BS in Agricultural Business
This study examined the differences in costs and profitability for established conventional and organic Cabernet Sauvignon vineyards in the Edna Valley region of San Luis Obispo County, California. The study used a partial budgeting approach to compare cost and profitability for established vineyards for 2009, and thus ignored transition costs. Data were obtained from UC Davis cost studies for organic and conventional grape production in other regions of California in previous years. Adjustments made to these costs to account for changes in input use, input costs and grape prices in San Luis Obispo County during the 2009 growing season.
The basic costs were found the conventional costs were slightly higher than the organic, however with the partial budget change it was deemed ‘unfeasible’. The study found that the profitability of established vineyards would be equal with a price premium of 1.08%. There were many limitations and estimations when doing this study such as secondary information and use of price indexing; therefore the price premium may be more or less depending on the vineyard.