This question is first and foremost
a question of how much does it cost
to grow grapes in Oregonís
Willamette Valley. The answer is: it
depends. Secondly, itís a question
of how you chose to account for all
your costs. Do you amortize your
land costs? Do you factor in the
time value of money? Do you account
for appreciation of your land?
Letís make some
own forty acres of prime
grow high quality grapes.
run all your own equipment,
worth approximately $40,000 new.
plant 20 acres of Pinot noir,
all good clones.
plan a moderate density of
vines, say 1245 per acre
vineyard development cost was
per acre (you did a lot
of the work yourself, and you
were frugal with materials).
Thus, not including land costs,
$440,000 invested in your vineyard.
vineyard is now in full
Annual cost of production
is also highly variable, but for the
purposes of this exercise, weíll
assume an annual production cost of
per acre. This is the entire
annual, variable expense, including
harvest and delivery of your fruit.
Actual costs might run as low as
$3,500 to a high of $6,000 per acre.
What price will you get
for your fruit? For the purposes of
this exercise, weíll assume youíre
growing only Pinot noir (or at least
a high demand varietal that will
recover $1800 or more a ton). The
National Ag Statistics report listed
an average of $2100 per ton for
Pinot noir in 2005.
Most wineries prefer a
low yield of 2 to 2.5 tons per acre,
and they pay a fixed amount per ton.
At $2,100 per ton, and 2.5 tons per
acre, your gross income per acre
will be $5250. Many wineries, with
well established relationships with
their growers, prefer to pay a fixed
amount per acre, rather than on a
per ton arrangement.
Financial analysis on a
per acre basis:
Annual variable expense:
equipment: $286 ($40,000 on a 7
year schedule, divided over 20
Total cost per acre:
Income per acre: $5250
Net income, before tax,
per acre: $464
* Not calculated in the
scenario is the time value of the
invested money; an important
Suffice it to say, this
isnít a lucrative endeavor,
certainly given the magnitude of the
investment required and the risks
assumed. Nevertheless, if we assume
substantial appreciation of the land
value, the return improves
For more help or
information, call us at
1-800-653-2216 or email us at