Presentation on Precision Viticulture

UC Davis runs an excellent extension programme from its department of Viticulture and Oenology. The following seminar by soil scientist Dr Jean-Jacques Lambert provides an excellent precis on Precision Viticulture research which has already been commercialised, and technologies that are still in the research phase. The way in which map layers in GIS are used to assist vineyard design are particularly interesting.

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The seminar can be viewed here

The accompanying Powerpoint presentation can be viewed here

 

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Remote Sensing in Individual Vineyards

The cited article from Fortune Magazine neatly summarises how drones with multispectral digital photography equipment can improve vineyard efficiency and enhance profits.

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Objective data on vine vigour, in a mapped form, is tremendously useful. Very vigourous vines tend to yield more, but have a tendency towards poorer flavour concentration. Vines under modest stress will tend to yield less harvest but with enhanced flavour characteristics. Overdoing the stress, due to water deprivation, nutritional deficiency or disease, will be counterproductive. Ground-level validation after scanning can yield tremendous information as to vineyard management efficacy. Also, remote sensing and grape testing can be coordinated to schedule harvesting of different parts of individual parcels at different times.

Australian research shows that grape yield per vine can vary by a factor of 5 from different zones within even quite small vineyard parcels. Vineyard managers often will earmark lower vigour zones of the parcel for later harvest than the rest of the parcel, to allow sufficient time for full maturation and development of flavour. Chateau-style wineries in Australia and the USA report increased winery margins in the order of USD$20,000 per hectare as a result of differential harvesting. GPS devices on mechanical pickers make management of this process quite simple, but hand-picking crews equipped with cheap GPS devices and a proper plan can accomplish the same result.

One day last fall, a drone lazily circled above Hahn Estate Winery, home to 1,100 acres of grapes in California’s Santa Lucia Highlands.

The drone, a five-pound model airplane, wasn’t there merely to take photos. Fitted with visual and multispectral sensors, it was collecting various kinds of data—information to help Hahn monitor the health of its vineyard and resist the effects of California’s fourth consecutive year of drought.

CTD.02.01.16.PrecisionHawk.02Photo: Courtesy of Precision Hawk

Winegrowers worry about two things: the quality of their grapes and how many they can produce. By running software algorithms made for monitoring crops, a drone can help the winery determine both. Welcome to the connected agriculture business. Yes, even the Internet of things has gone farm to table.

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In November, Hahn volunteered a patch of its vineyard to test the concept. It teamed up with PrecisionHawk, a Raleigh, N.C., company specializing in drones and aerial data analysis, and Verizon VZ -0.04% , which developed an agricultural technology platform to synthesize and analyze crop data. Aerial data from PrecisionHawk’s drone let the winery infer canopy cover, an indicator of crop vigor, while ground sensors installed by Verizon monitored temperature and soil moisture.

PrecisionHawk analyzes crops in several ways. Multispectral imagery detects anomalies unseen by the unaided eye; a field uniformity algorithm helps quantify the relative density and health of vegetation.

“All of that data goes into the platform, which runs it against our analytics engine, which looks for patterns and anomalies to make recommendations,” says Mark Bartolomeo, who leads Verizon’s IoT Connected Solutions division. “The idea is, if you’re the farmer, it shows exactly what you should do.”

 

New Logistics Options for Georgian Wine and Nuts

This month, a train from Lianyunyang port in East China’s Jiangsu province arrived in Tbilisi. Performed as a test shipment, the exercise was designed to test how a shipment of non-perishable goods (in this case electronics) could travel through China’s domestic rail network to its border with Kazakhstan at Korgas, through the Kazakhstan rail network to Aktau, cross the Caspian on a ferry to Azerbaijan’s capital Baku, and then travel to Tbilisi.

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The duration of travel for this journey was 15 days, which compares with the current 10-15 days that container freight on trucks taking the same route. It is 25 days shorter than the same route by sea.

From Civil.ge

According to the state-owned Georgian Railway one more container train is scheduled to deliver cargo via Georgia through this Trans-Caspian International Transport Route. The Georgian Railway also said, without specifying figures, that it expects “several thousand” of containers to be shipped via this route in 2016. Georgia hopes that completion of the Baku-Tbilisi-Kars railway in 2016, that will link Azerbaijan with Turkey via Georgia, will increase efficiency of the route.

It is worth noting that this route runs in parallel with China’s planned high-speed rail network routed between Turkey and China via Iran.

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As can be seen, the planned high-speed link bypasses Georgia and the Caspian altogether, with no need for moving carriages onto ferries for a slow trip over the Caspian Sea. It also avoids passing through either Azerbaijani or Armenian territory, which may or may not be linked to regional security issues. Using standard high-speed rail technology, cruising at 200-250 km/hour, a trip from Julfa in northern Iran to China’s Eastern or Southern coastal cities( a journey of 8000 km), could be accomplished in 2-3 days. Likewise, freight from Julfa to New Delhi (around 4000 km) could be accomplished in 1-2 days.

