Economic Feasibility of Table Grape Production in Kentucky

Stephen A. King, Nathan Howell, Martin Stone and Todd Willian

No 143084, 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida from Southern Agricultural Economics Association

Abstract: The local foods movement and alternatives to traditional agriculture are gaining considerable interest, not only in Kentucky, but throughout the country. This research provides information that may aid farmers in the decision to invest or not in the alternative agricultural enterprise of viticulture. The primary objective of the research was to determine the expected profitability for a 1-acre table grape vineyard in Kentucky. Data on production relationships, costs, and returns came from the Western Kentucky University demonstration vineyard, published enterprise budgets, and market observations. Annual pro-forma budgets were estimated for a 20-year planning horizon. It was assumed that the vineyard would not yield until the third year and that full production would begin in the fourth year and continues through the 20th year. It was further assumed that the farmer would market production via local farmers’ markets, school districts, and wholesale markets. Two pre-tax net present values were estimated using a 5% discount rate. The first assumed no compensation to family labor, which indicated a break-even point in the 4th year, a benefit-cost ratio of 2.39, and net present value of $91,059. The second analysis assumed compensation for family labor and indicated a break-even point in the 6th year, a benefit-cost ratio of 1.54, and a net present value of $54,724. Excluding taxation, the results indicate that table grape production in Kentucky is potentially economically viable.

Keywords: Agricultural Finance; Farm Management; Production Economics (search for similar items in EconPapers)
Pages: 17
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea13:143084

DOI: 10.22004/ag.econ.143084

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