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Lake Erie Grape Farm Cost Study, Using Tax-based Information For Cost of Production and Profitability of Grape Growers

Barry Shaffer

Summary

While accrual-based accounting allows for the best analysis, can cash accounting still be accurate enough to track industry trends and set benchmarks for an industry? The Lake Erie Grape Farm Cost Study (LEGFCS) has set benchmarks for the juice grape and bulk wine grape industry during the past fifteen years in western New York and Pennsylvania using a simple form relying primarily on Schedule F’s.

Grape growers do not have much in the way of inventories, cooperative growers will have a large accounts receivable. Our cash market growers won’t have much value in either inventories or accounts receivable. We have relied on getting a larger sample size with usually over 40 farms and 14 percent or more of the acreage represented. We have also done five year averages for individual farms in order to smooth out any tax planning that an individual farm manager might make.

This method may be good for other agricultural industries esp. ones where in-depth records are scarce, inventories are minimal, and low time commitment (2 hours annually) from the participants.

Details

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