Your source for CAWG and industry news
September 20 , 2018
CALENDAR

November 7
CAWG PAC reception, Santa Maria

November 7-8
CAWG Board of Directors meeting, Santa Ynez

January 29-31
Unified Wine & Grape Symposium, Sacramento

 
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THE FRONT PAGE 
California Wine and Winegrape Projects Garner Specialty Crop Grants
 
California received $22.6 million in federal grant funding from the 2018 Specialty Crop Block Grant Program - the most of any state. CDFA will fund 83 projects, including the following that focus on wine and winegrapes. 

 
PROJECT TITLE / ORGANIZATION / GRANT AMOUNT:
- Sustainability Research, Education and Promotion to Enhance U.S. Winegrowers' Competitiveness / California Sustainable Winegrowing Alliance ($299,998)

- California Backroads: Growing Markets for California Grown Wine on the Roads Less Traveled / Wine Institute ($295,001)

-Irrigation Training Program: Almond, Citrus, Grapes, Pistachio and Walnut / UC Cooperative Extension, Imperial County ($229,506)

-Farm Academy: Grapes -- Vine to Table / PLANT Foundation ($48,743)

-Novel Field-Based Diagnostic Strategies for Management of Powdery Mildew in California Specialty Crops / USDA Agricultural Research Service ($283,760)

- Zinfandel Stories: Preserving California's Legendary Vineyards / Association of Zinfandel Advocates and Producers ($259,141)

-Training to Support Winegrower Adoption of Best Management Practices to Promote P ositive Environmental, Social and Economic Outcomes / California Sustainable Winegrowing Alliance ($234,889)
 
 

CAWG Comments on US Trade Subsidy Program
 
CAWG logo no words
This week CAWG filed comments ( VIEW HERE) in support of a proposal by U.S. Customs and Border Protection (CBP) -- part of the U.S. Treasury Department -- to end trade subsidy payments for the import and export of wine under a program known as substitution drawback. Currently, CBP offers a drawback subsidy equal to 99 percent of import duties and federal excise taxes on imports of non-sparkling wine of 14 percent alcohol or less whenever firms match imports with qualifying exports. Firms have until five years after the date of import to execute a qualifying export transaction and claim a drawback subsidy. A UC Davis study commissioned by CAWG in 2011 made clear the program promotes imports and exports. 
 
When CBP published its proposal to modernize the drawback program and end subsidy payments for wine, the agency argued the subsidies incentivize bulk wine imports and have done little to increase volumes of bulk wine exports. CAWG believes the subsidies provide a competitive advantage to imported bulk wine in the domestic market, contributing to a dramatic surge in bulk wine imports since 2004. More generally, the subsidy program distorts the wine market, but absent data on which import and export transactions receive drawback subsidies, it's difficult to determine with accuracy which communities of growers benefit or are hurt under the program. The program doesn't require that wine import and export transactions match by varietal. So, a winery may import 1,000 liters of chardonnay in 2018 and export 1,000 liters of French colombard in 2022 and receive a subsidy payment for the transaction. Obviously, under this scenario, chardonnay growers are harmed in 2018, but French colombard growers would benefit in 2022.  --CAWG President John Aguirre


US Levies Tariffs on $200 Billion of Chinese Goods. China Retaliates.
 
The  U.S. Trade Representative announced that additional tariffs will be placed on approximately $200 billion worth of imports from China. The tariffs will be effective starting Sept. 24 and set at a level of 10 percent until the end of the year. On Jan. 1, 2019, the tariffs will increase to 25 percent.  Following the announcement, China responded with tariffs on $60 billion worth of U.S. products. Said President Trump in a  statement , "...if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports."
 
 
>ARTICLE: California wine among $60 billion in US goods hit by new China tariffs (SF Chronicle)


Government Relations Report
 

GOOD NEWS: TAX RATES MAY FALL
California is on track to pay off its unemployment insurance loan to the federal government. This loan repayment could result in a reduction in the FUTA tax rate from 2.7 percent to 0.6 percent. This good news is due to California's low unemployment rate, combined with the higher FUTA tax rate California employers have been paying for several years. 
 
Background: During the Great Recession, California borrowed more than $10 billion from the federal government to continue paying unemployment benefits. To repay that debt, the federal government increased its FUTA tax for California employers. If the loan is paid in full by November, California's UI Trust Fund will be solvent once again.   
 
EAST BAY ASSEMBLY RACE
Assemblywoman Catharine Baker (R-Orinda) is up for re-election in November. Her opponent is Rebecca Bauer-Kahan (D-Orinda), a self-described environmental advocate, lawyer and mom.  
 
Baker is a well-respected pragmatic policymaker with a reputation for fairness and proud public service. She is tireless in her district and is very active in her community. In the June primary, Baker bested Bauer-Kahan by a 57-43 percent margin. So, why is this a race to watch?
 
