Hunt, John Brahm III, Tom Collins, Peter Bell and Derek Wilbur. Its great to be able to draw upon talent within the industry to make presentations at our winter meetings. As usual, we also had great participation from faculty and staff of Cornell. Katie Tomlinson, grape program administrative assistant, was in charge of all the details including registration, exhibitor placement, and program design. Our thanks to advisory committee volunteers Jim Ritter (registration), Bill Dalrymple (wine reception), Dave Stamp (Trade Show) and Rich Jerome (pesticide Certificates), and to the audiovisual team Chris Gerling and Steve Lerch. I d like to thank the New York State Women for Wine and their chair Donna Gridley for setup of the Wine and Cheese reception, which was as always a great way to close out the convention! Thanks to the wineries who donated wine and the 42 exhibitors who packed the exhibit hall: Wine donations included these and others: Barrington Cellars Bully Hill Casa Larga Cayuga Ridge Fox Run Vineyards Hazlitt 1852 Vineyards Hosmer Hunt Country Vineyards Konstantin Frank Lakewood Vineyards Leidenfrost Vineyards Lucas Vineyards McGregor Vineyards Miles Vineyards Prejean Winery Swedish Hill/Goose Watch Wagner Winery Thanks also to all our exhibitors for their support: Agra Quest, Inc. Applied Agricultural Technologies LLC BASF Ag Products Bayer Agriculture BDI Machinery Sales Co. Belle Terre Irrigation Benchmark Custom Planting Cerexagri Concord Nurseries Double A Vineyards, Inc. Durand-Wayland Inc. Empire Tractor Euro-Machine USA

3 Farm Credit of Western N Y Gowan Growers Nutritional Solutions Harvestmore Grape Harvest Helena Chemical Co. Innovative Fence JMS Flower Farm, Inc. KLR Machines, Inc. Lakeland Equipment Lakeview Harvesters Leonardi Manufacturing Co., Inc. Morton Buildings, Inc. Northeast Distributors and Equipment NY Solar Energy Industry Assoc. NYS Wine Grape Growers Orchard Valley Supply Paige Equipment Sales R F Inter-Science Co., Inc. Slawson Safety Equipment Slimline Manufacturing Spec Trellising Superb Horticulture/Korvan Syngenta Crop Protection TFE Co. The Green Hoe Company Inc. The National Bank of Geneva UAP Northeast Valent BioSciences Corporation Vance Metal Frabricators, Inc. Vineyard & Winery Management Yates County Soil and Water CALIFORNIA CONCENTRATE FACES CHALLENGES California Association of Winegrape Growers Press Release [ Ed. Note: This article is reprinted, with permission, from the California Association of Winegrape Growers (CAWG) website. CAWG is a lobbying and marketing organization representing California wine grape growers, some of whom also produce juice for the concentrate market. TEM] Low prices and stiff import competition topped the agenda at CAWG s fourth annual concentrate meeting in Selma December 6. The 2001 season will be remembered for the $75 spot market price, CAWG President Karen Ross said. Joe Ciatti, president of Joseph W. Ciatti Company Brokerage, said suppliers have to understand that growers will not survive on $75 a ton. Nat DiBuduo, president of Allied Grape Growers, said that growers need $125 to $150 a ton just to cover costs. Recognizing that growers are struggling economically, he said pricing has to keep the industry viable. He said there has to be some equitable pricing system in which Thompson Seedless grapes, which are preferred for concentrate, are primarily made into raisins. DiBuduo told growers, Don t be afraid to make raisins. Tell buyers you will make raisins if you have to, but be realistic about it. Barry Kriebel of Sun-Maid Growers, however, said that the juice and raisin markets are totally different markets and shouldn t be tied together. He said that California raisin growers have learned that with a large supply, it is imperative that an industry provide high quality, fair prices, reliability and service for world buyers. Fred Kilian, chairman of Welch Foods, Inc. and president of the National Grape Cooperative, which owns Welch s, talked about the success his cooperative enjoys. Welch s is doing fairly well despite tough