Saturday, May 16, 2015

What Does Organic Wine Grape Certification Cost?

Have you ever asked a winery if its wines were from organic vines and been told, "yes, but we're not certified?"

A fairly common response is, "Oh, we're not costs too much to get certified." You'll also hear from wine store clerks: "Certification is just too expensive."

Lately, I've started to turn the question around and ask wineries and wine store clerks if they know how much it costs to be certified. I haven't met one yet who has an answer. They seem kind of surprised that someone would ask them that question.

The truth is most people, even in the industry, don't know about certification costs. So let's remedy the situation here and now with the costs presented at last week's CCOF certification workshop in Rutherford.


First of all, who are certifiers? They are organizations that follow and enforce federal organic standards set by the USDA's National Organic Program.

Most are not themselves government agencies (but a few are). All are licensed as agents enacting government policies.

The biggest organic certifier in the U.S. is CCOF, which stands for California Certified Organic Farmers (but certifies both inside and outside of California). It's based in Santa Cruz. Others prominent certifiers are Organic Certifiers, in Ventura, and Stellar Certification Services, a branch of Demeter USA.

Sometimes government agencies themselves offer certification services. Monterey County is an example of a county that offers certification services; there farming operation can choose the county or other certifiers as well. In Washington, the state offers certification services.

Fixed Rate Versus Tiered Rates

Costs vary depending on the fee structure set up by the certifier. But since certification costs are competitive, the prices exist in a pretty narrow range.

Stellar Certification Services charges a flat rate - 0.5% - or half a penny on every dollar of grape or wine value, while CCOF, like most certifiers, bases its fees on a tiered structure.

Organic farming certification requires following the certification standards on farming practices. Once those standards have been met, a grower can apply to a certifier for certification. After three years of meeting the standards and farming inspections, the crops can be labeled organic.

Here are the costs, starting in Year 1:

1. Application Fee = $325 (one time only)

2, Inspection Costs = $250-500 (typically)

3. Annual Certification Cost = based on the value of the grapes or wine, depending on which is certified

$0-10K = $220
$10-20K = $300
$20-50K = $375
$50-100K = $575
$100K-200K = $650
$200K-300K = $775

Total Year 1 = $325 application fee + $250 inspection fee + crop value fee
Total Year 2 and all subsequent years = $250 inspection fee + crop value fee

Napa Cabernet Example

Since the workshop was in Rutherford, where Cab is king, let's use the example of a Napa Cab grower/vintner to illustrate certification costs as part of the price of farming the grapes and as a percentage of the wine cost.

In Napa, the average price for Cabernet in 2013 was $5,930 per ton. The average yield was about 4 tons per acre. So, roughly, the grower or vintner would be harvesting about $24,000 worth of grapes per acre.

Let's say our Napa grower/vintner had 10 acres of bearing vineyards, therefore harvesting a total of $240,000 worth of grapes.

In Year 1 (only) the grower/vintner would pay:

Application Fee: $275 (first year only)
Inspection Costs: $250
Annual Certification Costs: $775 (based on crops valued at $200K-$300K)

Total in Year 1: $1,300

In Year 2 and subsequent years, the grower/vintner would pay:

Inspection Costs: $250
Annual Certification Costs: $775 (based on crops valued at $200K-$300K)

Total for each year after Year 1: $1,025 

That's less than one half of one percent - 0.4% - of the value of the grapes.

Another way to break it down is by acre. On 10 acres, the per acre price would be $102.50.

Grape Certification Costs As a Portion of Vineyard Expenses

To put this in perspective of the overall cost of production, check out this chart from Maher Associates, published in Paul Franson's piece in Wine Business on data presented at a recent Napa Valley Grapegrowers conference.

Here the price of grapes is a little higher, if we assume the grower/vintner in our example is an "average" grower. (They may be above average).

For the "average" vineyard, the grower/vintner would pay $6,200 in farming and generate revenues of $19,800 per acre for growing Cabernet.