In this Assembly district, Hillary Clinton got 65 percent of the vote, Jerry Brown got 63 percent and Barack Obama got 58 percent in recent elections. Additionally, labor unions and the Democratic Party are pouring substantial dollars into Bauer-Kahan's campaign. The Democrat's strategy of attacking all Republican candidates based on President Trump's leadership of the party is proving effective in polling.  
 
As party registration in this district is 42 percent Democrat, 28 percent Republican and 26 percent no party, Bauer-Kahan believes she can prevail if Democrat voters turn out and vote party line up and down the ballot. However, business groups are solidly behind Baker and East Bay voters have historically liked Baker's representation of their interests.
 
Pundits see this race as one that could come down to the wire.

-- Michael Miiller / michael@cawg.org / 916-379-8995 


CAWG Board Member Visits with Assemblyman
 
CAWG board member Gregg Hibbits, of Mesa Vineyard Management in Templeton, recently met with California State Assemblyman Jordan Cunningham (R-San Luis Obispo) at Justin Winery in Paso Robles.


Kern County and Tulare County Crop Reports: Increase in Winegrape Value
 
The Kern County crop report shows the 2017 gross value of all agricultural commodities was $7.25 billion, making it the nation's leading agricultural county. Grapes (all) maintained the No. 1 spot, valued at $1.75 billion, up from $1.66 billion in 2016. For winegrapes, harvested acres totaled 32,200. Production was 277,000 tons, $311 per ton, totaling $86.2 million. The numbers for 2016 were 233,000 tons, $299 per unit, totaling $69.6 million. 
 
> REPORT
 
Tulare County remains the second largest agricultural county in the U.S., with the gross value of all agricultural commodities totaling $7.03 billion in 2017. The Tulare County crop report shows that grapes (all) had a total value of $904.8 million ($600.2 million in 2016) and moved up two spots to the No. 2 crop, behind milk. For winegrapes, harvested acres totaled 9,450. Production was 164,000 tons, $308 per ton, totaling $50.5 million. The numbers for 2016 were 152,000 tons, $303 per ton, totaling $46.1 million. 
 


DPR Seeks Comments on Listing Chlorpyrifos as Toxic Air Contaminant
 
DPR  announced a proposed regulation  that could increase restrictions on the use of chlorpyrifos in California. The regulation would designate chlorpyrifos as a toxic air contaminant. The Ninth U.S. Circuit Court of Appeals recently ordered the U.S. EPA to cancel all registrations for chlorpyrifos within 60 days of its Aug. 9 ruling. EPA has not indicated whether it will appeal the order. While this issue is being addressed in the courts, DPR will continue to follow the toxic air contaminant listing process per California law. Public comments will be accepted from Sept. 21 through Nov 9; email to dpr18002@cdpr.ca.gov. Oral comments will be heard at a hearing on Nov. 8 at 2 p.m. at Cal EPA in Sacramento.


INDUSTRY ARTICLES
VINEYARDS & WINE
 
Large wineries have been rejecting a significant share of the winegrapes they source from Lake and Mendocino counties, according to industry sources.
Wine Business, Sept. 20
 
The 2018 North Coast grape harvest remains slow but steady because of cooler summer temperatures, likely resulting in a crop that will not be wrapped up until the first week of November.
Press Democrat, Sept. 19
 
Humberto Izquierdo was Alameda County ag commissioner from 2016-2018 after working for the Napa Valley Ag Commissioner's Office for many years.
Napa Valley Register, Sept. 18
 
September edition
 
PD/GWSS Board Highlights  - September issue
2018 Pierce's Disease Research Symposium, GWSS trapped at Madera County nursery in August, brown marmorated stink bug.

LABOR

Two stories focused on the challenges farmers are facing with lack of labor.
Capital Public Radio, Sept. 19

Five years ago, workers at Gerawan Farming voted out the UFW's union by an overwhelming margin. But they only learned the result of their 2013 vote this week.
Fresno Bee, Sept. 18


WATER & WEATHER
House Passes Water Resources Infrastructure Legislation; California to Benefit
 
The House of Representatives on Sept.13 unanimously passed the comprehensive, bipartisan America's Water Infrastructure Act ( official website), which includes the Water Resources Development Act of 2018. The bill aims to improve America's harbors, ports, waterways, flood protection and other vital water infrastructure. California Reps. Jim Costa (D-Fresno) and Jeff Denham (R-Turlock) were instrumental in pushing key provisions of the legislation, including increased water storage in California (see statements below).  
 
 

>ARTICLE: Federal water bill aims to smooth project funding (Ag Alert, Sept. 19) 


Articles & Resources
 
The agency announced its commitment to cut greenhouse gas emissions by 60 percent or more below 1990 levels.
Press release, Sept. 13