times for most food companies, largely because the company has been able to balance supply and demand. California grapes constitute an important component of Welch s product line. California whites provide an excellent blend for Concords and Niagaras. In fact, Killian said, We can t keep up with Concord demand; we need California. The company buys very little foreign concentrate because California s quality and consistency are superior, he said. The cooperative has invested $500 million on marketing in the last five years, including new juice blends and package development. Even small changes such as putting grape juice in cartons and putting them alongside orange juice on refrigerated shelves pay off, Killian said. The company sells 95 percent of its goods in the domestic market. Imports Push Down Prices. About 8 million tons of concentrate imports enter the U.S. market each year, according to Brad Miller of Joseph W. Ciatti Co. Foreign product tends to be priced lower, often 50 to 75 cents per gallon below California prices. Buyers like to have a diversity of suppliers, which adds to the attractiveness of foreign product. But foreign markets suffer from instability and uncertainties. Argentina, with its economic struggles, demonstrates these risks. There has been a 50 percent reduction in the number of Argentine suppliers in the last season. Another disadvantage for imports is maintaining consistent quality. CAWG Proposes Concentrate Grant. CAWG submitted comments to the California Department of Food and Agriculture (CDFA) October 31st recommending a $500,000 grant to help California s fruit juice and concentrate industry. The money would fund an economic and cultural practices investigation to evaluate the long-term viability of producing grapes specifically for the concentrate market. The effort would include an economic development angle, examining how to produce and market the best concentrate for the market with buyers willing to pay for it. 3

4 2001 GRAPE CROP STATISTICS New York Agricultural Statistics Service This release was sent out by the New York Ag Statistics Service a couple of weeks ago. Hans Walter-Peterson of the Lake Erie Regional Grape Program recreated it from a jumbled table. - TEM Released January 24, 2002 Seasonal No New York grown grapes delivered to wineries and processing plants (both in and out-of-state) in 2001 totaled 148,000 tons (see Table 2). This represents a decrease of 3 percent from the 152,000 tons delivered from the 2000 crop. The tonnage received from the Chautauqua-Erie-Cattaraugus Region was down 7 percent from the previous year. Grapes received from the Finger Lakes Region were up 4 percent from the 2000 receipts. Tonnage originating in Niagara County was up 65 percent from a year ago. New York grapes grown by variety, major growing area, and varietal prices paid by processors are accounted for on the reverse side of this release. Wineries and processing plants located in New York State crushed a total of 139,006 tons of grapes in 2001, down 4 percent from the 144,230 tons processed from the 2000 crop. Receipts from New York growers accounted for 83 percent of the total with the remaining 17 percent coming from other states and Canada. Wine crushings in New York plants increased 6 percent from last year to 50,901 tons and accounted for 37 percent of all grapes processed. Tonnage utilized for juice and other products decreased 8 percent to 88,105 tons. Data for this publication was provided by New York and out-of-state wineries and processors who crushed New York grown grapes. Their cooperation is greatly appreciated. NEW YORK GRAPE UTILIZATION Use Fresh 2,000 2,000 1,000 Juice 1 152, , ,000 Wine 50,000 41,000 41,000 Total 204, , ,000 1/ Includes other processing for jam, jelly, etc. Table 1. GRAPES PROCESSED IN NEW YORK STATE WINERIES AND PROCESSING PLANTS Tonnages Received by Variety and Primary Use, 2000 and 2001 Wine Sweet Juice and others Primary Utilization Variety Total Receipts New York Plants 1 American Varieties Catawba 7,132 8,821 5,205 8,014 1, Concord 106, ,912 21,600 22,677 84,428 81,235 Delaware / 2/ 2/ 2/ Ives Elvira 4,176 4,442 4, Niagara 11,549 8,001 2,287 2,279 9,262 5,722 French Hybrids Aurora 4,020 2,860 3,764 2, Baco Noir Cayuga White DeChaunac / -- 2/ Rougeon Seyval

