Grape growers on the warpath

When you open a bottle of wine, you probably read the information on the back label to get a feel for what the winery is trying to accomplish.  What you don’t see, however, is the politics at work in the wine region. I’ve been involved with Rioja wine for almost 30 years.  Most of the time, things have gone remarkably well. With the exception of some intermittent dips in sales, full recovery always came a year or so later.  One thing has remained constant, however:  the bickering between the wineries and the grape growers.  Practically all of it has been politically motivated, with the fighting taking place between the winery and growers’ associations in the Rioja Regulatory Council.

On a one-on-one basis – growers and wineries – things work pretty well, because the growers and wineries have a symbiotic relationship – in a denominación de orígen  Rioja wineries can only buy grapes from growers in Rioja, so they have to get along.  But when it comes to discussing industry issues, not only are the winery associations in constant disagreement with the growers, but often the different associations on the same side disagree.

The most recent spat is about the process for renewing the seats on the Rioja Regulatory Council and Interprofessional Committee. These bodies’ members total 200 votes – 100 for the wineries and 100 for the growers. 150 votes are needed to approve measures proposed in these bodies. This 75% majority was created to make sure that policies were approved with a broad consensus. As we shall, see, it can backfire, too.

The election rules changed in 2004 from a one winery (or grower), one vote system with the same weight given to each of the players to one based on the number of liters of sales of Rioja wine made by wineries in each winery association and the number of hectares of vineyards represented by each grower’s association. This happened because the independent wineries (those not belonging to any association) threatened to band together, shaking up the status quo– the power of the association (that I happened to be the managing director of) made up of the biggest wineries that held the most seats in the Council.

The new system has its problems, however. Determining seats on the Council is easy for the winery associations.  For the growers’ associations it’s more complicated, because some of them are farmers’ unions whose members also belong to cooperatives.  The coops can show how many hectares of vineyards their members have, but some members of unions also belong to coops so the union can’t count their hectares.  The unions feel that they are underrepresented, which, as we will see, is not true.  

In 2004, the problem was avoided by negotiations between unions and the coops to avoid the burden of proof of hectares, with the coops agreeing to 45% and the farmers’ unions, 55%. In 2008, this agreement held up.  In 2012, however, the coops want more power and the unions consequently feel that they will lose seats.

Another bone of contention is the process of election of the president of the Council and the Committee.  It was agreed in 2004 that the presidency would rotate on a two-year basis between wineries and growers, with the wineries leading off.  When 2006 rolled around, the growers couldn’t come up with a suitable candidate, so the winery candidate remained president.

In 2008, the growers found a highly regarded candidate but he was rejected by the wineries.  The result:  the winery president stayed on.  By 2010, the process was so poisoned that the growers didn’t even propose a candidate.

Now it’s time for a new election.  The growers aren’t about to be hoodwinked again.  In addition, they’re angry about low grape prices (they say the average price in 2011 was 47 euro cents a kilo of grapes, below their cost of production).  They are also angry about the president’s decision to once again demand that both coops and farmers’ unions show the hectares each represents, rather than negotiate the percentages. In this, they are right because the decision to initiate the renewal process must be taken by the Council as a whole, not the president. This time, however, the coops and unions both feel that they will lose representation, so negotiations, if allowed to take place, are sure to founder.

The unions decided that their best show of force was to use their 55 votes to block approval of the Council’s 2012 operating and promotion budget (remember that 150 votes out of 200 are needed).  Last Friday, they partially relented and allowed part of each budget to be approved, but have refused to budge unless an agreement is made to increase 2012 grape prices.

This is impossible because any agreement to fix prices is illegal and would incur the wrath of the anti-monopoly authorities in the government.  The unions know it.

I suspect the real problem has more to do with negotiating representation and assuring that the next president of the Council is a nominee of the growers than the price of grapes and wine.

Until these issues are resolved, I’m afraid that Rioja will have a very small promotion budget.  That’s too bad because we risk wasting over thirty years of hard work and money invested to put our region on the map.

What’s really sad is that until 2002, the promotion budget was funded exclusively by the wineries.  When the growers were convinced to participate, it was seen as a great leap forward. In retrospect, however, it was a leap off a cliff.

 

(Photo of tomahawk:  cainmo.com)

 

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