Pacific Northwest grape growers take risk management to a new level

Over the past three years, grape growers and tree fruit producers in the Pacific Northwest have been leading their industries by taking advantage of a $743,050 federal partnership agreement to investigate and develop new decision-making tools.

The project was funded by a risk-management partnership between the Washington Wine Industry Foundation, which submitted the partnership request, and USDA's Federal Crop Insurance Corporation. The grant paid for investigating new technologies for mapping crop acreages, such as satellite imagery and remote sensing; creating online cost-of-production calculators; and researching a system to automate the process of estimating grape yields, among other projects.

“Our goal was to provide growers critical information for making basic business decisions aimed at mitigating and managing risks and reducing the impacts of year-to-year variability,” explains Vicky Scharlau, executive director of the foundation, which facilitates education, outreach and research opportunities for the industry.

“The purpose of this grant was to provide user-friendly, timely and basic information to assist growers with decision-making for production, renewal, expansion, consolidation, and entry/exit in their industries. Without this data and without it being in user-friendly, accessible formats, they may be taking unnecessary risks.”

Development of these tools highlights the possibilities available to farmers and ranchers elsewhere in the country to improve the financial viability of their businesses by participating in risk management partnership agreements or by seeking other unique and unusual partnerships. Funding for these agreements is provided under provisions of the Federal Crop Insurance Act that pertain to risk management and implementation of research and development, community outreach and assistance, and crop insurance education.

In this case, the Foundation joined with USDA's Risk Management Agency (RMA), which administers the various agreements. The agency partners with public and private organizations to develop new risk management tools to help strengthen the economic stability of farmers and ranchers throughout the country.

Since the RMA partnership programs began in 2001, the agency has funded $150 million in partnership agreements. These partnerships are awarded on the basis of how well they fit with national and regional priorities identified by RMA. These priorities, which can change from year to year, are published in the Federal Register.

When the Washington state foundation submitted its grant in 2004, it was the largest of 12 partnerships, totaling $5.1 million, which were awarded that year for research and development of new non-insurance risk management tools. The partnership has benefited about 1,000 grape producers, 700 wineries and six juice processors in Washington, Oregon and Idaho, and some 4,000 apple, pear and cherry growers and 80 warehouses in the region's tree fruit industry.

Through their various producer and industry organizations, the grape and tree fruit growers identified the types of information and tools they needed. Working with the RMA, the foundation then directed researchers in developing these tools and providing growers with information and training in how to use them.

The partnership funded the development of five risk-management tools:

Cost of calculators

Trent Ball and Ray Folwell, with Agri-Business Consultants, Prosser, Wash., used information provided by growers to develop online cost of production calculators for wine and juice grapes, produced either conventionally or organically. Using their own fixed and variable costs, growers can automatically calculate total production costs on a per acre basis by adjusting such factors as input costs, trellis and planting spaces and interest rates. The calculators guide them in gathering and analyzing costs of production by variety of grape and market, either juice or wine, for each of the first four years of production.

Growers can compare their costs by category with industry averages for either conventional or organic production systems. Also, they automatically compute current and future break-even costs, and compare costs of different management practices. Plans call for creating similar cost of production calculators for wineries.

Satellite mapping

Eileen Perry, a remote sensing research scientist with the Washington State University Center for Precision Agricultural Systems, evaluated the feasibility of using remote sensing and satellite imagery as a more timely, more accurate alternative to ground-based surveys for mapping acreages of grapes and certain tree fruits.

By measuring differences in light reflected by plants, satellite sensors can distinguish one type of crop from another. Perry's research was designed to determine how well commercial software programs could be trained to identify these differences in digital images made by a commercial satellite. The accuracy of the software in correctly identifying acreages of a particular crop ranged from 57 percent for cherries, 70 percent for wine grapes, and 87 percent for juice grapes to 92 percent for hops and 96 percent for apples.

Automated yield estimates

A team of scientists, directed by Julie Tarara, research horticulturist with the USDA's Agricultural Research Service, based in Prosser, expanded their research to develop a system for automatically monitoring grape yields. Called the Trellis Tension Monitor, it offers a faster and less expensive alternative to conventional hand sampling methods of estimating yields.

