Wine grape growers in California’s Central Valley looking for a rebound in prices for their crop any time soon are likely to be disappointed. Blame ample supplies and dwindling demand for the types of wine made from their grapes, says Jeff Bitter, vice president of operations for the nearly 600 grower-members of Allied Grape Growers wine grape marketing cooperative.

The Central Valley wine grape region, which extends south from Stanislaus County to the Grapevine, represents more than half of California’s total annual winegrape production. Reflecting the growing conditions here, most Central Valley grapes are crushed to produce so-called value wines – those selling for under about $7 a bottle. Currently, wineries have plenty of these wines on hand. Should more be needed, they have access to readily available and cheaper imported bulk wines from Argentina, Chile and Australia.

“Wineries have been buying finished bulk wine from these countries for less than the economically sustainable cost of producing the grapes for those wines in the Central Valley,” Bitter says. “In some cases, prices of this imported wine are no more than about $3 a gallon. I’ve received reports recently that Australian Chardonnay growers are getting less than $200 a ton for grapes. Those grapes will end up in the market place as bulk wine in the next few months.”

It’s a far different story for growers in California’s central and north coast areas. They’re benefitting from the improved economy, which has put more money into the pockets of consumers who are trading up to higher-priced wines – those made here, where climatic factors favor production of higher-quality, higher-value grapes. Wines made from these grapes, typically priced above the $10-a-bottle mark, are selling very well

Over the last several years, coastal growers have developed few new vineyards even as demand for their wines has been on the rise. “The supply of grapes is now balanced to possibly even short in some of these areas,” Bitter says. “I think the wine grape market on the coast will be pretty solid this year.”

Meanwhile, responding to the fall-off in value of their grapes, Central Valley growers of both wine and raisin-type grapes are estimated by Bitter to have uprooted about 30,000 acres of vineyards since last year’s harvest. That includes about 20,000 acres of wine grapes, Much of this ground has been replanted to more profitable alternatives, particularly almonds, he notes.

In all of last year, Central Valley growers pulled out three times the acreage of grapes as they had in any of the previous five years, he reports. What’s more, Bitter expects growers here to continue replacing vineyards with other crops both this year and next.

“The market is re-balancing to bring supply more in line with demand,” he says.

This has left those Central Valley growers who are seeking contracts this year to sell their grapes unable to find any. Wineries simply aren’t offering them, at least for the time being.

“Right now, no market has developed for 2015 Central Valley wine grapes,” Bitter says. “Grape buyers have no incentive to be in the market place. I expect they’ll wait until after April or May to see what this year’s crop looks like before offering any contracts.”

Even then, he expects growers to be disheartened by the market for the 2015 Central Valley crop – either for contract or spot sales.

“An average size or larger crop this year is almost guaranteed to result in unsustainable spot market prices – those that won’t allow growers to cover their production costs and growing investments from one year to the next,” Bitters says.

A short 2015 crop is a reasonable possibility. Vines will be recovering from three straight years of strong production while coping with restricted supplies and lower quality of irrigation water due to the continued drought. However, while a drop in production would help bring supply more in line with demand, it wouldn’t necessarily be enough improve the ability of growers to pay their bills, he notes.

For example, Central Valley wine grape yields average around 10 tons to 12 tons per acre. Should that figure drop to, say, 6 or 8 tons this year, any increase in price growers receive may not be enough to offset the lost production, he says.

That leaves growers with few attractive options.

“For non-contracted growers it will be like rolling the dice,” Bitter says. “They could grow the crop all year long only to receive economically unsustainable price offers at harvest.”

Then, again, a grower could forego growing any crop at all this year – pruning the vines back to the point where no grapes are produced and irrigating, fertilizing and managing disease and insect threats – in hopes of a better market next year.

“Some growers are talking about doing that and some probably will,” Bitter says.

Another option, of course, is to do what others have been doing and replace their vineyards with more profitable crops. “With enough equity in their land, they could afford to do this,” he says.

With current land prices being driven to high levels by other agricultural sectors, still other Central Valley wine grape growers could decide to quite farming altogether.

“A ranch with water, is easy to sell these days,” Bitter says. “More than one Thompson seedless vineyard has sold to the almond grower next door wanting more land for orchards. Some vineyards have been selling in the range of $30,000 an acre. Some ranches in the Central Valley will be changing hands this year as frustrated grape growers get out of the business.”