Issue link: http://read.dmtmag.com/i/52389
Grapes Vineyard and winery FINANCING What to expect when seeking wine financing. by Melissa Hansen F Risk in vineyard financing depends greatly on where the grapes are contracted, says Bill Shibley. rom a banker's perspective, vineyard loans in Washington State can generally be categorized as high risk or low risk, with risk depending on whether the grapes are owned or contracted with the state's largest wine companies. For winery financing, risks are all relatively high and loan terms generally reflect the high risk. Wine-grape acreage in the state—at around 43,000 acres—represents 2.4 percent of the state's 1.9 million acres of irrigated agriculture. Of the total wine grape acreage, Bill Shibley estimates that 85 percent is owned or contracted by the state's five largest wineries and repre- sents little third-party risk to the bank in terms of growers not getting paid. Vineyards that fall in this low-risk category are pretty homogenous, said Shibley, regional vice president of Northwest Farm Credit Services. "Parcels are large, we know that checks from big wineries like Ste. Michelle Wine Estates will be good, we know what the costs of production are, and what the winery is paying. These operations are relatively easy to finance," he said, adding that the grapes are generally high quality. But the financ- ing attributes of "everybody else" are anything but homogenous. About 6,500 acres of grapes fall in this cat- egory, he said. These vineyards are mostly small parcels dedicated to estate or family wineries, with only a few larger than 150 acres. "This group is big by number but small by volume with every type of business model used." Shibley, who shared some lending tips during a work- shop on wine marketing sponsored by the Washington Association of Wine Grape Growers, said that of the 700 wineries bonded in the state, about 80 percent sell fewer than 1,000 cases. "The important thing to realize, and something that I don't see in other agricultural segments, is that half of those small wineries really don't care about making money. I don't have hay farmers that are in it like that for the fun of it," he said. Helping you tie up the loose ends! DRIPLOK™ Quick and economical, this long- lasting dripline holder can be installed in seconds. The built-in saddle prevents water flow restriction. Available in 1/2" and 7/8" sizes. AGLOK™ AgLok is a universal agricultural fastener designed for your vineyard and orchard tying and training needs. The AgLok comes in 11.5" strips, 150' belt- mounted boxes, and 500' spools. For your nearest dealer, contact AgFast at… 30 JANUARY 15, 2012 GOOD FRUIT GROWER Toll-Free: 877.552-4828 909.451.2299 • Fax: 909.593.8309 www.goodfruit.com