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The 2010 grape harvest that started last week is one for the history books — and for all the wrong reasons.

The economy has decimated grape prices and stalled sales, and Mother Nature continues to deliver one nasty blow after another.

About 20 percent of Sonoma County's grapes are still unsold, with only a few weeks to go. In normal years, nearly everything is usually sold by this point. And when grapes are selling, the prices for some varietals have fallen nearly in half.

Already growers are comparing the harvest to 1974 and 2000, when grape gluts combined with economic downturns to roil the wine-grape market.

But unlike those tough years, a glut is not expected this harvest. The forecast is for a slightly smaller haul of about 190,000 tons — about 5 percent below normal.

This year will instead be remembered for its awful economy and incessant natural calamities.

"I've never experienced anything like this," said Duff Bevill, a veteran grower and founder of Bevill Vineyard Management in Healdsburg. "Everybody likes to compare it to the Depression. It's not, but it's the closest thing to date."

Growers who managed to find buyers in recent weeks received prices between $1,000 and $1,800 a ton — and even lower, depending on the varietal, according to some farmers.

"Some of the growers can't stay in the business at these prices," said Brian Clements, a wine broker at Turrentine Brokerage in Novato. "The price decline ... has been huge."

In 2008, Sonoma County farmers got $2,240 per ton on average, with varietals such as pinot noir fetching an average $3,170 a ton.

Options for growers with unsold grapes are dwindling. They now likely face three choices: Sell their grapes at or below cost; let the fruit rot on the vine and save the cost of picking it; or pay a custom-crush facility to turn their crop into wine and gamble someone will buy it in the future.

"There could be some grapes left on the vine because the grower made that choice," said Nick Frey, president of the Sonoma County Winegrape Commission. "And there might be some left on the vine because there were no buyers."

Increasingly, farmers are just resigned to surviving this harvest.

"We need to get through this year and minimize damage," Frey said.

Economic calamity

North Coast growers were initially spared the impact of the recession because of market mechanics and circumstances dating back to 2008.

Grape prices are largely set by bottle prices, meaning how much retailers can charge consumers for the wine. During the boom years, many people were willing to pay $50 or more for a bottle of wine. That drove up the price of North Coast premium grapes.

But the recession began eroding that high-end market.

A spring freeze in 2008 resulted in a small Sonoma County crop of 168,992 tons — about 15percent below normal. That shortage helped artificially support grape prices just as consumers began turning away from high-priced wines due to the worsening economy.

Then the 2009 harvest resulted in a larger crop of 212,674 tons. That surplus filled the inventories of wineries during the last winter and set up the tough market conditions for this year.

By this spring, it became clear that consumers were not going to quickly drink down those stockpiles of high-end wine. The rule of thumb in business is that large inventories are bad during a recession, and that meant wineries didn't want to commit to buying more grapes that would increase their stockpiles.

"No one wants large inventories now," Clements said.

Everyone from winery owners and wholesalers to restaurateurs began letting their supply of wine dwindle down. When they sold wine, instead of restocking their depleted shelves, they often used the cash to pay down debt.

"They have financial pressures to keep inventories tight," Frey said. "The banks are really pressuring them."

Unfortunately for grape growers, they can't really control their inventories, short of dropping fruit on the ground. Grapes grow whether anyone wants to buy fruit or not.

"Inventory is the old maid. Everyone is trying to pass it on to someone else," said Bill Turrentine, president of Turrentine Brokerage. "The grower is the one who gets stuck with it."

Unsold grapes

Farmers, who are used to the volatility of the marketplace, are turning to different options for their unsold grapes.

Some might soon stop investing more money in this year's harvest and just let the fruit rot on the vine. They won't put out bird netting, and they won't pay workers to pick the fruit. They'll take their losses, write it off, and move on to next season.

Others will continue investing money in this year's harvest with the hope of finding a buyer for their grapes.

"We were concerned about this last year, and yet most of the grapes found a home," Frey said.

That optimism is shared by many farmers.

"I hope the buyers that came in at the end of last year come back this year," said Ned Hill, owner of La Prenda Vineyards Management. "It might not have been the prices we wanted, but we sold it."

Hill said about 20 percent of the crop he manages remains unsold.

But with only a few weeks left during the traditional grape-buying market, hope will soon give way to reality.

"The waiting game is just about over," Frey said. "We have from now until about Sept. 15 to see what's going to happen."

The third option that many growers with unsold grapes are pursuing is custom crushing. They will pay to have their crop turned into wine with the plan of selling it on the bulk market in a couple of years. Last year, the amount of bulk wine produced doubled. It is expected to increase again in 2010.

"I just can't abide seeing my grapes rot. I just can't," said Mike Rowan, owner of Wine Creek Vineyard in Healdsburg.

Rowan plans to custom crush his grapes.

"Prices are so low now that it's not even worth looking for a buyer," he said.

But it's a gamble, because essentially he and others will be doubling down. They will increase their costs without knowing for sure that anyone will buy their bulk wine.

Rowan has turned to custom crushing in five of the past six years, and has always come out ahead, he said.

"I've done significantly better than just covering growing costs," Rowan said.

But if bulk wine prices drop as far as grape prices did, it remains unclear how much growers can expect to recoup.

"The question now is whether the prices will cover costs," Bevill said. "No one is really expecting profits."

A natural cost

Grape prices are down. But farming costs are not.

Growers have been forced to spend more this year to battle a tempestuous Mother Nature.

Farmers were forced by regulators to spend extra money fighting against a possible European grapevine moth invasion.

Then the unusually cool, foggy summer resulted in aggressive mold and mildew that required that workers spend extra time pruning and spraying in the vineyards. Finally, last week, an extreme spike in the temperature blasted grapes, turning perhaps 10 percent of the county's grape crop into worthless raisins.

The unusual summer weather slowed grape growth and delayed the start of harvest by two to three weeks. Most vineyards are expected to begin picking in earnest in mid-September and continue through October.

The harvest likely will be compressed, meaning many varietals will be ready for picking at about the same time. It will result in even more frenzy in vineyards, and has forced wineries to plan early on how to store all the fruit and juice as it comes into their facilities.

But most growers are not worried about labor shortages, which is a bigger concern for Central Valley growers. North Coast growers tend to pay higher wages, and often keep a larger number of workers on hand throughout the season.

Silver lining

This year is not entirely without hope.

Both winery owners and growers say that because of the cool growing season, the grapes that survived the mold, mildew and freak sun damage are of high quality.

"Great vintages are built on real moderate weather," said Rob Davis, winemaker for Jordan Winery in Healdsburg.

However the late-ripening fruit is more susceptible to early rains, which would likely lead to an outbreak of devastating mold and ruin any unpicked crop.

"It could still be a great vintage for the early ripening varietals," said Alex Davis, winemaker at Porter Creek Vineyards west of Windsor. "The other varietals are all dependent on if we get an Indian summer."

Another benefit to the mid-season mold and sun damage is that vineyard workers cut out the damaged fruit, meaning this year's harvest will be smaller. A smaller supply of grapes could help prevent prices from slipping further, and might even force wineries to buy more grapes next season.

"But if that is the silver lining, it is still a pretty painful one," Frey said.

You can reach Staff Writer Nathan Halverson at 703-1577 or nathan.halverson@pressdemocrat.com.