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04.30.2012  
 

Ontario Grape Prices Set

Plateau pricing to continue as grape surplus is reduced; new figures valid for two years

 
by Hudson Cattell
 
 
Alternative text
 
Three Ontario organizations representing grapegrowers and wineries have agreed to base prices for 2012 and 2013. Photo credit: Grape Growers of Ontario
Toronto, Ontario, Canada—In 2009, the Ontario provincial government insisted that the grape and wine industry come up with a plan to work together to further the production of VQA wines and reduce grape surpluses, which reached a total of nearly 8,000 tonnes that year, and that there would be no further government bailouts. The first two years of the pilot project have been a success to the point of continuing it for another two years.

Grape prices will increase slightly during the next two years as a result of negotiations held between growers and wineries. Earlier in the year, agreement had been reached to continue a pilot project that was first used in 2010 to negotiate prices for a two-year period at one time. Plateau pricing also started in 2010 is being renewed for four varieties to give wineries the option of buying lower cost grapes of varieties in surplus.

According to the two-year pricing agreement, the price of red hybrid varieties will increase by 1% in 2012 and another 1% in 2013. White hybrids will increase by 2% the first year and 1% in the second. White vinifera varieties will go up 1.5% the first year and 1% the second year. There will be no increase in price for red vinifera varieties in either the first or second year.

The Grape Growers of Ontario, Wine Council of Ontario and Winery and Grower Alliance of Ontario have agreed to the price increases for some winegrape varieties in 2012 and 2013, as listed in the accompanying table. Princes are quoted in Canadian dollars per tonne with 2011 prices in parentheses.


Ontario Grape Prices in Canadian Dollars per Tonne

Grape (2011 price)   2012 2013
De Chaunac and Rosette ($659) $666 $673
Maréchal Foch ($780) $788 $796
Baco Noir and Chambourcin ($843) $851 $860
New York Muscat ($520) $525 $530
Seyval Blanc and Vidal ($600) $612 $618
Johannisberg Riesling ($1,396) $1,417 $1,431
Auxerrois ($1,216) $1,234 $1,246
Chardonnay ($1,424) $1,445 $1,459
Gewürztraminer ($1,554) $1,577 $1,593
Pinot Gris ($1,595) $1,619 $1,635
Sauvignon Blanc ($1,570) $1,594 $1,610
Gamay and Zweigeltrebe ($1,283) $1,283 $1,283
Pinot Noir ($1,933) $1,933 $1,933
Cabernet Sauvignon ($1,875)  $1,875 $1,875
Cabernet Franc ($1,676) $1,676 $1,676
Merlot ($1,894) $1,894 $1,894
Shiraz ($2,164) $2,164 $2,164

Several other prices related to late harvest wines or ice wines will be negotiated prior to July 31, 2012.

Plateau pricing for four varieties
The pilot plateau-pricing model established in 2010 for four varieties most in demand will be continued for the next two years. A base price for Johannisberg Riesling and Chardonnay has been established at $1,200 per tonne; Cabernet Sauvignon and Cabernet Franc are priced at $1,300 per tonne. These prices apply to grapes delivered within negotiated sugar levels (or Brix range) and are lower than the cost per tonne for the same grapes at higher sugar levels. Last year, for example, Chardonnay at the base price of $1,200 per tonne resulted in significant savings for wineries over the $1,424 cost per tonne for the same grapes containing higher sugar levels. Growers can offset the lower prices by growing more of these grapes because there is no tonnage restriction on these grapes.

Only grapes that fall within the negotiated lower Brix range qualify for plateau pricing. Regular negotiated prices apply to grapes delivered at the higher Brix levels. The base price for plateau pricing is unchanged from the previous two years. The lower Brix range for this year has net yet been established.

Reducing the surplus
According to Debbie Zimmerman, CEO of the Grape Growers of Ontario, 95% of last year’s 62,000-tonne crop has been sold, a sharp contrast to the nearly 8,000-tonne surplus before the pilot project bega n in 2009. Part of the reduction in surplus has been due to plateau pricing. Ontario legislation that is mandatory until 2014 requires that 40% of a winery’s overall blended content has to be from Ontario grapes with a 25% minimum within each bottle. Zimmerman adds that plateau pricing combined with federal tax relief of approximately $460 per tonne for wineries using 100% Ontario grapes has meant that wineries are getting these grapes at a price competitive with what they would pay for imported grapes from another country.

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