Employing the information in this bulletin should result in production of muscadines of good quality and quantity. The question is, “will this production result in a profit?” Profit can be achieved only when sufficient fruit is sold at a price that covers all costs.
Below is a summary of the costs associated with establishing, growing, and marketing fresh market muscadines.
A substantial amount of capital is required to establish a muscadine vineyard. Potential growers must have capital available from personal sources or be able to borrow funds. Shortage of funds could result in lesser than optimum cultural practices or “shortcuts.” Shortcuts would likely result in a less productive vineyard.
| Table 1 - Establishment Costs per Acre | |
|---|---|
| Year 1 | $2567 |
| Year 2 | 485 |
| Year 3 | 500 |
| Annual costs to recapture over 15 years at 6% | $425 |
Table 2. Costs and returns from a mature planting appear in Table 2. The column called “economic costs” shows all costs including depreciation, interest, and recapture of establishment costs. These costs are high but with the yields and prices used, an annual return of $350 per acre could be expected. Returns above cash costs could be more than $1000 dollars if there is no debt associated with establishment. If, however, much or all of establishment capital is borrowed, returns could be negative for a few years.
| Table 2 - Annual Costs and Returns Per Acre | |||
|---|---|---|---|
| Economic Costs | Cash Costs - with establishment amortized over 5 years |
Cash Costs | |
| Expected Yield | 6000 lbs | 6000 lbs | 6000 lbs |
| Expected Prices | $.49 per lb | $.49 per lb | $.49 per lb |
| Preharvest Variable Costs | $649 | $649 | $649 |
| Harvest and Marketing Costs | 1255 | 1255 | 1255 |
| Fixed Costs | 686 | 12662 | 0 |
| Total Costs | $2590 | $3170 | $1904 |
| Expected Revenue | $2940 | $2940 | $2940 |
| Expected Returns | $350 | $-230 | $1036 |
Potential growers should satisfy themselves that they can:
- secure sufficient capital until the vineyard is mature.
- produce a good quality and quantity of muscadines.
- deliver to an available market.
1Updated from “Estimated Costs of Producing Muscadines”, 1992. Ag Econ 92-025, The University of Georgia.
2This is not a true fixed cost, but is a fixed cash outflow for the five years of establishment debt amortization.