1. Revenue, Cost and Profitability of Grape Production in the U. S
Revenue, Cost and Profitability of Grape Production in the U.S. Pacific Northwest: Econometric Analysis of Farm-Level Agricultural Census Data
John Antle
Susan Capalbo
Hongliang Zhang
Dept. of Applied Economics
Oregon State University
Presented at AAWE 10th Annual Conference June Bordeaux, France

2. Study Area Oregon Washington 28 American Viticultural Areas (AVA)
10% of U.S. wine grape acreage in 2014
Wine grape and wine production value over $8 Billion in 2013 with an average growth rate 8% from
Large differences in soils, climate, grape varieties, number and scale of producers in Oregon and Washington

3. Research Goals
Evaluate the factors affecting the revenue, cost and profitability of grape production using disaggregate data
Econometric analysis of farm-level agricultural census data on grape revenues, costs, and net returns, by size & type of operation, location
Evaluate the usefulness and limitations of the census data

4. Summary Statistics of Wine Grape Farms for Three AVAs, 2002, 2007, 2012

5. Summary Statistics of Grape Farms by Three AVAs (cont.)

6. Results
SUR model with Year and AVA Fixed Effects to estimate revenue, cost, and net returns equations with data for 2002, 2007, and 2012
Heterogeneous effects between large and small farms
Heterogeneity across AVAs

7. Coefficient Estimates for Grape Farms in Oregon and Washington
Notes: Selected results are presented. *** p<0.01, ** p<0.05, * p<0.1

8. Coefficient Estimates for Grape Farms in Oregon and Washington (cont’)
Notes: Selected results are presented. *** p<0.01, ** p<0.05, * p<0.1

9. Coefficient Estimates by AVA for Grape Farms in Oregon and Washington
Notes: Selected results are presented. *** p<0.01, ** p<0.05, * p<0.1

10. Coefficient Estimates by AVA for Grape Farms in Oregon and Washington (cont’)
Notes: Selected results are presented. *** p<0.01, ** p<0.05, * p<0.1

11. Discussion Census data useful but has important limitations
The most detailed data available on revenues and costs
Confirm expected differences between small & large producers (low or negative returns)
Other factors (e.g., ownership, climate) do not show consistent effects across AVAs
Locations identified by zip code areas, cannot identify precise site characteristics (e.g., soils)
Lack grape variety, yields, quality, input quantities
Implications for industry structure & dynamics
Inefficient scale, high cost, small vs large producers

12. Conclusions
Need more detailed, site-specific data to control for site & management characteristics
Precise location
Grape variety, yield
Detailed management and input data
Quantity and timing of inputs, organic, etc.
Plan: use AgBizLogic software with cooperating producers