“This extension of the Wine Sector Support Program will provide vitally important support to our wineries as they continue to innovate and adapt to challenges so the sector can stay strong and competitive for years to come,” said federal Minister of Agriculture and Agri-Food Lawrence MacAulay in a news release.

The extension will cost the federal government up to $177 million, the news release said.

The Wine Sector Support Program, instated in 2022, provides non-repayable grant payments to licensed Canadian wineries based on their bulk wine production, with a maximum of $25 million per fiscal year, the government’s website says.

Wine Growers Canada on its website said the program must continue, “otherwise billions in economic opportunity are left on the table and wineries across Canada will shrink or… go out of business.”

Imports represent 70 per cent of wine sales in Canada, Wine Growers Canada said. Foreign wineries receive government subsidies or lower taxes, the organization added.

Wine Growers Canada said that each dollar of federal funding will generate more than six dollars in transactions in the Canadian economy.

MacAulay announced up to $6.7 million in funding for two other wine and grape initiatives under the Sustainable Canadian Agricultural Partnership. Both projects, led by the Canadian Grapevine Certification Network, will “advance science and research and increase the competitiveness of the sector.”

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Vineyards nationwide have enough wine in domestic storage to fill 859 Olympic swimming pools, Rabobank said this week in its third-quarter wine report.

“That’s over two billion litres of wine, or over 2.8 billion bottles,” said RaboResearch analyst Pia Piggott, adding that the inventory was depressing prices, particularly for commercial red wines.

Ties with biggest trading partner China deteriorated in 2020 after Australia called for an inquiry into the origins of COVID, triggering reprisals by Beijing, such as anti-dumping duties on Australian wine and barley.

The curbs battered the wine industry, with exports to China shrinking to just A$8.1 million (C$7 million) in the year to June, from a peak of A$1.2 billion for the year to January 2020, when the pandemic began to take hold.

“No other market can quickly compensate for the China market,” said Lee McLean, chief executive of industry body Australian Grape and Wine, thanks to Chinese drinkers’ obsession with red wine.

Diversification into markets such as Britain, Europe, the U.S. and elsewhere in Asia would take time to yield results, McLean added.

China, traditionally an avid purchaser of Australian commodities, including iron ore, resumed buying coal and timber this year after tension between the two has eased since the centre-left Labor party won power in Australia last year.

The recent removal of tariffs on Australian barley has fed hopes for an early easing of the five-year tariffs China imposed on Australian wine in 2021.

But even if the tariffs are lifted this year and Chinese wine consumption recovers, Australia’s wine industry will take at least two years to work through the surplus, Piggott said, as the curbs had coincided with an exceptional growing season.

“This coincided with COVID, logistics bottlenecks and inflation, which were major hurdles in the way of plans to grow and diversify exports,” she added.

“Thus, two-plus years into the tariff, prices of Australian commercial red grapes have significantly declined, and oversupply issues remain.”

Australian wine exports declined a tenth in value to A$1.87 billion and one per cent in volume to 621 million litres in the year ended June, Wine Australia’s Export Report said in July.

This week, Australia’s Treasury Wine Estate, the world’s biggest standalone winemaker, reported a drop in its profits, hurt by lower sales.

Wine sales will not return to the same level for the company even if the high tariffs are dropped, its chief executive said in May.

The crisis has made quality red wines more affordable for Australian domestic consumers, however.

“All we can say is next time you go to buy a bottle of wine, make sure it’s Australian,” McLean said.

— Praveen Menon is a Reuters correspondent in Sydney.

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The federal ag lender on Tuesday said it will offer an unsecured credit line of up to $500,000 with loan processing fees waived, “to help producers, agribusinesses and agri-food operations with their immediate cash flow needs.”

FCC said it’s making the offer to both new and existing customers who are “experiencing financial difficulties, including cash flow challenges, due to higher-than-average input costs and elevated interest rates.”

While the Bank of Canada has maintained its policy rate since January, FCC warned in a March outlook that “additional intervention” could still be required to get inflation to two per cent.

Elevated inflation and interest rates are expected to slow consumer spending and business investments, FCC said in March, adding that if the U.S. Federal Reserve continues raising its policy rate, that could lead to a lower Canadian dollar if the Bank of Canada extends its pause.

