Grapes
By: Craig Tordsen - Iowa State University Extension Value-Added Ag Content Specialist
Updated June 2015
Introduction
Wine may represent the most expensive and creative use of grapes, but it is not the only use. Eaten fresh as table grapes, dried as raisins or processed into jams, jellies and juices, grapes are thought to have been first cultivated more than 7,000 years ago near present-day Iran.
Spanish friars are credited with bringing European varieties to the United States to serve at the missions they settled across California and the southwest beginning in the 1700s. California’s climate provided ideal grape-growing conditions, and consequently it became the leading grape-growing state.
During 2014, more than 7.8 million tons of grapes were grown commercially in the United States. California accounted for nearly 6.8 million tons, or 87 percent, of these grapes. Other top grape-growing states include Washington and New York (NASS 2015).
Marketing
The USDA, National Agricultural Statistics Service (NASS) collects grape production data from 13 states-Arkansas, California, Georgia, Michigan, Missouri, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texan, Virginia and Washington. Most other states produce grapes but NASS does not collect their production data. The annual Noncitrus Fruits and Nuts report contains the NASS Grape production data.
NASS reports the US has 1,049,600 grape bearing acres producing an average of 7.4 tons per acre, valued at $5.76 billion at the farm gate. Major grape uses: Canned-$10 million, Juice-$113.3 million, Wine-$3.5 billion, Dried-$648 million.
Most of these grapes produced on a large scale are marketed to supermarkets or exported. However, other marketing opportunities are available to small-scale producers of varieties that do not travel well, such as Reliance or Marquis, at local farmers' markets, small artisanal food stores, white tablecloth restaurants and direct sales though u-pick and the Internet.
The US imports over 500,000 tons of grapes a year. Major fresh grape producing countries are:
| Country | Production |
|---|---|
| China | 8,085,000 |
| India | 2,500,000 |
| turkey | 2,200,000 |
| EU-27 | 1,935,700 |
| Brazil | 1,300,000 |
| Chile | 1,055,000 |
Production
The USDA, National Agricultural Statistics Service (NASS) collects grape production data from 13 states-Arkansas, California, Georgia, Michigan, Missouri, New York, North Carolina, Ohio, Oregon, Pennsylvania, Texan, Virginia and Washington. Most other states produce grapes but NASS does not collect their production data. The annual Noncitrus Fruits and Nuts report contains the NASS Grape production data.
NASS reports the US has 1,049,600 grape bearing acres producing an average of 7.4 tons per acre, valued at $5.76 billion at the farm gate. Major grape uses: Canned-$10 million, Juice-$113.3 million, Wine-$3.5 billion, Dried-$648 million.
While grapes will grow in most climate zones in the United States, the types of grapes grown for wine, eating or juices are have a much more limited growing area. Before planting any commercial vineyard, consult an expert in viticulture in your area. Even in areas where the desired grape will grow, it is important to place the vineyard on the correct type of soil, with proper wind and water drainage, fertility, sub-soil make-up, facing the sun.
Selection of the types of grapes to produce will depend on what the market wants to buy. Market research is the most important step in starting a new vineyard. Wine makers buy only the types of grapes needed to make their wine. Develop a strong relationship with any buyers before planting. A mistake now will take 10 years to fix later.
Grapes are the fruit of a vine plant and grown in a field called a vineyard. The vines planted in rows evenly spaced six to 10 feet apart with 6 to 10 feet between each row. A wire trellis supports the vines above the ground for ease of caring for the vines and harvesting of the grapes. A vineyard can easily cost $15,000 an acre to establish before the first harvested in the third or fourth year after planting plus the cost of the land.
Vineyards produce a very high value crop. Timely applications of fertilizers, herbicdes, inescticides, fungicides and pruning activities are a must to protect the crop. Other risks come from birds and deer attacking the crop at the pike of value that must be controlled.
Management
A vineyard manager will inspect orchards or fields to determine crop maturity or condition or to detect disease or insect infestation. Direct crop production operations, such as planning, tilling, planting, fertilizing, cultivating, spraying, or harvesting. Monitor activities such as irrigation, chemical application, harvesting, milking, breeding, or grading to ensure adherence to safety regulations or standards. Plan crop activities based on factors such as crop maturity or weather conditions. Maintain financial, operational, production, or employment records for farms or ranches. See more occupations related to this task. Obtain financing necessary for purchases of machinery, land, supplies, or livestock. Inspect farm or ranch equipment to ensure proper functioning. Negotiate with buyers for the sale, storage, or shipment of grapes. Analyze soil to determine types or quantities of fertilizer required for maximum crop production. Evaluate marketing or sales alternatives for products. Prepare budgets or financial reports for farm or ranch operations. See more occupations related to this task.
A vineyard is a very labor-intensive farming business. Much of the work is by hand and in all kinds of weather, mostly hot and humid. Vineyards are springing up in every state of the nation. Talk to other vineyards about the availablility of vineyard workers.
While grapes will grow in most climate zones in the United States, the types of grapes grown for wine, eating or juices are have a much more limited growing area. Before planting any commercial vineyard, consult an expert in viticulture in your area. Even in areas where the desired grape will grow, it is important to place the vineyard on the correct type of soil, with proper wind and water drainage, fertility, sub-soil make-up, facing the sun.