He or she would then pay $102.50 per acre for certification and inspection fees annually on a crop selling for $24,000 per acre yield. The $102.50 cost as a percentage of the $6,200 in farming costs is 1.6%.

This hypothetical grower would spend $100 an acre on a crop that's bringing in $20,000 an acre in revenues.

The Bigger Reasons Why Most Growers and Vintners Are Not Certified Organic: They Use Roundup

The real reason some people like to say that certification costs are what's keeping them from being certified organic is that they're torn. They wish they could say they are organic, but they want their Roundup more.

In fact, some of them have even coined a term for themselves - OWR - which stands for "Organic with Roundup." (Yes, that's a contradiction in terms.)

The vast majority of growers use Roundup because, to their way of thinking, it's cheaper. It's popular because growers and vintners don't perceive of it as dangerous - and so they use it widely.

Across the state, in 2013, wine grape growers used 880,000 pounds of glyphosate (the main active ingredient in Roundup) on wine grape vineyards. One type was used on 371,000 acres; another type was used on 208,000 acres. Add the two together and the total is roughly the same as the number of acres in bearing vines in California in 2013 - 570,000.

Organic growers will readily tell you it kills microorganisms in the soil, and that it's not worth killing the soil just to kill the weeds. But they're in the minority.

So most of the state's vines have Roundup applied to them. (Only about 3 percent of the vines are certified organic; experts estimate that perhaps another 3 percent may be practicing organic farming).

In Napa, growers applied 50,000 pounds of it to 34,000 acres of vineyards, meaning that if you bought a Napa Cab, and it wasn't from a certified organic vineyard, your chances of subsidizing the use of Roundup were more than 80%.

Statewide, the chances that your wine purchase subsidized the use of Roundup are closer to 95%. And it's there that growers are more likely to claim cost as the issue. (In a later post, we'll look at the costs of certification relative to their operations, and find similar percentages as in Napa - certification costs are tiny).

For growers and vintners who use the "certification is too expensive" line, most just aren't farming organically. Those who are farming organically and aren't certified are generally making that decision of a. not knowing what it actually costs to get certified or b. factors unrelated to costs.

Among the high end vintners, say, in Napa, there are a number of proprietors who do not want to show up on the CCOF web site, because there's so much confusion about the word organic when it comes to wine grapes and they just don't want to go there. They don't want to "be certified."

(On the other hand, there are plenty of certifiers who do not publish the names of the certifieds as publicly. Organic Certifiers is one. It's used by both Tablas Creek and Ridge Vineyards. But all certified growers and operations can be found - in tiny type - on a relatively obscure link on the USDA's web site.)

Others, like one Sonoma winery, just don't think the certification system is fair - they don't believe in the federal law that says that in order to say you are organic, you have to actually be certified organic.

Wineries don't go so far as to put the word on the bottle label if they are not certified, but there are hundreds of mentions of the word "organic" on the Twitter profiles or FB pages of wineries that are uncertified (sometimes called "practicing organic") or some that are not even "practicing."

County ag commissioners and the CDFA are charged with enforcing these laws.

But back to Roundup.

If you've been reading the news lately, you might have heard that the World Health Organization (WHO) recently classified glyphosate as a "probable carcinogen." The WHO science panel based its assessment on known risks to humans of getting non-Hodgkin lymphomas as well as animal studies that show other harmful effects.

So the next time someone tells you that certification costs are what's driving their decision not to be certified organic, try to create a dialog. Ask them if they can tell you what the certification costs are and if they've ever looked into it. If they don't know the costs or haven't checked it out, ask them if there are other reasons.

Consumers have every reason to start asking the wine industry for real answers on wineries' use of carcinogens and to get real answers, other than the standard reply: "We're sustainable."

1 comment:

  1. Great post. I totally agree in Europe it is the same - fees around 650 euro for us as a 9ha vineyard and for the first 5 years 80% of this is paid by the state. there is absolutely no excuse to be not certified if you are really working this way. as a wine lover certified is the only one you can trust.