Date of Completion

9-11-2012

Embargo Period

9-10-2012

Open Access

Open Access

Abstract

The Connecticut Wine and Vineyard industry has grown at a steady 3.9% per year over the past decade (ATTTB, 2009). Economic models estimate that the wineries sub-sector contributes $38 million dollars to the state economy and direct employment of 106 residents (Lopez et al., 2010). Programs to support and foster further growth of the industry and CT farm vineyard culture include the Department of Agriculture’s CT Wine Trail and the annual CT Wine festival (DOAG, 2010). Farmland preservation groups also support vineyard development since grape growing tends to secure tracts of farmland for long periods of time.

Investment analysis for a representative Connecticut farm vineyard over a 20-year time horizon suggests that wine grape production is profitable under a reasonable set of assumptions, including estimated CT grape prices. When prices from the New York Finger Lakes region are included in the analysis the investment in wine grapes becomes unprofitable. The Monte Carlo simulation method is implemented to explicitly incorporate risk stemming from variability in expected yields and prices into the representative farm vineyard model. Consistent with the initial investment analysis, simulation results indicate significant variation in expected returns. Information collected during interviews with state growers provided multiple strategies for mitigating such variability. In particular, production of wine as a value-added product is a common approach to obtaining more consistent farm profits. Additional analysis is needed to evaluate the overall profitability of the vineyard coupled with a winery establishment.

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