Ag financing for vineyards and financing for wineries are Farm Plus Financial's specialty. Our experienced team has secured vineyard and winery financing with dozens of vineyards throughout California's Central Valley and across the United States. If you are seeking a vineyard loan to refinance your current loans for a better rate and term, looking to purchase an existing vineyard or just looking for capital to cover day-to-day operating costs, Farm Plus Financial is your trusted agricultural lender. Contact us today at 866-929-5585 (toll-free) or simply fill out our online contact form to have a vineyard loan officer contact you with our updated rates and information.
Farm Plus Financial is dedicated to providing you with the information and resources you need to make informed decisions. The information and resources below are an overview of Winery and Vineyard financing options. In this article we will cover the following:
- History of California Winemaking
- Appraising Your Vineyard
- Vineyard Refinancing
- Winery & Vineyard Loans for Purchase, Expansion & Operating Costs
- Resource Links for Winery and Vineyard Loans
- Apply for a Vineyard Loan
In early July 2014, a wine tasting bill passed a major hurdle in the California state senate. The bill, if passed into law, will reform current California alcohol laws, allowing underage vintner students to taste the wine they produce, sipping wine under instructor supervision, but not swallowing it. Current state laws, which are out of synch with similar laws in major wine-producing regions like New York, Colorado, and Florida, have hindered students studying winemaking, sometimes preventing them from graduating on time and hurting viticultural programs in California schools.
While the bill is hardly at the top of the California legislature’s to do list, it represents the growing importance of the wine industry in California and the United States. For decades, American wine, particularly wine made from California grapes, have outsold and outranked a variety of wines from Europe. With American winemaking in its ascendency, farm-lending companies like Farm Plus Financial have been quick to offer financial supper to vineyard, with particular importance given to California vineyards.
Winemaking has long been an important part of California’s cultural and economic life. The first reports of wine production in the state took date back to 1683, when Eusebio Francisco Kino, a Spanish missionary and cartographer, arrived in the Spanish colony of California. In August of that year he established a missionary in San Bruno and planted the state’s first vineyard. While the mission was abandoned before the grapes could be harvested, the planting represented a first step towards self-sufficiency for New World vineyards. For the next hundred years, California vineyards and the state’s winemaking industry were deeply connected to the Spanish mission system. First planted in 1769, the Mission grape (whose name arose from its prominent role in the missionary economy) quickly became the most popular grape in the state and remained so until the nineteenth century.
By the 1830s, the California wine industry began its transition from a subsidiary of the state’s historic mission system to a full-fledged component of the region’s economy. As Europeans migrated into the American West, they imported European grapes and vines into Mexico and California. European immigrants like Jean-Louis Vignes and Agoston Haraszthy cultivated prized European grape varieties, determined to expand the wine selection in far-flung California. The California Gold Rush and the massive influx of European and American settlers increased the demand for local wine and greatly expanded the scale of California wine production. Vineyards were planted across the state, including places like Napa County and Sonora County (still major centers of California wine production).
The California wine industry continued to expand, capitalizing on the sudden and devastating spread of phylloxera (an insect that feeds on the roots and leaves of grapevines) to Europe , an infestation that severely reduced the number of European wineries. While European producers struggled, American (particularly Californian) producers flourished. By the turn of the century, California had more than 800 wineries being supplied by more than 300 grape varieties across the state. However, the industry, poised to make its name on the international stage, was badly hurt by the 18th Amendment (ratified in 1919) banning the production of alcohol in the United States. While many wineries managed to stay in business by producing non-alcoholic grape juice and other managed to switch to producing sacramental wine (exempt from Prohibition restrictions), the number of wineries severely declined during the Prohibition period (by the time prohibition was repealed in 1933, California had fewer than 150 wineries still in business).
While the ending of Prohibition allowed the wine industry the chance to recover, it took decades for California wineries and vineyards to fully bounce back from the damage done to their industry. While California’s great soil and climate certainly helped, a major boost in the wine industry came as the result of a 1976 international wine competition held in Paris. The blind taste test ranked two Napa Valley wines (a white and a red) higher than the finest French wines, establishing California as a major competitor in the realm of wine production. Since then, California wine production has continuously expanded. Last year, California wine shipments within the U.S. totaled 215 million cases (a 3 percent increase from 2012 and a total retail value of $23.1 billion). In 2013, California had 4,100 bonded wineries (and increase of 119 percent from 2012), generated $1.55 billion in international exports, and the state’s 5,900 grape growers operating on 570,000 acres, produced 4.24 million tons of wine grapes.
Given the importance of vineyards and wineries to the California economy, it is understandable that farmers, financial institutions, and state agricultural organizations would be deeply concerned with the financial health and well-being of farmland, vineyards, and wineries. Unlike traditional farms, vineyards are inextricably linked to the health of the wine market. As such, appraising and valuing vineyards requires evaluating the strength of the state’s wineries.
