Econ 101

In all actuality, I have no business pining about the ins-and-outs of economics. There's this dude are many others that are far more qualified. And generally, save for the occasional pool match, I am not a betting man. However, even I recognize this as a 'losing proposition'.

"California’s and the world’s largest winery, E&J Gallo, has tossed out the first California wine grape price pitch of the season. It was low and away.

A price of $125 per ton for open market Thompson seedless grapes and other low value white grapes...

I suppose it's good to be king (i.e. Gallo). The article goes on to say that this very well may be the 'floor' as far as pricing goes and if that's the case, folks in CA might want to consider some other means of income.

DiBuduo said at 7.5 tons $125 per ton is a gross income of $1,000, $400 to $500 less per acre than it cost to produce the grapes “and that is if you have the ranch paid off.”

So let us on to the math:

1. Grape growing costs $1500 per acre (quantity X)
2. Grapes grown sell for $1000 per acre (quantity Y)

X + Y = YOU'RE SCREWED

And this is surely only a sign of things to come. 2005 yielded a 'bumper crop' in CA and just like the rest of the world, the meglo-agro-oeno-corporations are in the proverbial 'cat bird seat' with reserves of juice at the ready. Increased competition on all fronts continues to rise as newer plantings in all corners of the world come on-line. Employment costs are on the rise and immigration reforms abound.

All of this continues to spell things all bad for growers.

The ringer of the article:

“I hope this is not the floor for future wine grapes this season,” said Nat DiBuduo, president of Allied Grape Growers. “I was hoping for higher price. Surprised? I am not surprised by anything that goes on in this industry any more.(emphasis T.t.S.)

Amen, brother.