A high-speed spur line from Julfa, through Azerbaijan to Tbilisi and onwards to Poti and Anaklia would make sense, but it is not yet known if that is planned.

The high cost of freight and ponderous speed of transit has been an impediment to Georgian exports of agricultural produce to East Asia and South Asia. Wine and hazelnuts are products that Georgia has certain competitive advantages in producing, and hopefully faster, cheaper freight with better temperature control will improve competitiveness of Georgian exports in those markets

 

 

World Trade Organization strikes ‘historic’ farming subsidy deal.

For many decades, a critical impediment to developing countries’ agricultural development has been unfair competition from the EU and US, dumping products in local and regional markets supported by taxpayer-funded subsidies. Thankfully, this may change soon;

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“Countries in the World Trade Organization (WTO) have agreed to abolish subsidies on farming exports.

Developed countries agreed to stop the subsidies immediately and developing nations must follow by the end of 2018.

The WTO, which represents 162 countries, called it “the most significant outcome on agriculture” since the body’s foundation in 1995.

But longstanding talks on other trade barriers were left unresolved at the end of the summit in Kenya.

Removing agriculture export subsidies is intended to help farmers in poorer countries to compete more fairly.

“The decision you have taken today on export competition is truly extraordinary,” WTO chief Roberto Azevedo said at the closing session in Kenyan capital, Nairobi.

The summit of ministers, which finished on Saturday after five days of talks, was the first to be held in Africa. “.

Of relevance to Georgia are imports of milk powder used to make liquid milk, yoghurt and cheese in Georgia.

 

Grape Subsidy and the Way Forward

Factcheck‘s article lays out key data on the nature of Georgia’s grape subsidies, which have been wound back substantially this year. It is worth reading in its entirety, but the basic data is interesting reading. Various parties suggest that subsidy should be rerouted towards improving vineyard productivity, and hence reducing the cost of production per tonne of grape. This is worthy of serious consideration.

ISET Policy Institute also performed a brief review of this subject, and suggested that subsidies should be directed towards wine export market diversification, rather than grape subsidy. In this way, it is suggested that vignerons would hence be buffered from wild swings in price due to difficulties in Georgia’s traditional markets.

Aus Vineyard

It has already become a “tradition” in Georgia that the grape harvesting process is always paired with some sort of public agiotage with the 2015 grape harvest being no exception. The low grape prices have seriously angered farmers from the Kakheti region who were expecting continued subsidisation and not the prices for 2015 which are, for them, unacceptable. As a result, some farmers have joined in protests against the low prices. Given the importance of this issue, we attempted to analyse the situation in Georgian viticulture and winery over the past several years.

Vineyards occupy a total of 37,419 hectares in Georgia (according to the agricultural census of 2004) of which 22,227 hectares are located in the Kakheti region. A total of 5,000 hectares of new vineyards wereplanted in Georgia in 2013 and 2014 (4,700 hectares in Kakheti). According to the explanation of industry specialists, the planting of new vineyards (in 2013 and 2014) was due to the successful grape harvests of the past several years and the high incomes from the sold grapes.

According to the data of the National Statistics Office of Georgia, the largest amount of grapes, after 2007 (227,000 tonnes), was harvested in 2014 (224,000 tonnes). The share of the Kakheti region in the overall amount of harvested grapes varied from 51% to 71% from 2007 to 2015. The amount of grapes processed for industrial purposes over the years changed as follows:

Table 1: Amount of Grapes Processed for Industrial Purposes from 2009 to 2014

Year 2009 2010 2011 2012 2013 2014
Amount of Processed Grapes (Tonnes) 23,000 23,000 43,500 54,000 92,773 124,606

Source: Ministry of Agriculture of Georgia

The amount of revenues from processing grapes equalled GEL 116 million in 2013 whilst the revenues in the Kakheti region alone were GEL 102 million. The overall amount of revenues from processing grapes equalled GEL 177 million including GEL 114 million to Kakheti. As of today, the amount of processed grapes equals 143,167 tonnes of grapes and the revenues amounted to GEL 102,341,924.

It should be pointed out that, over the years, grape prices, including subsidies, changed as follows:

Table 2: Prices of White and Red Grapes (in GEL) from 2010 to 2014

Year 2010 2011 2012 2013 2014
White GEL 0.60 GEL 0.70 GEL 1 GEL 1 GEL 1
Red GEL 0.80 GEL 1 GEL 1 GEL 1.3 GEL 1.95
Racha (Red) GEL 3 GEL 3 GEL 4 GEL 8 GEL 8

Source: Ministry of Agriculture of Georgia

As for the role of the government in determining grape prices, the state has been subsidising the grape harvest since 2008. The government decided to subsidise the grape harvest in order to neutralise the negative effects caused by the Russian embargo and encourage the fields of viticulture and winery. The amount of subsidies for grapes by year was as follows:

Table 3: Amount of Money in GEL for the Subsidisation of Grapes from 2008 to 2014

