Giving credit where credit is due

Wines & Vines, Nov, 1996 by Jean Deitz Sexton

"Deals vary," Lindley says, depending on the applicant's capital needs and where they are in the winery life cycle.

Murphy-Goode is a representative example. Pacific Coast has helped them finance the land, vineyard development, winery construction and a 30,000 square-foot barrel storage facility, the Beagley Building (named after Tim Murphy's beloved dog who "passed on to the eternal land of beloved pets") which was just completed September 1.

PERCENTAGE COMMODITY LOAN TOTALS

As of 9/30/96

                        Aggregate
Commodity                 Total

Wine grapes              46.9%
Vegetables               17.2%
Dairy                     5.3%
Forest products           6.2%
Beef                      4.6%
Fruit                     7.2%
Other                    12.6%

                        100.0%

Source: Pacific Coast Farm Credit Services, ACA-October 8, 1996

Pacific Coast is a lottery player's idea of heaven, an endless supply of money always readily available to the right applicant. This unique characteristic is due to Pacific Coast's money source. It floats bonds to finance what is now a $1 billion accumulated portfolio.

"Money supply is never an issue," says Rodda. "We are self-funded." The organization is able to float bonds since it functions as a government-sponsored entity, having its origins in the Federal Farm Loan Act of 1916. Today, Pacific Coast is part of a national network of agriculture lenders that includes 250 local Farm Credit lending associations. The Pacific Coast branch serves an enormous territory extending from Oregon to California's Monterey County.

To reinforce the long-term relationships it seeks, Pacific Coast functions, to some degree, as a cooperative, requiring new credit clients to invest $1,000 in the organization. "We see ourselves as a cooperative, working together with our ag clients," explains Rodda.

Of Pacific Coast's $1 billion portfolio, slightly less than 50 percent is comprised of winery and vineyard accounts; vegetables make up the next largest share, at 17%.

California and Oregon's thriving wine industries have fueled the percentage growth; not that many years ago prunes and apples were a bigger part of the lending picture.

Although many of the Pacific Coast wine regions are pretty tapped out in available good vineyard land, both the lender and client, Tim Murphy, see expansion in the future.

"The ultra-premium, smaller wineries will continue to thrive," says Lindley.

After 30 years in the wine business, Tim Murphy still believes "there will always be opportunities for new wineries." There's a lot of wineries out there but there's room for more.

"Smaller wineries - De Lorimier, Rochioli, Rafanelli - are all doing well. Opportunities in the ultra-premium market will continue," says Murphy.

For Murphy the next generation has already been spawned; his sons, Jim, Dennis and T.J., are active partners in the winery, working in vineyard management. The family retains ownership of the land and leases it back to the winery. Marketing is handled by winery partner Dave Ready, whom Murphy credits with having the skill to establish a strong brand presence early on for the winery.