USDA looks to be calculating total crush value in a sub-optimal manner.

March 9, 2017

Read a great working paper from AAWE: http://www.wine-economics.org/aawe/wp-content/uploads/2017/03/AAWE_WP213.pdf.  They make the point that the USDA is underestimating the total value of wine crushed in California.  It's pretty technical, so here is the simple explanation.

 

Some growers crush their own wine.  There are no prices reported for these.  If 10 tons are crushed statewide and 7 are sold for $100 each, while 3 are crushed by the grower, the USDA calculates the total value at the rate of $100/t = $1,000.  They do this calculation for the whole state, regardless of location or variety grown.

 

However, high-priced regions, like Napa and Sonoma Counties, have a higher rate of growers crushing their own fruit.  The paper re-calculates these crush value totals for each combination of variety and pricing district.  The resulting calculations indicate the total value of crush is 4% to 16% higher than the USDA reports.

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