Year 2008 2009 2010 2011 2012 2013 2014 2015
Rkatsiteli 0.15 0.15 0.15 0.15 0.25 0.40 0.35 0.35
Saperavi 0.25 0.25 0.25 0.25 0.35 0.35 0.15 0.15
Mujuretuli 1.0 1.0 1.0 1.0
Overall 6.1 Million 5.5 Million 4.7 Million 8.7 Million 14.8 Million 32 Million 32 Million 30 Million

Source: Ministry of Agriculture of Georgia

It should be noted that wine is among the top ten Georgian export goods and its share of overall export constituted 6.3% in 2014. The amount of exported wine by year was as follows:

Table 4: Wine Export from 2010 to 2015

Year 2010 2011 2012 2013 2014 2015 I-II Quarters
Wine Exports (0.75 Liter Bottles) 15 Million 19 Million 23 Million 46 Million 59 Million 13 Million

Source: National Wine Agency

Georgian wine was exported to 61 countries from 2010 to 2014. The top five export destination countries for wine from 2010 to 2012 barely changed (Ukraine, Kazakhstan, Belarus, Poland and Latvia). Since 2013-2014, after the abolition of the Russian embargo, it has firmly occupied the first place in export destination countries:  a total of 22,997,170 bottles in 2013 (49% of overall exports) and 37,615,052 in 2014 (63% of overall exports). The rest of the top five remains the same:  Ukraine, Kazakhstan, Belarus and Poland. According to the data of the first two quarters of 2015, exports have increased to markets such as:  China – 23%, Japan – 21%, Latvia – 20%, Estonia – 16%, Germany – 5%, Canada – 159%, USA – 61%, Kazakhstan – 6%, UK – 33%, Hong Kong – 230% and so on. However, the share of wine exports to these countries is so small that it fails to change the larger image. Hence, due to the decrease in exports to Russia and Ukraine in the first six months of 2015, exports of Georgian wine dropped by 49%.

Georgian Wine Pricing and the Chinese Market.

With French Vin de Table and Spanish Vino de Mesa typically arriving at Chinese ports for less than 1 Euro per bottle, Georgia has little room to move in the bottom end of the market. Grape prices, even in the midst of the current crisis, are significantly higher than most New World producers or indeed many EU producers, which is passed on to the wholesaler through the winery. Last year, Georgian wine exports worldwide on average were the third most expensive in the world per hectalitre, after France and Italy.

However, tight quality control, a capable national branding campaign and skilled company marketing can yield good results in China despite the worldwide glut of wine. From Wine Industry Insight’s Lewis Perdue

So, it can be done. Great quality wine with a good story behind it and effective promotion can make serious inroads in the Chinese market, at a respectable price.

Hazelnut Industry Review from Galt and Taggart

A concise summary of Georgia’s hazelnut sector, from local investment bank Galt and Taggart.

Worth reading in its entirety, the government estimate for establishment cost of hazelnut orchard is in our opinion underestimated. Clearing and elimination of woody weeds can cost almost half the budget provided. Also, tissue-cultured seedlings are significantly more expensive than conventionally produced seedlings budgeted for, but have the advantage of great consistency, longevity and freedom from infections.

Hazelnut production in Georgia increased at a compound annual growth rate (CAGR) of 6% over 2006 – 2014, from 24,000 to 37,000 tons. If Georgia is able to integrate efficient farming practices in order to increase quality and productivity and expand the planted area, the country has an opportunity to land a place among the top 3 hazelnut suppliers in the world, after Turkey and Italy. The American hazelnut industry, even though technology-intensive, is facing difficulties at growing and harvesting the hazelnut, as the hazelnut type most demanded on the world commodity market is being affected by a region-specific disease. USA has only 1.4% of total hazelnut planting area (~12,200 ha), but its yield is much higher than in Georgia, as American hazelnut growers integrate innovative farming and best practices.

Turkey is a price setter on the hazelnut market. In 2014 when the hazelnut harvest suffered from a severe frost in Turkey and output almost halved, hazelnut prices on the world market doubled from US$ 5.5 to US$ 11.5. This was rather beneficial for other nut exporting countries, including Georgia. In August 2015, prices were back to $4.5-5.0, and dipped further in September as the harvest outperformed forecasts. In 2015, according to the Istanbul Exporters Union, Turkey has already earned US$ 2.67bn in 7M15 and exported 208,000 tons of hazelnut. Georgian hazelnut exports in 1H15 increased 163% y/y in dollar terms and generated US$73.4mn in export revenues, up from US$ 28mn last year. Roughly ¾ of Georgian hazelnut exports went to the EU, where prices were 43% higher on average than in the CIS countries (2014 World Bank estimates). Italy, Germany, and Spain jointly imported 46% of hazelnuts exported from Georgia. The largest importer from the CIS countries was Kazakhstan, accounting for 8% of Georgian hazelnut exports.

From “Hazelnut – Georgia’s Precious Commodity“. Georgia Today