A global economic slowdown has also resulted in lower growth in Canadian ag and food export volume, FCC said at the time.

Cost pressures in the “current economic environment” are difficult to pass on, FCC said Tuesday, and that’s led to “tough financial circumstances for some operations.”

“While the current experiences of individual operations within the different agriculture and food sectors are varied, we hope those who identify with these challenges will use this credit line as an opportunity to work through their current position and build back stronger than before,” FCC chief operating officer Sophie Perreault said in a release.

FCC reiterated it can offer flexibility to customers who are going through “challenging business cycles and unpredictable circumstances” on a case-by-case basis, such as through flexible payment options, payment deferrals or credit lines.

For example, the lender said last Thursday it would consider additional short-term credit options, deferral of principal payments and/or other loan payment schedule amendments for customers in B.C.’s wine sector up against financial hardship following “prolonged cold temperatures” last winter that caused significant damage to wine grapevines.

FCC said May 16 it would also consider similar supports for maple syrup producers in Eastern Canada following an “unfavourable change in temperature this spring” that shortened the maple syrup harvest in most parts of the region.

“This limited harvest can cause financial challenges for farm operations – not to mention personal hardship and stress,” Manon Duguay, FCC’s vice-president of operations for Quebec and Atlantic Canada, said in a separate release at the time.

“We stand by our customers over the long term, helping them pursue opportunities and overcome challenges, and this year’s unfavourable temperature has certainly been challenging for many maple syrup business owners.” — Glacier FarmMedia Network

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The International Organisation for Vine and Wine (OIV) said on Thursday that global wine exports in 2022 stood at 37.6 billion euros (C$55.6 billion) as export prices rose 15 per cent on average compared to 2021.

Global wine consumption fell one per cent, to 232 million hectolitres (mhl).

“The war in Ukraine and the associated energy crisis, together with the global supply chain disruptions, lead to a spike in costs in production and distribution,” the OIV said in a statement posted on its website.

Wine exports in 2022 were severely impacted by high inflation and global supply chain problems that led to a significant slowdown of sea freight, it added.

In terms of output, the OIV slightly lowered its estimate for 2022 wine production to 258 mhl from its initial estimate of 259.9 mhl released last October, still about one per cent below the previous year’s output.

The OIV pegged the world’s vineyard area in 2022 at 7.28 million hectares, down 0.4 per cent from 2021, led by Spain — at 955,000 hectares, or 13.1 per cent of the world’s total, and down 0.8 per cent from 2021 — followed by France, China, Italy and Turkey.

Wine production in 2022, however, was led by Italy — at 49.8 mhl, or 19.3 per cent of the world’s total, and down one per cent from 2021 — followed by France, Spain, the U.S. and Australia.

The U.S. led the world in consumption at 15 per cent, followed by France, Italy, Germany and the U.K. The U.S. also led the world in wine imports by volume, followed by Germany, the U.K., France and the Netherlands.

Canada ranked 27th on the OIV’s list of wine-producing nations in 2022, at 692,000 hl, up from 656,000 in 2021. It ranked 12th in wine exports by volume last year, mainly in lower-value bulk wine, at 2.129 mhl, and sixth in imports, at 4.178 mhl.

The OIV doesn’t yet offer data for Canada’s vineyard surface area or wine consumption for 2022. Canada’s 2021 figure for vineyard area was marked at 13,191 hectares, or No. 50 among countries; its wine consumption in 2021 was pegged at 4.22 mhl, for No. 12.

— Reporting for Reuters by Sybille de La Hamaide in Paris. Includes files from Glacier FarmMedia Network staff.

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The changes, which took effect May 11, come at the request of the Nova Scotia Federation of Agriculture (NSFA) — which has said that owners of small farm-level processing facilities shouldn’t be treated the same as multi-million-dollar processing plants, in terms of the required fees and regulatory approvals based on larger volumes of waste to manage.

The smaller operations will now be regulated through standard wastewater approval requirements, the province said.

The province said its Office of Regulatory Affairs and Service Effectiveness estimates the changes will save each on-farm business $308 per year.