A major part of evaluating a vineyard depends on understanding its characteristics. Given the variety of wine grapes in California, more than 110, the demand for wine made from specific grapes is the first step in pricing a vineyard. Valuing grapes, according to most experts, is typically calculated at 100 times the retail value of a bottle of wine. Wine that costs $10 a bottle, for example, typically translates into grapes that are worth $1,000 a ton. The value of the grapes grown on a vineyard plays a major factor in determining the value of said vineyard.
Climate, soil, and region are also critical factors in determining the value of vineyards. To determine the quality and desirability of a region’s climate, most appraisers and vintners use the Winkler scale (also known as the heat summation method). Wine vines generally do not grow in temperatures below 50 degrees. The Winkler system seeks to evaluate how many days the temperature exceeds that minimum. The scale is made up of five categories ranging from Region I (with 2,500 or fewer temperature days) to Region V (with more than 4,000 temperature days). Certain wine grapes only grow in certain regions (Rieslings and Chardonnays, for example, thrive in Region I while table grapes intended for direct consumption tend to do well in Region V). While California contains all five regions throughout its agricultural areas, the value of a vineyard is evaluated in part by the value of grapes that could be grown there.
In addition to grapes and climate, soil and water sources are major characteristics that determine vineyards values. Soil characteristics are important in determining the value and desirability of grapes and the quality of wine that can be produced from them. Valuing the soil of a vineyard often depends on judging the historical qualities of wine produced there, mineral content, drainage, and fertility. Evaluating the mixtures of various soil types can be difficult, but is also a major part of determining what kinds of wine grape a vineyard can grow and their potential value. The Napa Valley, for example, has a mixture of alluvial soil (a combination of clay, silt, gravel, and sand), loam soil (a crumbly mixture of clay, sand, and silt), and shattered deposits of limestone and sandstone. Water resources also play a major role in appraising vineyards. Access to water (proximity to streams, reservoirs, etc.), local restrictions on water usage, sprinkler systems, and adequate drainage to avoid erosion all help boost the value of vineyards (particularly in states like California where increasingly hot summers are leading to droughts and draining aquifers).
In addition to considering vineyard characteristics and resources, appraisers compare vineyards to one another, looking at sales, costs, and income. They look, for example, at the value of neighboring vineyards (particularly looking at real estate costs there) and examine the value of grapes per ton of vineyards that grow similar crops. They also factor in the cost of the land, the cost of needed improvements (such as irrigation systems), and the cost of operating the vineyard. Finally, they compare these numbers to estimate potential income a grower could make in possession of the vineyard in question.
California vineyards and wineries have painstakingly developed a reputation for excellence. California’s diverse climate and superb soil conditions have made it, in addition to a center of American agriculture, the unquestioned leader in the American wine industry. As a result, vineyard prices, particularly in places like Napa Valley, are often significantly higher than the national average. In 2010, for example, prime vineyard real estate in Napa Valley sold for $250,000 per acre. In Sonoma County, prices reached $125,000 per acre, in San Luis Obispo and Santa Barbara Counties, prices reached $57,000.
Because of these higher prices, Farm Plus Financial is able to provide vineyard loans and financing for smaller acreage properties throughout California's Central Valley and wine country. Our California farm loans & vineyard loans range from $400,000 to $25 million and are intended for startup, established, mid-scale and large-scale farm and vineyard operations with the required collateral (allowing federal farm programs to help those without agricultural land to be used as collateral). The high price of California vineyards allows Farm Plus to finance plots as small as 5 acres. As such, Farm Plus Financial is a great resource for California farmers looking to refinance vineyards, wineries and agricultural land dedicated to growing wine grapes. As one of the nations premier farm lending companies, Farm Plus has been serving California farmers for years, offering low-interest loans with rates starting under 4%. In addition to offering competitive rates, Farm Plus Financial’s commitment to satisfying customer needs has built it a loyal customer base. Watch a customer testimonial from a California customer here.
In addition to refinancing vineyard loans, California vintners and vineyard owners have many options from Farm Plus Financial for starting or expanding their vineyard business. Farm Plus Financial offers a variety of loans that can be used to purchase new agricultural property, expand your vineyard and farm operation or just to cover day to day operating costs. These loan programs offer the most competitive rates and top of the line service from Farm Plus Financial. Contact a Farm Plus Financial loan representative for more information and our current rates by phone at 866-929-5585.
With winemaking looking to take an ever-increasing role in the California economy, local businesses and government agencies will likely pay closer attention to the needs of state vintners and grape growers. Farm Plus Financial is similarly committed to meeting the needs of this vibrant, growing sector of the economy, we are committed to offering information and money to individuals looking to start or expand their farm business. Contact us today toll-free at 866.929.5585 or contact us online.
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