Abstract
The production of grapes in the Midwest U.S.A. is not free of challenges. Growers are presented with a long list of strategic and operational decisions when planning a vineyard. This article uses survey data and secondary data to prepare sample budgets and examine costs, expected returns, and economic feasibility of grape vineyards under different production systems. Departing from two sample budgets that resemble the reality of American-hybrid and vinifera grape growers in the Midwest, we examine the economic feasibility of 24 plausible production scenarios by simulating changes in operational and technical parameters of production. Our results show that economies of scale, level of automation, and adequate balance between capital and labor use are determining factors for economic feasibility. Small-scale hybrid vineyards (10 acres or less) are seldom feasible as a stand-alone project. Vinifera vineyards tend to reach superior performance due to scale, decisions regarding automation, and efficiency of field operations. Following the feasibility analyses and results, our discussion helps explain why grape vineyards are frequently integrated with wineries and other business units across the Midwest.
Highlights
IntroductionThe production of grapes in the United States (U.S.A.) is primarily concentrated in California and Washington
The results simulated in this article suggest that the establishment of American-hybrid cultivar vineyards requires USD 9500 per acre approximately
Additional analyses demonstrate that hybrid cultivar vineyards are seldom feasible as stand-alone projects in the Midwest U.S.A., especially for small-scale operations (10 acres or less) and under risk of production losses due to extreme weather events
Summary
The production of grapes in the United States (U.S.A.) is primarily concentrated in California and Washington. There are approximately 930,000 acres of bearing grape vineyards in these states, leading to an annual production of 6.1 million metric tons of economically viable grapes and an estimated production value of USD 5.7 billion [1]. Together, these states make the national and international statistics. According to FAO, the estimated value of grapes produced in the U.S.A. (California and Washington combined) accounts for percent of the world’s production value.
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