An Economic Analysis of Wine Grape Production in the State of Connecticut Jeremy L
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CORE Metadata, citation and similar papers at core.ac.uk Provided by OpenCommons at University of Connecticut University of Connecticut OpenCommons@UConn Master's Theses University of Connecticut Graduate School 9-11-2012 An Economic Analysis of Wine Grape Production in the State of Connecticut Jeremy L. Jelliffe [email protected] Recommended Citation Jelliffe, Jeremy L., "An Economic Analysis of Wine Grape Production in the State of Connecticut" (2012). Master's Theses. 350. https://opencommons.uconn.edu/gs_theses/350 This work is brought to you for free and open access by the University of Connecticut Graduate School at OpenCommons@UConn. It has been accepted for inclusion in Master's Theses by an authorized administrator of OpenCommons@UConn. For more information, please contact [email protected]. An Economic Analysis of Wine Grape Production in the State of Connecticut Jeremy Leeming Jelliffe B.A. & B.S., University of Connecticut, 2009 A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Science at the University of Connecticut 2012 APPROVAL PAGE Master of Science Thesis An Economic Analysis of Wine Grape Production in the State of Connecticut Presented by Jeremy Leeming Jelliffe, B.A., B.S. Major Advisor Boris E. Bravo-Ureta Associate Advisor ________________________________________ Dennis Heffley Associate Advisor ________________________________________ Joseph Bonelli University of Connecticut 2012 ii ACKNOWLEDGEMENTS It is a great pleasure to take a brief moment after all the hard work that has gone into this project and to thank the people who helped me along the way, the people who in many ways made this possible. To begin with I would like to thank my major advisor, Dr. Boris Bravo-Ureta, for selecting me to work on the Connecticut specialty crop grant that supported the following research. Dr. Bravo-Ureta spent many hours working with me to complete this research, the findings of which I have had the pleasure of presenting with him to a variety of audiences. He also helped me organize a visit to Chile where I was able to visit several vineyards of varying size and gain a deeper understanding of the world wine industry. My associate advisors also provided me with invaluable feedback and support. Dr. Dennis Heffley invited Dr. Christopher Jeffords and myself to co-author a paper for the CT Economy periodical with him, which was featured in the spring 2010 issue, my first publication as a graduate student. Recently I have had the pleasure to work closely with Professor Joseph Bonelli, of Cooperative Extension, on the CT dairy study. Joe Remained a key resource throughout my thesis project, providing me with feedback and offering his support wherever he could. The editing and finalization of this report would never have been possible without the time and patience of my committee members. Thank you all very much. The Connecticut Department of Agriculture also deserves tremendous thanks for their support over the past few years, both financially and otherwise. In particular Mrs. Jaime Smith, was a critical asset in both monitoring the progress of the project as well as introducing me to state producers and officials. She was a critical asset in helping to ensure the success of these efforts. The Connecticut Farm Wine Council, on which she serves, iii allowed me to introduce myself at their quarterly meeting, at the project outset, offering their support and even initializing the farm interview process. Dr. Christopher Jeffords worked with me to develop the interview packet for farm visits and accompanied me to the first of several visits in the fall of 2010; his contributions are peppered throughout the report. A special thanks is also extended to the state producers and industry experts who provided information, advice and feedback for the study. Out of respect for the confidence of those whom chose to participate, individuals remain unnamed through the report, though their many contributions were of the utmost importance and significance. My department deserves specific praise. Mrs. Karen Nye and Mrs. Claire Bazzano provide the best administrative support imaginable, including graduate school forms, facilitating my assistantship, travel reimbursements, and many other countless tasks, but most importantly they provide a bright and professional atmosphere for the work to get done. The department head, Dr. Rigoberto Lopez, and the head of the admissions committee, Dr. Farhed Shah, helped me orient myself in the department, providing advice which has stayed with me through the course of my graduate career. Several other members of the department assisted me in my graduate studies in various ways, including: Dr. Marilyn Altobello, Dr. Joshua Berning, Dr. T.C. Lee, Dr. Subash Ray; fellow graduate students who were particularly helpful include: Elena Castellari, Eric Njuki, Nataliya Plesha, Adam Rabinowitz, Charles Rhodes, and Rachel Rindfleisch. Members of the University of Talca in Chile were very helpful in arranging my visit during the 2011 harvest period, in particular Dr. Javier Troncoso, Dr. Roberto Jara Rojas, and Ms. Maribel Rojas. iv On a final note, I am excited to formally extend a thanks to my close friends and family who have supported me in my work over the years. In particular , my mother and father who have supported my education through and through, from my earliest years in Montessori education onto college and now graduate school. I am fortunate to have such engaging parents who have given me their full support and attention. With respect to this project, some additional thanks is given to my mom, who near the outset of the project planned a trip to California with me and my brother so we could explore the Napa and Sonoma wine regions together. Another special thanks goes to Ms. Whitney Hollands, my lovely and talented girlfriend who has supported me through the duration of this project and who occasionally accompanied me on trips to state vineyards. Of course there are many unnamed persons who have contributed to my success and the completion of this project, and as expected some of these folks deserve more praise than others, but for the sake of brevity, as my father always said to me as a kid, “if the shoe fits, wear it.” Thank you all very much for your love and support over the years, it would not have been close to as meaningful without it. v TABLE OF CONTENTS ACKNOWLEDGEMENTS ................................................................................................III LIST OF TABLES AND FIGURES ................................................................................VIII ABSTRACT........................................................................................................................... IX CHAPTER I. INTRODUCTION ..........................................................................................1 STATEMENT OF THE PROBLEM .................................................................................................2 SPECIFIC OBJECTIVES .............................................................................................................4 CHAPTER II. LITERATURE REVIEW..............................................................................5 THE STATE OF CONNECTICUT 'S AGRICULTURAL INDUSTRY .....................................................7 FARMLAND PRESERVATION .....................................................................................................9 WINE GRAPE PRODUCTION ..................................................................................................16 CHAPTER III. CONCEPTUAL FRAMEWORK, DATA, AND THE MODEL ............24 PRODUCTION ECONOMIC ANALYSIS .....................................................................................24 ECONOMIC ENGINEERING , DATA SOURCES AND INTERVIEWS ................................................30 VITICULTURAL CONSIDERATIONS .........................................................................................33 CAPITAL BUDGET ASSUMPTIONS AND THE REPRESENTATIVE FARM MODEL .........................40 DEALING WITH RISK AND UNCERTAINTY ..............................................................................49 CHAPTER IV. RESULTS AND DISCUSSION ..................................................................56 BASE CASE AND SENSITIVITY ANALYSIS ..............................................................................57 MONTE CARLO SIMULATION ................................................................................................61 ADDITIONAL QUALITATIVE FINDINGS ..................................................................................64 vi CHAPTER V. SUMMARY AND CONCLUSIONS............................................................71 SUMMARY OF RESULTS .........................................................................................................71 CONCLUSIONS ......................................................................................................................73 LIMITATIONS OF STUDY .........................................................................................................76 REFRERENCES....................................................................................................................79 APPENDIX A. THE 10-ACRE REPRESENTATIVE CONNECTICUT FARM VINEYARD MODEL AND BUDGETS...............................................................................85 APPENDIX B. NYS PRICE DATA AND YIELD ESTIMATES BY VARIETY............103 APPENDIX C. MONTE