Financial
A well run vineyard can expect to see net profits before taxes of 8 to 17 percent. Data from 83 to 113 vineyards in the last five years provided by the Risk Management Association show a positive trend.
| INCOME DATA | 4/1/09 - 3/31/10 | 4/1/10 - 3/31/11 | 4/1/11 - 3/31/12 | 4/1/12 - 3/31/13 | 4/1/13 - 3/31/14 |
|---|---|---|---|---|---|
| Number of Statements | 113 | 101 | 115 | 87 | 83 |
| Net Sales | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Gross Profit | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| Operating Expenses | 83.5% | 82.4% | 83.7% | 77.5% | 75.75 |
| Operating Profit | 16.5% | 17.6% | 16.3% | 22.5% | 24.3% |
| All Other Expenses (net) | 8.0% | 8.1% | 8.5% | 4.65 | 6.8% |
| Profit Before Taxes | 8.6% | 9.5% | 7.8% | 18.0% | 17.5% |
Source: Risk Management Association eStatement Studies of Vineyards 111332
Resources/Other Links
- Fruit and Tree Nuts Outlook, Economic Research Service (ERS), USDA.
- Fruits and Tree Nuts, ERS, USDA.
- American Society for Enology & Viticulture - A scientific organization for the wine and grape industry.
- American Vineyard Foundation, Napa, California.
- California Association of Winegrape Growers
- California Table Grape Commission
- Federal Register
- Fresh Deciduous Fruit, Economic Research Service (ERS), USDA, 20147.
- Fruits and Tree Nuts, ERS, USDA.
- Global Agricultural Trade System (GATS), FAS, USDA.
- Noncitrus Fruits and Nuts, National Agricultural Statistics Service (NASS), USDA.
- Table Grapes: World Markets and Trade
- U.S. per capita food availability, ERS, USDA.
- Department of Viticulture, University of California-Davis - Information on grape production and enology
- Department of Viticulture, Washington State University
- Viticulture, Iowa State University Cooperative Extension - Production guides, budgets and supplies.
- Noncitrus Fruits & Nuts, 2014 Preliminary Summary, Jan. 2015
- Cost and Return Studies
- California - Current Cost and Return Studies, University of California Extension Service - Collection of cost/return analysis studies for a variety of production scenarios.
- Colorado
- Idaho
- Washington
- Establishment and Annual Production Costs for Washington Concord Grapes
- Expense Method of Depreciation - Vineyards, orchards and groves can qualify for the expense method of depreciation. The IRS agrees that I.R.C. §179 is available when the vineyard is placed in service even in situations where the taxpayer established the vineyard years earlier by planting the seeds and capitalizing expenses during the preproduction period. The IRS position in the past was that orchards, groves and vineyards were not able to capitalize direct and indirect costs until the vineyard became productive. Tax returns for the open tax years (generally three years back) can be amended to either make or revoke an I.R.C. §179 election. Taxpayers who put a vineyard, orchard or grove in service in the past three years but didn’t elect I.R.C. §179 can now do so.
- Grape, Integrated Pest Management guidelines, University of California, Davis.
- Grapes Community of Practice, eXtension.
- Production Guide for Organic Grapes, Cornell University, Cooperative Extension, 2014
- National Grape Registry
- Northwest Berry and Grape Information Network, Oregon State University - Cultural information, research, and market and trade information for grapes.
- Northwest Grapes Cost of Production Calculator
- PlantFacts, Ohio State University - This website provides a full-text search engine of all extension and academic department information from all land-grant universities in the United States. Additionally, there are significant image and video databases, a FAQ database and a glossary.
- Recent Trends in the California Wine Grape Industry; Richard Volpe, Richard Green, Dale Heien and Richard Howitt; Giannini Foundation of Agricultural Economics; University of California, ARE Update, 2008 - Over the last 30 years, the wine grape industry has expanded rapidly in acreage and production. As shown in this paper, growth has been driven by changes in consumer demand and has not been uniform across grape varieties or in the major growing regions.
- Sample Costs to Establish a Vineyard and Produce Wine grapes, University of California Cooperative Extension, 2010.
- Sample Costs to Establish a Vineyard and Produce Wine Grapes (Chardonnay variety under drip irrigation), University of California Cooperative Extension, 2013.
- Viticulture & Enology Research Center, California State University, Fresno.
Businesses/Case Studies
- Grapes, The New American Farmer, Sustainable Agriculture Research and Education (SARE), USDA - Describes an operation located in Washington. Page 175.
- Lodi Winegrape Commission, Lodi, California - Funded in 1991, the Commission serves to raise awareness of the Lodi - Woodbridge winegrape production region among the wine trade, the press and consumers and to provide growers with information, materials, education and strategies directed at profit improvement.
- National Grape Cooperative Association, Ag Marketing Resource Center, 2003 - Jack Kaplan, an entrepreneur, purchased a small grape processing facility in 1933 from some investment bankers in Brocton, New York, and called his new company National Grape Corporation.
- Welch Foods, Inc., Ag Marketing Resource Center, 2003 - Welch Foods, Inc. is a wholly-owned subsidiary of the National Grape Cooperative Association, Inc. (National Grape).
