Details of analysis

Total establishment costs (Years 1-5)

With proper management and conducive conditions, a kiwiberry vine can begin to flower and set fruit as early as Year 3; and appreciable harvests (~40 lbs. per vine) have been realized at the NHAES as early as Year 5. Nevertheless, for this conservative analysis, it is assumed that harvesting for sale will not commence until Year 6; thus Years 1-5 are considered establishment years (see Training Young Vines), with no harvesting or sorting expenses and no income generation. In the summary table, the total cost of establishment over this time period is broken into two main components, materials and labor, as discussed in detail below:

Materials

Trellis supports (posts and crossbars)        

The cost of materials for trellis construction can vary greatly based on both the materials used and the overall geometry of the vineyard. Black locust poles, pressure treated wood, and concrete are all viable materials for the posts; but they vary in price. Furthermore, producers who are able to generate such materials onsite (e.g. via woodlots or a lumber mill) can realize greatly reduced costs compared to those who must purchase them from a retailer. In terms of geometry, long rows¹ are generally more cost-effective than short rows due to the reduced number of H-braces needed per unit area; thus a square acre will incur a higher trellis support cost than a rectangular acre. The costs reported in the table are based on a square acre, with black locust posts and rough-sawn pine crossbars, as used at the NHAES.

Trellis hardware

Again assuming an ideal square acre, the costs of all necessary trellising hardware (i.e. wire tensioners, staples, bolts, wire sleeves, etc.) have been aggregated into the above summary table. The assumed per unit costs for such hardware components used in the analysis are reported below, but again it is worth noting that pricing can vary depending on volume and the source of materials.

Irrigation system

The reported cost of the irrigation materials is based on a square acre of the raised microsprinkler system (2 sprinklers per bay) used at the NHAES (see Irrigation System). In practice, irrigation system design and required components will vary based on a number of factors, including pre-existing access to water at the site and zoning requirements. Similar to trellising hardware, the realized costs of irrigation materials will depend on quantity and supplier; but the following table presents the per unit costs used in this analysis:

Grass seed for vineyard floor

As discussed in the production guide (see Vineyard Establishment), there are multiple benefits to a well-established alleyway in the vineyard. The costs presented are for seeding an acre of vineyard floor with a Chewings fescue mix at a rate of 5 lbs per 1,000 ft².

Kiwiberry vines

A highly variable and potentially significant start-up cost is the vines themselves. Except for Hartmann’s Plant Company, all current commercial nurseries offering kiwiberry vines are geared toward homeowners and hobbyists, and the cost-per-vine is variable and can be quite high (as much as $23, excluding shipping). Growers may be able to reduce their costs by negotiating bulk rates, purchasing wholesale, or even propagating vines themselves (see Planting Material). For this analysis, the assumption is that lower cost materials will become increasingly available as demand grows. Based on experience at the NHAES, a retail price of $12 per one-year-old vine appears reasonable from the nursery perspective and thus was used.

Training materials

Various materials are needed for vine training during the establishment period, including 8′ bamboo stakes (trunk support), wire clips, and trellising tape/staples. The analysis assumes the purchase of two (2) Tapener guns and the following materials at the indicated unit costs:

Labor

The amount of labor required for vineyard establishment can vary greatly. If you have access to a tractor with an auger and post-pounder, trellis construction can move quickly. The same task can be very time-intensive, however, if you are digging holes by hand. And if you are hiring someone else to do the work, it can be quite expensive, especially at low volumes. The analysis here assumes outsourcing post-establishment to someone with an auger and pounder, at $6/post. Having access to the correct tools for trellis construction (power tools, spinning jenny, crimpers, etc.) will also greatly increase efficiency and reduce overall labor inputs.

Beyond trellis construction and irrigation installation, the estimated labor requirements in Years 1-5 also cover vine management (pruning, training, fertilizing, irrigating), vineyard floor establishment, and mechanized weed control (see Cultivation). A labor rate of $15/hour is assumed, and activities such as large-scale field amendment or renovation are not considered, due to the wide range of possible costs.

