Ciatti Co. Hoping for a Smaller Winegrapes Crop in 2017

Brexit Also A Concern for California Sellers

By Joanne Lui, Associate Editor

The Ciatti Company – a worldwide company headquartered in San Rafael, CA – has been in the wine, grape concentrate and spirit brokerage business since 1971. They are experts in the industry, and President Greg Livengood spoke to California Ag Today recently to give an update on this year’s harvest and prices around the globe.

Ciatti Co. President Greg Livengood
Ciatti Co. President Greg Livengood

“World supply is down a little bit this year from last. We saw some major weather events in the southern hemisphere to start out the year. … Starting in January in Argentina, we saw a fair amount of rain throughout the harvest. They were down a little over 30 percent from their three-million-ton average harvest and that really set the tone for South America,” Livengood said.

“Right behind that, the Chileans got going. They hit about the halfway point of their harvest when El Nino came and slapped them around a little bit. It rained very hard there – five major weather events – and their crop was down at least 20 percent, but in addition to that, they probably would have been down more, but they tried to salvage some of that fruit that suffered a lot of damage from the rain.”

According to Livengood, all of this may not affect pricing in California.

“It certainly helps to set a floor, a pricing floor, and that floor has come up,” Livengood said. “I don’t know that pricing necessarily will go in any direction here based on what happened down there, but … it’s a much more shallow dive that pricing could potentially take here if things go the wrong way.”

A real concern for California winemakers is actually Brexit – Britain’s exit from the European Union.

“ U.K.’s been a very good … market for wine. It is. They don’t grow a lot of their own so they’re buying it from everywhere else. It’s been a very good market for the U.S. The problem with Brexit is the economy. It’s the value of the pound, so the pound took a big hit when Brexit was announced. There’s concern it will take more of a hit. That decreases their buying power and that’s a concern for us here in the U.S. because our prices are generally a little bit higher than all of our competitors around the world,” Livengood said.

“We’re selling on the California name and we’re selling on quality and so as that consumer and as that retail buyer in the U.K. has less buying power, we do have concern that they may look for alternatives to California.”

Overall, Livengood actually hopes for a smaller crop worldwide because high crop yields in multiple years isn’t necessarily a good thing for the industry.

“You never want really long oversupply.  2013, worldwide, it was a bumper crop just about everywhere.  We had too much wine in ‘14 and ’15 … and it’s taken us almost three years to really eat through a lot of that inventory.  A shorter worldwide crop here in 16 is certainly something that we would welcome.”

Brexit Hurts Wine Exports To U.S.

Brexit-Devalued Pound Hurts Wine Exports To U.S.

 

Jon Moramarco, managing partner of Bonded Winery 166 (BW 166 LLC), is a third-generation wine professional at the company that his grandfather, Giuseppe Moramarco, a tenth-generation wine professional émigré from Italy, acquired BW 166 LLC in Los Angeles from the Jesuits during Prohibition.

 

Moramarco explained the effects of Brexit on wine imports to the U.S. “The UK pound has dropped in value versus almost every currency,” he began. “The UK will not want to raise their price in British pounds, so it will probably drive them to become interested in any exports to the UK from the U.S. They will want to have a lower price in U.S. dollars, which will be tough for producers to do in the U.S.”

shutterstock_87596773 wine bottles

Continuing, “Now those [EU] European wine exporters are going to say, ‘Well, I don’t want to sell at that price to the UK. I’m gonna go try and sell more in the U.S.'” noted Moramarco. “So we will see more imports coming into the U.S. from Europe.”

 

“So you kind of have a double whammy for wine,” Moramarco concluded, “because they’ve kind of lost the margin in one of their key markets.” He anticipated “difficulty in exports with people wanting to drop price,” as well as a greater “increase in people wanting to import into the U.S.”

Brexit Affects U.S. Agricultural Trade

Joel Nelsen’s Commentary on Washington D.C. Meetings, Brexit and U.S. Agricultural Trade

By Lauren Dutra, Associate Editor

Joel Nelsen, president of California Citrus Mutual based in Exeter, Calif., spoke about his advocacy for growers and the impact Brexit has on U.S. agricultural trade as he arrived at the Fresno Yosemite International Airport from Washington, D.C. last week. Brexit is an abbreviation of “British exit,” which refers to the June 23, 2016 referendum by British voters to exit the European Union (EU), according to Investopedia.

Nelsen explained, “There were two missions I was on while I was in Washington. One had to do with a proposal to allow lemon imports from Argentina. We’re definitely opposed to it because of pests and diseases, and a lack of transparency in that country over the last one to two decades.”

“We have a comment period,” Nelsen continued, “but we have asked for an extension on that comment period because of the scope of the rule and the economic impact, and we haven’t heard a word on that,” he said. “We met with our colleagues and friends in Washington, D.C.  Senator Feinstein, Senator Boxer and a couple of House Office Committees have agreed to make a phone call to the Secretary of Agriculture and get a determination on that,” he said.

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The second purpose of Nelson’s trip was to discuss trade and the impact on the U.S. economy due to the recent Brexit, as Nelsen is chairman of the Fresh Fruit and Vegetable Agricultural Technical Advisory Committee (ATAC), a national trade committee that offers information and advice about agricultural products and trade issues to the USDA Secretary of Agriculture and the U.S. Trade Representative. “People from across the country came, and we talked about trade subjects, such as the Trans-Pacific Partnership (TPP) agreement and Britain’s separating itself from the EU,” said Nelsen. “It’s obvious that this upset everybody; Ambassador Michael Froman, United States Trade Representative (USTR) who advises the president on international trade and investment issues, said, “I know what I don’t know, and I don’t know a lot right now.”

Nelson explained, “We think [Brexit] will slow down the fresh fruit and vegetable sector, as well as the passage of the Transatlantic Trade and Investment Partnership (T-TIP). According to the USDA Foreign Agricultural Service, since the U.S. market share of agricultural products and food imported by the EU—the world’s largest importer in the category—is shrinking despite continued growth of the EU market, T-TIP negotiations offer a major opportunity to address unjustified tariff and non-tariff trade barriers to U.S. exports.

“Quite frankly,” Nelsen summarized, “we’re less than excited about [T-TIP] because it didn’t address the inherent problem that we have from competition: fresh fruit and vegetable producers in the EU get a direct subsidy and growers in the United States do not.”

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Some additional members of the ATAC for Trade in Fruits and Vegetables include:

  • Julie Adams, Almond Board of California
  • James R. Cranney, Jr., California Citrus Quality Council
  • Robert Guenther, United Fresh Produce Association
  • Richard Hudgins,
    California Canning Peach Association
  • Randy Hudson, National Pecan Growers Council
  • Marcy L. Martin, California Fresh Fruit Association
  • Matthew McInerney, Western Growers
  • Ken Melban, California Avocado Commission
  • Mike Montna, California Tomato Growers Association
  • Jim A. Zion,
    Meridian Growers, LLC

Joel Nelsen on Departure of UK from the EU

Joel Nelsen Comments on EU and Impact on Ag from Recent Washington D.C Trip

Yesterday, we were fortunate enough to meet up with Joel Nelsen of California Citrus Mutual at Fresno-Yosemite Airport. He filled us in about his recent trip to Washington, D.C.

Nelsen told us about the discussion he and his colleagues had with foreign trade leaders regarding imports into the United States, as well as how California Ag will be impacted by the United Kingdom exiting from the European Union.

Click below to check it out!