“These changes reduce red tape while ensuring that environmental standards are met,” Environment Minister Timothy Halman said in a release. “With input from industry, we are better aligning regulatory approvals to environmental and business needs.”

These activities include construction, operation or reclamation at sites “associated with small farm operations” involving:

• poultry, red meat, inland fish, dairy or dairy products, vegetable, or fruit processing plants;
• distilleries or wineries;
• breweries that produce 150,000 litres or more of alcoholic beverages per year;
• fish meal plants; and
• food additive or supplement manufacturing plants.

Regulatory changes such as these are occurring across the country to better align with smaller farm processing facilities, the ministry said via email.

“Other Canadian jurisdictions are, or are in the process of, moving to a model of regulation for these industries that better align regulatory approvals to the environmental risks,” ministry spokesperson Tracy Baron said.

— Liam O’Connor reports for Glacier FarmMedia from Saskatoon.

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China’s customs authority published new food safety rules in April stipulating all food manufacturing, processing and storage facilities abroad need to be registered by year-end for their goods to access the Chinese market.

But detailed procedures explaining how to get the required registration codes were only issued in October, while a website for companies allowed to self-register went online last month.

“We’re heading for major disruptions after Jan. 1,” said a Beijing-based diplomat from a European country who is assisting food producers with the new measures.

China’s food imports have surged in recent years amid growing demand from a huge middle class. They were worth US$89 billion in 2019, according to a report by the United States Department of Agriculture, making China the world’s sixth largest food importer.

China has tried to implement new rules covering food imports for years, triggering opposition from exporters. The General Administration of Customs of China (GACC), overseeing the latest iteration of the rules, has provided little explanation for why all foods, even those considered low-risk such as wine, flour and olive oil, are covered by the requirements.

Experts say it is an effort to better oversee the large volumes of food arriving at Chinese ports, and place responsibility for food safety with manufacturers rather than the government.

GACC said in a statement sent to Reuters that it had sought public comment on the rules prior to April.

It has “fully considered and actively accepted reasonable suggestions” and strictly followed WTO agreements on implementing food safety measures, it said, adding that it had also responded to company questions.

The European Union has sent four letters to Customs this year requesting more clarity and more time for implementation, said Damien Plan, agriculture counsellor at the European Union Delegation in Beijing.

Last week, GACC agreed that implementation should only apply to goods produced on or after Jan. 1, effectively granting a delay for products already shipped, said the European diplomat, though it has not yet published an official notification.

Still, several diplomats and exporters said they saw the rules as a trade barrier for overseas products.

“We have never had anything this draconian out of China,” said Andy Anderson, executive director of the Western United States Agricultural Trade Association (WUSATA), a trade group that promotes U.S. food exports. He described the rules as a “non-tariff trade barrier.”

Food, especially chilled and frozen food, has already faced severe delays clearing Customs in China in the last year due to coronavirus testing and disinfection measures.

Foods including unroasted coffee beans, cooking oil, milled grains and nuts are among 14 new categories deemed high risk that were required to be registered by the end of October by food authorities of the exporting countries.

Facilities making low-risk foods can register themselves on a website that launched in November but has not always worked.

“The Chinese system is working now but the English one is on a trial version,” said Li Xiang, business development manager at Chemical Inspection and Regulation Services Ltd. (CIRS) Europe, which is helping companies with the registration process.

The rules only apply to facilities making finished products to be exported to China, but it provides little flexibility to change sourcing or labels.

Some U.S. spirits companies have registered but are still unclear on labelling requirements, said Robert Maron, vice-president for international trade at the Distilled Spirits Council of the United States.

“There is not a lot of time to understand what the requirements are and I think that is the main concern from our membership,” he said.

No Irish whiskey makers assisted by CIRS Ireland have been able to register so far, said Li.

It is not clear what will happen if goods arrive without the required registration codes stuck onto packaging.

“For the moment, the information we got from (Chinese) authorities is that there won’t be a grace period,” he added.

— Reporting for Reuters by Dominique Patton in Beijing and Siddharth Cavale in Bangalore; additional reporting by Julie Ingwersen in Chicago and Francesca Landini in Milan.

