The Economics of Wine Production in Virginia

Authors: Eric R. Capps, Viticulture Extension Assistant, Alson H. Smith Agricultural Research and Extension Center, Virginia Tech. Currently Graduate Research Assistant, Virginia Tech; Tony K. Wolf, Viticulture Extension Specialist, Alson H. Smith Agricultural Research and Extension Center, Virginia Tech, Winchester, VA; B. Jerry Walker, Financing Specialist, Agricultural Development Services, Virginia Department of Agriculture and Consumer Services, Richmond, VA.

Publication Number 463-008, posted June, 1998

Table 7. Projected grape production cost and return estimates associated with vines spaced 7 feet apart in rows 7 feet wide and trained to a bi-lateral cordon, spur-pruned, with canopies vertically shoot positioned (VSP 7' x 7').

							Anticipated results if costs remain constant
	YEAR	YEAR	YEAR	YEAR	YEAR	YEAR	YEAR	YEAR	YEAR	YEAR
	1	2	3	4	5	6	7	8	9	10
Revenue
Production Tons Per/Acre	0.00	0.00	3.50	5.60	5.60	5.60	5.60	5.60	5.60	5.60
Price Per/Ton	0	0	1,300	1,300	1,300	1,300	1,300	1,300	1,300	1,300
Total Revenue			4,550	7,280	7,280	7,280	7,280	7,280	7,280	7,280
Operating ExpensesZ
Site Preparation	199
Vineyard Layout	139
Plants/planting	3,211
Trellis Material	2,241
Trellis Construction	694
Dormant Pruning		103	473	355	355	355	355	355	355	355
Weed Control	61	55	61	38	38	38	38	38	38	38
Replanting		61
Fertilization	46		50	46	46	46	46	46	46	46
Canopy Management	232	386	347	347	347	347	347	347	347	347
Disease/insect Control	112	265	398	398	398	398	398	398	398	398
Harvest - Lugs			819	491	0	0	0	0	0	0
Picking Labor (25lb.lug @ $1.25)			350	560	560	560	560	560	560	560
Labor - Distribute/Remove Lugs			30	48	48	48	48	48	48	48
Machinery	663	189	268	291	291	291	291	291	291	291
Operating Interest @ 9.00%	387	55	133	123	101	101	101	101	101	101
Safety Equipment	386	162	162	162	162	162	162	162	162	162
Hand Tools	618
Total Operating Expensesy	8,990	1,276	3,091	2,860	2,346	2,346	2,346	2,346	2,346	2,346
Accrued interest on borrowed capital @ 9.0%	0	809	997	955	643	257
Total Expenses	8,990	2,085	4,087	3,815	2,989	2,603	2,346	2,346	2,346	2,346
Annual Cash Flow	(8,990)	(2,085)	463	3,465	4,291	4,677	4,934	4,934	4,934	4,934
Cumulative Cash Flow	(8,990)	(11,075)	(10,612)	(7,147)	(2,856)	1,821	6,755	11,689	16,623	21,557
10 Year Internal Rate of Return	21.42%

^Z Expenses do not include purchase cost of land or equipment, nor are costs associated with irrigation, deer fencing, or other capital improvements included.

^Y Due to rounding, total operating expenses may vary slightly from the sum of operating expenses.

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