PART 3: What Organic Certification Costs

ORGANIC FARMING AND CERTIFICATION COST COMPARISON

Organic vineyards use alternative methods for weed control and protection against fungal diseases and pests. There is much debate about the cost of farming organically and a lot of rumor mill lore about how "expensive" certification is.

Organic Farming Costs

Some experienced producers say it costs the same to farm organically as it does to be conventional or "sustainable." 

Some long term organic producers say it costs 20 percent less to farm organically. 

Others report costs of 10-30 percent more to farm organically. 

Terrain has a lot to do with it and costs vary widely  depending on the site, disease pressure, insect population and other factors.

Grapes as a Cost Center in Wine Production Expenses

Another variable to consider is what percentage of the cost of wine is in the farming and grape costs. Most of the cost of producing a bottle of wine is not in the grapes.

In general, the rule of thumb is that a wine costs 10x what the grape cost. 

So, for a $60 bottle of wine, the grape cost would be around $6. 

If it costs 10 percent more to be organic, the grape price would be $6.60 on a $60 bottle of wine. 

Certification Costs

Many do not realize the costs of certifying grapes is actually quite low and even lower when government rebates are factored in. (See my article from Wines & Vines on the subject). The federal government picks up 1/2 of the costs of certification fees. (CCOF is trying to get the reimbursement back up to 3/4 which is what it was before Trump.)

Take this example: a Napa farmer growing 10 acres of Cabernet Sauvignon yielding 4 tons of wine grapes has grapes valued at $6,000 per ton (for a per-acre yield of $24,000).

For $24,000 worth of grapes (in each acre), the California Certified Organic Farmers (CCOF) certification fee works out to $435 (before government reimbursements kick in). Inspection fees are no more than $400-800, according to the CCOF website but let's use their average quoted price of $550, though it could be lower. The reimbursement can be up to $500 per company.

For four tons, with a conversion rate of 750 bottles per ton, and a wine price of $60, it would cost $435 plus $550 in annual inspection fees or about $1,000 for 3,000 bottles. Then subtract the subsidy and the cost is about $500.

The total value of the wine would be $180,000 ($60 times 3,000 bottles). So the $500 cost in certification fees would be .00005% of the cost of the wine or 3 cents per bottle.

If the farming costs added 60 cents per bottle (assuming a 10 percent increase in organic farming costs) and certification fees added 3 cents per bottle, is that too a high price for consumers to pay? Maybe it's time to ask consumers how they would vote. 

Would they like to pay 3 cents to know the grapes in the bottle were certified organic? 

Wine consumers are clamoring for more transparency in food and wine. This seems like a low price to pay to give consumers piece of mind.