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The potential consolidation comes as France, the European Union’s largest agricultural producer, is trying to embrace environmentally conscious farming practices while vying with cheaper grain suppliers such as Russia.

A tie-up could also let InVivo, a grouping of 192 farmer-owned co-operatives, and century-old Soufflet better compete with rivals such as U.S. group Cargill and Germany’s BayWa.

“The combination of InVivo Group and Soufflet Group would lead to the creation of a French champion in agriculture and agribusiness with an international footprint,” they said in a statement.

A deal would bring together their international grain trading activities while also associating complementary businesses with limited overlap, including Soufflet’s flour milling and malt production and InVivo’s wine distribution and garden retail, they said.

The transaction price was not disclosed.

The deal, under which the Soufflet brand would be preserved, could close by the end of 2021, they said.

‘Positive for France’

The talks were welcomed by French Economy Minister Bruno Le Maire, who said in a statement sent to Reuters that “the creation of this group would be positive for France and French agriculture.”

That contrasted with Le Maire’s initial opposition to a takeover approach for French retailer Carrefour SA by Canadian convenience-store operator Alimentation Couche-Tard, with the minister citing food sovereignty concerns.

InVivo said it expected to finance the acquisition through its own funds, bank loans and potentially by selling stakes in some activities to partners.

InVivo has in recent years sold its animal nutrition division Neovia to U.S. agribusiness group Archer Daniels Midland, while expanding its garden retail business and entering wine merchandising.

It restructured its grain trading unit after losses, and developed a wheat and barley trading joint venture, Grains Overseas, with two other co-operative groups.

Soufflet has been the subject of takeover rumours in the past, partly because of the lack of a family successor to take over from Michel Soufflet, board chairman, and his son Jean-Michel, who is chief executive.

InVivo would maintain Soufflet as a separate entity within the group and no asset sales were planned, InVivo said.

Current Soufflet management would stay for a transition period expected to last a few years, it added.

— Reporting for Reuters by Sybille de La Hamaide and Gus Trompiz in Paris; additional reporting by Gwenaelle Barzic.

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Jason Hanson expects his crews may only harvest five tons of grapes, including his Chardonnay and Gamay varieties, down from the 25 to 30 tons his fields yielded last year. The birds can have the rest, he said, as the fruit has likely absorbed too much smoke to be salvaged and would produce wine that tastes like a “wet ashtray.”

“With the dense smoke that we’ve had at the ground level for so long now, almost everything has to be affected or damaged,” Hanson said. “I have a yearly fight with the birds. This year I’ll just let them win.”

The historic wildfires across the western U.S., home to the bulk of the country’s vineyards and major producers of crops from apples to zucchini, have ravaged farmers and ranchers already hard hit by the Trump administration’s trade wars and demand disruptions from the coronavirus pandemic.

Atmospheric smoke has obscured grape-ripening sunlight while ash has coated green beans, cauliflower and other produce in nearby fields just days before scheduled harvesting. Poor air quality is slowing harvesting as farms limit fieldwork hours and some run low on particle-filtering masks due to the coronavirus pandemic.

For wineries, the wildfires have only deepened recent wounds. A drop in restaurant traffic and smaller crowds visiting vineyards for tastings had already been sapping key sources of revenue.

Many tasting rooms remain shuttered due to fire and smoke risks, while grapes awaiting harvest in storied wine regions such as Willamette Valley or California’s Napa and Sonoma Valleys may be damaged or ruined entirely.

Oregon, Washington state and California together produce about 90 per cent of all U.S. wine. The true impact on the US$70 billion industry will not be known for months as the typical wildfire season is only just beginning, and crop damage can vary greatly from field to field.

“You have a far greater potential for tainted wine the closer you are to the fire,” said Eric Jensen, owner of Booker and My Favorite Neighbor wineries in California’s Paso Robles region.

“We’re testing constantly and we believe in Paso we’ll be blessed because of the distance that the smoke traveled to get to us. But in Napa and Sonoma, the proximity is causing issues.”

Smoke has blanketed much of the U.S. West as fires have charred nearly five million acres, but some wine areas such as Napa, Sonoma, Santa Cruz and Monterey have been much closer to blazes than areas like Santa Barbara and Paso Robles.

