2. 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

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

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

5. 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

6. 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

7. 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

8. 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

9. coststudies.ucdavis.edu

10. Rodney Schatz Owner, Peltier Winery

11. Justin Leigon Viticulturist, Pina Vineyard Management

12. 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)

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

14. 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)

15. 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

16. 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