Cost Containment, Labor and Mechanization: How To Keep Your Business Profitable Craig Ledbetter, Partner, Vino Farms – moderator Jeremy Murdock, Staff Research Associate, Cost Studies, University of California Davis, Ag Issues Center Rodney Schatz, Owner, Peltier Winery Justin Leigon, Viticulturist, Pina Vineyard Management

Jeremy Murdock Staff Research Associate, Cost Studies, University of California Davis, Ag Issues Center

Annual Cost and Returns for Lodi Winegrapes Review Assumptions Compare 2016 and 2019 Cost & Return Studies Closer look at labor & mechanization costs

Assumptions Used for the 2016 & 2019 Lodi Winegrape Cost Studies Hypothetical 200 acre farm Studies are based on 60 acres of vineyard establishment - Cabernet Sauvignon, $600/ton Quadrilateral Trellis System 792 vines per acre - 5 ft. X 11 ft. spacing

Comparing the 2016 and 2019 Studies Vineyard Establishment $18,979 $20,375 Total Operating Costs $2,457 $2,765 Cash Overhead Costs $1,163 $1,145 Non-Cash Overhead Costs $2,483 $3,526 Total Costs Per Acre $6,103 $7,435 11% increase in total operating costs Land cost dropped from $25,000 to $21,000 Long term interest rate increase from 3.75 to 6.75

2016 Labor Rates 2019 Labor Rates Hand Labor - $15.29/hour $11.00 without payroll overhead Equipment Operator Labor -$19.46/hour $14.00 without payroll overhead Hand Labor - $16.80/hour $12.00 without payroll overhead Equipment Operator Labor - $21.70/hour $15.50 without payroll overhead

Labor Costs Per Acre 2016 2019 Total Labor (includes harvesting) $1,346 $1,478 Hand Pruning Labor $925 $1,000 Labor as a Percentage of Total Operating Costs 55% 53% Mechanical Harvest Labor (includes Supervisor) $160 $175 Mechanical Leafing Labor N/A $22 Mechanical Trimming Labor $15 $17 Mechanical leafing reduced shoot removal hand labor by 3 hours

coststudies.ucdavis.edu

Rodney Schatz Owner, Peltier Winery

Justin Leigon Viticulturist, Pina Vineyard Management

Cost Containment, Labor and Mechanization: How To Keep Your Business Profitable Normalized Difference Vegetation Index (NDVI) Mechanical leaf remover Automated irrigation systems Labor data analytics (Ag Software) Irrigation monitoring technologies (Tule)

Crop Production Labor *Source: CA EDD Labor Market Information Division (March 15, 2019)

Grape Worker Wage & Cost of Living *San Joaquin Valley Region (Alpine, Amador, Calaveras, Fresno, Inyo, Kern, Kings, Madera, Mariposa, Merced, Mono, San Joaquin, Stanislaus, Tulare, Toulumne)

Irrigation Monitoring Regulated Deficit Irrigation (RDI) & Partial Rootzone Drying (PRD) “Mild water deficits were shown to have a positive impact on wine quality.” (Bravdo et al., (1985). Effect of irrigation and crop level on growth, yield and wine quality of Cabernet Sauvignon). *Screen shots from Tule Season Summary

Leaf Removal “The IBMP content of grapes at harvest can be controlled by summer vine work. Operations such as debudding, summer lateral removal, leaf thinning and cluster thinning lead to a large decrease in IBMP content in Merlot and Cabernet Sauvignon grapes during ripening. It is generally important to perform lateral removal and leaf thinning early, i.e. between fruit set and berry touch. After that, the risks are greater of harvesting grapes with marked green pepper aromas.” (Roujou, Dominique & Roujou de Boubée, Dominique. (2003). Research on 2-methoxy-3-isobutylpyrazine in grapes and wines). *2-methoxy-3-isobutylpyrazine (IBMP), a Methoxypyrazine. Responsible for bell pepper and vegetable flavors