Labs overwhelmed

Laboratories that test grapes for smoke contamination are overwhelmed this year, with some taking up to a month to return results, instead of less than a week normally. Vineyards use that data to gauge whether to harvest or not.

Winemakers and scientists are still learning how smoke can affect wine grapes and how the effects can be mitigated.

Australia has been at the forefront of research, as drought-fueled bushfires have riled its industry for years. But studies at American universities have ramped up over the past five years, helped by U.S. Department of Agriculture funding, as climate change is expected to increasingly impact U.S. wineries.

It is too soon to judge how the wildfires will impact 2020 vintages, but harvested grape supplies will likely be smaller, said Glenn Proctor, partner and broker at California-based Ciatti Global Wine + Grape Brokers.

Winemakers short of newly harvested grapes are expected to buy bulk wine from the 2019 season for blending with what is available from this year, he said. Fear of reputational risk will prevent winemakers from bottling and selling any wine with an unpleasant smoke taste, he said.

Ample supplies coming into this season should offset any shortfall from this year’s harvest so work-from-home Zoom Happy Hours will likely not notice any impact, he said.

“I still think we’re going to see some good wines coming out of 2020 because the growing conditions were great through the season,” Proctor said.

“The fires have put a question mark on everything but I’m still hopeful that most of those wines will play out.”

— Reporting for Reuters by Karl Plume in Chicago.

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California was hit by nearly 11,000 lightning strikes in 72 hours, sparking 367 fires, nearly two dozen of them major, as the state suffered a record heat wave, authorities said.

A group of fires covering over 46,000 acres near the city of Vacaville raced through hills and mountains destroying 50 homes and other structures.

The city of 100,000, about 50 km southwest of Sacramento, was under a partial evacuation order after flames from the LNU Lightning Complex fire burned some homes, leaving dead livestock among the properties or wandering around, a Reuters photographer said.

“This is my cousin’s home in Vacaville that just burned to the ground,” tweeted podcast show host Robert Hanna with a picture of a house in flames.

The blazes follow devastating fires across northern California in 2017 that killed 44, wiped out numerous wineries and destroyed nearly 9,000 homes and other structures.

“In the last 72 hours we’ve experienced an historic lightning siege,” said California Department of Forestry and Fire Protection spokeswoman Lynnette Round.

So-called red flag high winds are fanning fires caused by rain-less dry-lightning storms, sending flames racing through scrub and woodland parched by record-breaking heat and low humidity.

Another group of fires called the SCU Lightning Complex about 30 km east of Palo Alto more than doubled in size overnight and is now burning over 85,000 acres. The CZU August Lightning Complex has grown to over 10,000 acres and forced evacuations around 20 km south of the city.

Governor Gavin Newsom has declared an emergency over the fires and said he requested 375 fire engines from out of state with Arizona, Nevada and Texas sending assistance.

— Reporting for Reuters by Steven Lam; additional reporting by Sharon Bernstein and Andrew Hay.

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The total number of Canadians killed by the coronavirus edged up by 0.9 per cent to 7,773 from 7,703 on Saturday, the public health agency said, further evidence that the worst of the pandemic has passed. The total number of cases rose to 95,057 from 94,335.

Canada’s 10 provinces are all gradually reopening their economies and relaxing restrictions on social gatherings. Unemployment, though, has soared to record levels amid widespread shutdowns and market analysts say it could take years for the economy to recover.

“I am concerned about Canadians’ mental health … more Canadians have increased their consumption of alcohol and junk food or sweets since the beginning of the pandemic,” chief public health officer Theresa Tam said in a statement.

Tam, citing the results of a recent Statistics Canada survey about the effects of the pandemic, said Canadians needed to make mental health a priority.

“While social interactions and activities might look different right now, Canadians should be actively looking for safe ways to socialize, engage in physical activity and make … healthy food choices,” she said.

Almost 20 per cent of respondents in the StatsCan survey reported symptoms consistent with moderate or severe anxiety.

Last month, StatsCan said factory sales of beverages and tobacco rose by 6.7 per cent in March from February on higher demand for beer, wine and soft drinks. Food sales increased by 8.2 per cent.

— David Ljunggren is a Reuters political correspondent in Ottawa.

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