This patented system would enhance the ability of grape growers to make decisions about thinning grape clusters and scheduling harvest crews and equipment. Also, it would help juice processors and wineries plan their operations.

The system features a palm-size electronic device connected to the horizontal wire that supports the grape vines. This device measures the increased tension or load on the wire as the grapes grow. That information is transmitted wirelessly to a computer that stores the data throughout the season. Changes in the tension readings allow growers, processors or wineries to adjust yield estimates more accurately as the season progresses, rather than using hand samples.

Weather telemetry

A team of researchers evaluated new telemetry technology for upgrading a statewide system to gather and transmit weather information from the field to a farmer's computer. Operated by Washington State University and directed by Gary Grove, the AgWeatherNet includes more than 100 weather stations. It provides growers air temperature, relative humidity, rain, leaf wetness, solar radiation, wind speed, wind direction, soil moisture, and soil temperature every 15 minutes.

The team found that non-recurring costs for two-way UHF radio telemetry were slightly higher and recurring costs were less than using modems with cellular phones. However, because cellular technology offers a strong support system it has the advantage when expanding the network into new regions. The satellite system transmitted information only once every 24 hours, limiting its usefulness for time-critical weather events, like frost.

The AgWeatherNet is now being upgraded with the evaluated two-way radio system, and when applicable, cellular phones and modems.

Online database

The partnership agreement is being used to expand and improve an online database. Called the Oregon Vineyard Database (OVID), it was originally developed to provide small to medium-size grape growers in Oregon with better vineyard management information. Now, it is being developed as a regional database to also provide wine and juice grape growers and wineries in Idaho and Washington with local, state and regional crop information.

The database provides easy-to-use forms for creating and managing information for each vineyard block about canopy, crop and soil management, fertilization, pesticide usage, irrigation, and other activities. It can be used to share information with other selected growers or wineries about vineyard sites, soils, plantings, and management practices. Also, it automatically generates pesticide use reports, which can be uploaded easily to state reporting systems, and allows growers to download data into Excel files.

Keys to success

Dave Paul, Spokane, Wash., director of RMA's Northwest Region, administered the Washington Wine Industry Foundation agreement. He lists the main reasons why Washington growers were successful in applying for and using this partnership to develop these risk management tools.

The grape and tree fruit growers were involved in all aspects of the grant project, under the direction of the Washington Wine Industry Foundation. The Foundation worked directly with the grape and tree fruit growers throughout the project. The growers identified specific tools that would help them better manage risk and then worked with the researchers to develop and test these tools before they were released to the industry. During each step of the process, growers provided feedback to help improve results of the next stage.

“They had a clear vision of what they wanted to achieve with the partnership and they assembled the people they needed to carry out their plan,” says Paul. “In addition, they had a sound research approach and defined the methods they used to develop the risk management tools and other deliverables.”

Right priorities

When the Washington growers applied for their grant in 2004, RMA had seven project objectives in the area of non-insurance risk management tools the proposal could address. They included developing risk management tools to assist forage and rangeland producers, livestock producers, and farmers and ranchers who hand limited resources and/or had traditionally been underserved, to name a few. The application from the Washington grape and tree fruit growers matched the agency's top priority that year: To develop risk management tools that would help producers reduce the risk of multiple-year losses.

In addition to the Washington grape and tree fruit growers, the Washington Wine Industry Foundation collaborated with other related organizations in the Pacific Northwest. They included the Washington Growers Clearing House Association, the Oregon Wine Board, the Idaho Grape Growers and Wine Producers Commission, the Washington Tree Fruit Research Commission, the Washington State Grape Society, and the Washington Association of Wine Grape Growers.

“This strengthened the project,” Paul says. The Washington growers recognized that working with other similar groups would improve their industries more than working alone. It also enables the grant to benefit a wider audience.”

The Washington Wine Industry Foundation and the various producer groups kept their members and the other groups informed about goals, progress and results throughout the three-year project. “They used newsletters, press releases and their Web sites to keep everyone up to date on the project,” says Paul. “Also, they conducted workshops to explain use of the various risk management tools. That's very important to us because at the end of the day we want products that producers will use.”

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