5 Blanc Vitis vinifera All 4,688 4,413 2/ 2/ 2/ 2/ Other varieties All 2,601 2,013 2/ 2/ 2/ 2/ TOTAL 144, ,006 48,094 50,901 96,136 88,105 1/ Total receipts includes the following amounts received from other states and Canada: , ,025 2/ Included in "Total." Table 2. NEW YORK GROWN GRAPES PROCESSED Tonnage by Variety and Production Area Received by Wineries and Processing Plants, 2000 and 2001; Prices Paid to Growers, New York Production Areas by variety Chautauqua & Erie Counties Niagara County Finger Lakes State Total 2 Average Prices Paid ($ per ton) American Varieties Catawba Concord 4 Delaware Ives Elvira Niagara 4 French Hybrids Aurora Baco Noir Cayuga White DeChaunac Rougeon Seyval Blanc Vitis vinifera All Other Varieties All ,820 1, ,503 6,447 6,400 7, ,929 91,206 1,720 2,072 13,542 13, , , / 3/ / - - 3/ ,839 3,306 3,660 3, ,182 8,425 1,298 2,645 4,394 4,068 13,900 15, / - - 3/ 4,040 2,862 4,060 2, / / / - - 3/ / 3/ 57-2,592 2,519 4,670 4,410 1,290 1,310 1, / ,780 1,902 2,020 2, TOTAL 4 108, ,461 3,146 5,192 37,482 39, , , / Includes New York grown grapes received at out of state plants. 2/ Includes Hudson Valley, Long Island, and other areas not listed. 3/ Quantities less than 50 tons not published. 4/ 2000 and 2001 prices are preliminary. Estimates of future payments by cooperatives have been included based upon historical data. 5

6 Finger Lakes Grape Program Tel: Court Street Fax: Penn Yan, NY Cooperative Extension The information, including any advice or recommendations, contained herein is based upon the research and experience of Cornell Cooperative Extension personnel. While this information constitutes the best judgement/opinion of such personnel at the time issued, neither Cornell Cooperative Extension nor any representative thereof makes any representation or warrantee, express or implied, of any particular result or application of such information, or regarding any product. Users of any product are encouraged to read and follow product-labeling instructions and check with the manufacturer or supplier for updated information. Nothing contained in this information should be interpreted as an endorsement expressed or implied of any particular product. Finger Lakes Vineyard Notes Newsletter No. 2 March 5, 2002 Timothy E. Martinson Area Extension Educator Building Strong and Vibrant New York Communities Cornell Cooperative Extension provides equal program and employment opportunities. NYS College of Agriculture and Life Sciences, NYS College of Human Ecology, and NYS College of Veterinary Medicine at Cornell University, Cooperative Extension associations, county governing bodies, and U.S. Department of Agriculture, cooperating. Upcoming Events March 26. Fredonia, NY. 8:00 AM to 5:00 PM. Lake Erie Regional Grape Growers Convention. This year s program will include breakout sessions on wine grape marketing April 3-5. Ramada Lakefront Inn, Geneva, NY 31 st Annual Wine Industry Workshop and Annual Meeting of the NY Wine and Grape Foundation. Topics include a Riesling symposium, Update on atypical aging, and a wine sensory workshop. Call or for more Information. April 16. Location to be announced. 8:30 AM-12:00. Planning a fertilizer program for your vineyard. This session will provide in depth coverage of grape nutrition and Finger Lakes soils. Dr. Lailiang Cheng, Terry Bates, Nate Herendeen (CCE soils expert for Western NY and Field crops Specialist with the NW NY Dairy Team) and Tim Martinson will cover topics including Understanding soils, ph, soil texture and nutrient availability, deficiency symptoms, and interpreting soil and petiole results in planning your fertility program. Preregistration will be required Cornell Cooperative Extension U.S. Department of Agriculture Roberts Hall, Cornell University Ithaca, NY Official Business Penalty for Private Use $300 6