At this year’s Washington Association of Wine Grape Growers’s annual meeting, we have a special session called “Getting Paid: Tools for Grape Growers.” The session is funded by a grant from the USDA Risk Management Agency through the Washington Wine Industry Foundation. It will be presented three times with the final session being in Yakima on Thursday, March 10.
While the session actually highlights a number of tools growers may use to get paid on time, or at all, one of the most important has been the processor lien.
Washington State law (RCW 60.13) allows any agricultural producer to extend an automatic first-priority statutory “processor lien” and be among the first in line for payment for one year in the case of bankruptcy. The lien must be filed within 20 days of the processor missing payment or within 30 days after the product has been delivered, if there is no contract. While the processor lien gives great protection to agricultural producers in the event of a bankruptcy, it comes with a caveat. The challenge for the producer is to remember to file the lien and complete the necessary paperwork on time. For grape growers, the filing and paperwork usually comes at a very busy time—harvest—and filing on time has been a problem for some.
Grape harvest for many growers could take as long as six weeks, or even longer, if vineyards are stretched over large parts of the state, since each variety ripens differently and parts of the state ripen at varying times. Common billing practices in the grape industry specify that payments are due from the winery within 30 days of grape delivery. But if a payment is missed and not paid on time, the account would be delinquent while the grower was still in the midst of harvesting the rest of his or her vineyard.
During harvest, little else occurs because of the focus on getting ripe grapes off the vines and to the waiting winemakers who are very particular about when “their” grapes should be picked. Immediately after harvest, the weather often turns cold, and growers are rushed to get the final irrigation water on their vines, winterize irrigation systems and equipment, plus apply fertilizers and establish cover crops between rows to protect the soil for next year.
Harvest is just about the worst time of the year to reasonably expect a grower to track and file paperwork to perfect a lien when their focus is on getting the crop picked and delivered before grapes are too ripe or before the birds start picking them off. Also, many of these small, family-owned operations do their own bookkeeping, so there is no one to hand this responsibility to that would ensure liens are filed on time.
Grape growers who use the processor lien agree that the current 20-day period is too short for the typical small family farmer. Alternatives have been suggested but with no clear preference as yet. One option would be to extend the filing period beyond 20 days. However, any modification to the state statute will require legislation.
It should be noted that the statute uses a broad definition of “agricultural product,” which includes much more than just grapes: horticultural, viticultural, aquacultural, or berry products, hay and straw, milk and milk products, vegetable seed, or turf and forage seed. The definition applies only when agricultural products are delivered to a processor or conditioner in an unprocessed form and does not apply to cooperatives.
Extending the time a producer is allowed to file a processor lien would provide a more effective tool to use in dealing with processors that are not paying for agricultural products on time. The Washington Association of Wine Grape Growers has been networking this issue within the grape and wine industry as well as the larger community of agricultural commodity groups to get input and see if consensus on change can be found.