Annual production costs (Year 6 and beyond)

As explained above, Year 6 in this analysis is considered to be the first harvest year; thus costs from this year onward are considered annual production costs, as distinct from vineyard establishment costs (Years 1-5). Such annual production costs can also be divided into two main categories, materials and labor. Materials in this case is the much smaller of the two categories, comprised largely of vine training supplies, fertilizer, and trellis/irrigation maintenance materials. Labor is by far the larger category of expense once a vineyard enters production, encompassing such activities as vine management, weed control, harvesting, and sorting.

Materials

The training materials considered in this analysis include the annual purchase of tapener staples and tape as well as KiwiKlips, in bulk. Fertilizer estimates are based on numbers used by the NHAES for synthetic nitrogen fertilizer.

Labor

Estimated labor requirements for production (vineyard management) and harvest are based largely on experiences at the NHAES. Production activities include training, pruning, irrigating, fertilizing, and weeding. Labor estimates assume the use of a fully installed, full-coverage irrigation system; access to an appropriate tractor-mounted weed cultivator; and hand harvesting of individual berries (not clusters). The estimated labor requirements for sorting are based on the experiences of Kiwi Korners Farm, where manual sorting (~50 lbs. per man-hour) is done by a team on a conveyor pack line. In general, all estimated labor requirements for vineyard management assume a level of efficiency that depends on timely training, pruning, fertilization, and weed control. Failure to enact operations in a timely manner can greatly increase labor costs in the long run. As before, the assumed labor rate is $15/hour.

Note: Up-front and ongoing costs for tractors, cultivation equipment, packline systems, and cold storage facilities are not included in this analysis.

Productivity and market price assumptions

Regional growers report annual per vine yields of as much as 100 pounds, with yields of 60 pounds per vine considered average for current commercial varieties. At the NHAES, yields of 40 pounds per vine have been observed as early as Year 5. For this analysis, however, a conservative estimate of 50 pounds per vine (Year 8 and beyond) was used, with that yield slowly coming into production over the previous two years (30 and 40 lbs/vine in Years 6 and 7, respectively). Of this total harvest, only 60% is estimated to be Grade A, appropriate for direct sale to consumers. This estimate is based on observations at the NHAES, but it is worth noting that domestic and European growers report variability around this number, from as little as 40% to greater than 80%. One analysis assumes a direct-sale price point of $10.64/lb ($3.99 per 6 oz. clamshell), as informed by the statewide market analysis (see Regional Market Analysis). Other potential direct-market and wholesale scenarios are also featured ($8/lb. and $5/lb.). Despite evidence for the existence of a value-added market for lower-quality berries (e.g. wines, jams, etc.), potential income from such sales are not considered.

Net annual income and return on investment (ROI)

The bottom of the enterprise summary table reports estimated net annual income once a vineyard enters production (Years 6 and beyond). These estimates of net annual income disregard establishment costs (Years 1-5) but do account for annual production costs after establishment. Even assuming highly conservative yield estimates and the sale of only Grade A berries, the analysis indicates that the income generated in Year 6 ($50,311), the first harvest year, can more than cover the establishment costs for materials and labor incurred over Years 1-5 ($44,342) at the market rate of $10.64/lb. In other words, in light of the conservative estimates used in this analysis, a 6 year return-on-investment is possible, in the absence of other large, up-front costs (e.g. significant land renovation, well drilling, large equipment purchases, cold room construction, etc.) not considered here but perhaps of relevance to some producers. Even in such cases, however, the analysis indicates a probable 7 year return-on-investment, with annual profits exceeding $90,000/acre in Year 8 and beyond. For the lower market price scenarios, the ROI timeline can be expected to increase by one or two seasons.

¹ The maximum recommended distance for a single wire strainer is 500 linear feet. Excessively long rows increase the risk of wind damage to both vines and fruit (R. Guthrie, pers. communication).