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Sweet deal Loan program would help NJ winemakers with capital expenses

John Cifelli, general manager of Unionville Vineyards, says a “fair amount” of New Jersey's wines are made from out-of-state grapes.
John Cifelli, general manager of Unionville Vineyards, says a “fair amount” of New Jersey's wines are made from out-of-state grapes.-(AARON HOUSTON)

In 2009, John and Debra Basile purchased the farmland that would become the location for their Monroeville Winery & Vineyard. The establishment in Upper Pittsgrove Township in the flat coastal plain 20 miles north of the Delaware Bay boasts 30 acres for growing grapes and making wine.

In 2009, John and Debra Basile purchased the farmland that would become the location for their Monroeville Winery & Vineyard. The establishment in Upper Pittsgrove Township in the flat coastal plain 20 miles north of the Delaware Bay boasts 30 acres for growing grapes and making wine.

The Basiles have been in on the success many winemakers across New Jersey have enjoyed in recent years — according to a December 2017 study by the Garden State Wine Growers Association, the industry had a $323 million economic impact on the state in the year prior.

Now they would like to expand their operation. The conversion of an equipment storage building into a climate-controlled wine cellar could set them back anywhere from $50,000 to $100,000. So as the Basiles and other New Jersey winemakers look to increase their size and output, they also must keep an anxious eye on costs.

Situations such as theirs prompted the Legislature to craft a proposal, Senate Bill 1057, that would create a loan program to help wineries and vineyards with their capital expenses.

The Senate approved a revised version of S1057 in a 40-0 vote Oct. 29 that incorporated the recommendations laid out by Gov. Phil Murphy when he conditionally vetoed the measure in July.

Under the proposal, the Economic Development Authority and Department of Agriculture would jointly administer the program.

Unionville is developing and expanding and we’re looking to increase our land holdings. I would say that if the opportunity arises for us to purchase another great piece of property that’s appropriate for grape growing, we would probably do so.

“As you’re growing, you need, or at least us, we need more storage space so that we can produce more wine,” John Basile said. “So financially, yes it would be a blessing to have that type of loan available.”

In vetoing the measure, Murphy cited concerns the terms of the loans were too constricting. He said they should be left up to the discretion of the EDA.

Under the new version, the EDA will indeed dictate the terms of the loans, which would go to eligible vineyards and wineries for expenses such as the acquisition or improvement of land, acquisition or modernization of infrastructure and purchase or modernization of machinery and equipment.

The EDA would partner with private lenders to loan out money and conduct annual financial audits of those lenders.

Tom Cosentino, executive director of the Garden State Wine Growers Association, said the program could provide a boost for farmers looking to get into the winemaking business, be it through the production of grapes or wine.

“It’s going to grow the industry. We have to provide the capital for these small-business owners to expand their operations,” Cosentino said.

Many existing vineyards and wineries would also have the means to purchase equipment and/or increase their operations.

“It’s pretty expensive to install vineyards and you have several years before you have any return on them,” said Jim Quarella, founder and president of Bellview Winery in Landisville. “It’s a large expense to plant an acre of grapes and you’ve got three years before you get any return on it.”

The legislation outlines a list of eligible capital expenses for both winemaking and vineyards: land acquisition, machinery and chemicals used during the harvest, wine storage and materials used for the treatment and processing of grapes and wine.

John Cifelli, general manager of Unionville Vineyards in East Amwell Township, said he was relatively supportive of the bill, save for what he felt was a lack of emphasis on the viticulture, or grape-growing, side of wine production.

“There’s a real lack of grapes available to the state in the existing wineries and we badly need more vineyards to supply grapes to the wineries, or we need wineries growing more grapes,” Cifelli said.

“There’s a fair amount of wine being made in the state from out-of-state grapes and that’s not a good or healthy thing for a growing wine industry,” he added.

Granted, Cifelli said, his own winery might look to the state for support from the loan program, pending a signature from Murphy. The winery’s grapes are harvested from six vineyards spanning three counties.

“Unionville is developing and expanding and we’re looking to increase our land holdings,” he said. “I would say that if the opportunity arises for us to purchase another great piece of property that’s appropriate for grape growing, we would probably do so.”

The program, Cosentino said, could benefit a farmer who is already successful growing other crops, but “may want to dedicate part of his land to growing grapes.”

And the state has already undertaken a variety of efforts to boost its winemaking industry.

In September, the agriculture department announced it would create a subcategory for wines under the Jersey Fresh program, which promotes New Jersey’s agricultural products.

Since wine technically is not considered a “fresh” product, state officials are creating a wine subcategory for a new logo that Cosentino said will likely be called “Jersey Vines.”

Daniel J. Munoz
Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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