- Author: Mark Battany
San Luis Obispo County has seen very rapid growth of the wine grape industry in a relatively short time; it ballooned from just a few hundred acres of vineyards in the early 1970s to nearly 45,000 acres of planted vineyards now. The economic multiplier effect of the associated wine production and tourism industries has made it a major component of the local economy. However, economic conditions for County wine grape growers have generally not been as positive in the past decade as they were during the earlier growth phases of the industry. The following figures represent data for the entire County. The raw data is sourced from the Ag Commissioner's Crop Reports.
The steady increase in vineyard acreage during the mid-1970s through mid-1990s was driven by increasing crop value per harvested acre (Figure 1 below). However the crop value per acre from the early 2000s until the present day, coinciding with full fruit production from a greatly increased number of acres followed by the recession, has been relatively depressed as compared to the more profitable earlier conditions. The average crop value over the past twelve seasons has been less than $5300 per acre (in 2014 dollars); this is likely below the average total cost of production per acre.
Improvements in growing practices, irrigation technology, quality of vine planting stock, and vineyard management expertise led to steady increases in productivity per acre from the 1970s through 1990s (Figure 2). However, productivity per acre has been gradually declining since the peak in the late 1990s; this may be due to a range of factors, including aging vineyards afflicted with trunk diseases and viruses, increasing salinity pressure in some areas, insufficient water supplies for irrigation in some cases, and intentional limiting of crop yields with the goal of producing higher quality fruit.
Even though the wine grape industry in the County has achieved significant acclaim over the past decade for producing high-quality wines, this has not resulted in notable increases in the average price paid for fruit produced in the County (Figure 3). The average price paid per ton of fruit in the County over the past decade is far below the price paid in the previous decade. The long period of high per-ton prices in the late 1990s/early 2000s also coincided with the period of the highest average productivity per acre (Figure 2); this combination of high production and high prices per ton made this a remarkably profitable period for wine grape producers, and served as a stimulus for the rapid additional planting that followed. The wine grape market is famous for going through periodic price cycles; this behavior is clear in SLO County in the 1970s through 1990s. In the 2000s and later this cycle turns into an extended low valuation period, likely due both to the increased local supply of grapes and the severe recession.
In spite of the relatively low crop values over the past decade, the County is again experiencing a new surge in vineyard plantings (Figure 4). In the 2014 Crop Report, 7346 acres of non-bearing vineyards were listed; the percentage of non-bearing vines is much higher in SLO County than in the state as a whole. The additional production from these new acres, plus any additional acres planted in the near future, could potentially prolong the extended cycle of lower prices.
These charts, plus similar charts for Santa Barbara County, are updated annually at the UCCE San Luis Obispo website.