By Josh Smart
When an overnight frost hit Wagner Vineyards Estate Winery in the Finger Lakes region of New York in May, the vineyard lost approximately half of its grapevines. Unfortunately, Wagner Vineyards is not alone. Farms across the nation have suffered significant losses when natural disasters hit.
Traditionally, grape growers have had little recourse when faced with the loss of their grapevines due to gaps in the federal crop insurance policy, which typically covers only the loss of grapes and grape products but excludes the vines. The lack of vine-specific coverage leads to devastating financial losses when natural hazards destroy grapevines.
Fortunately, the U.S. Department of Agriculture recently announced a stopgap to this issue — a pilot program called the USDA Grapevine Insurance Program, which was designed to cover the loss of productive grapevines caused by natural hazards such as freezes or wildfires. The intention is to mimic what the USDA did for fruit tree coverage for pears and apples.
Closing the gap in vineyard insurance
Many vintners have suffered vine damage when fires swept through their vineyards, causing long-term impacts to the products they create. The taste of grapes from 10- to 20-year-old vines or older is substantially different from those of newly grafted vines. The robust flavor palettes of older grapevines allow producers to sell their grape products at higher values. A single instance of unfavorable weather conditions can eliminate this earnings opportunity for many years.
Now, under the new USDA Grapevine Insurance Program, growers may be eligible to buy federally subsidized crop insurance for their grapevines. This mortality policy covers fire, freeze, hail, flood and failure of the irrigation water supply caused by an unavoidable, naturally occurring event. It does not cover partial damage losses.
This adds more asset protection to the bottom line as a grower or vineyard owner. As a result, the business income — the amount made from the grapes themselves or the annual production of wine — now has some long-term protection.
Grapevine insurance eligibility criteria
The USDA Grapevine Insurance Program is a pilot program and currently available in restricted counties in the following states:
- California
- Idaho
- Michigan
- New York
- Ohio
- Oregon
- Pennsylvania
- Texas
- Washington
In California, for example, vineyards in San Louis Obispo County can buy this coverage, but those in Santa Barbara County cannot. The program will likely expand to other regions in future crop years, but availability is limited for the inaugural 2024 crop year.
Grapevines are insurable under the program if they are grafted, adapted to the area and grown for the purpose of producing grapes to be sold as wine, juice or fruit for human consumption. Furthermore, vineyards must have a minimum number of vines per acre to be deemed insurable.
While the deadline for vineyard owners within one of the eligible counties was November 1, owners may want to consider applying for grapevine coverage in the future. After you apply, your insurance provider will inspect your grapevines and inform you if any of your vines fail to meet the insurability criteria.
Ultimately, if structured right, USDA Grapevine Insurance coverage is a powerful asset protection option that can significantly benefit vineyard owners by allowing operations to continue if an unexpected event damages the grapevines. Working with a broker will help ensure the coverage is correctly structured and help determine if the vineyard is insurable under the program before the owner decides to apply.
About the author
Josh Smart is the North American Practice Leader and Chief Sales Officer for Agribusiness, Food and Cannabis with insurance brokerage HUB International and is responsible for leading the strategic initiatives around growing and supporting the Agribusiness segment.
