cost of production - retallack viticulture benchmark booklet final 121112.pdf · cost of production...

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Cost of Production 1 . M u r r a y V a l l e y W i n e g r a p e C o s t o f P r o d u c t i o n 2 0 1 0 / 1 1 Prepared for: Murray Valley Winegrowers’ Inc. By: Mary Retallack, Retallack Viticulture 2 . M u r r a y V a l l e y W i n e g r a p e C o s t o f P r o d u c t i o n 2 0 0 8 / 0 9 Prepared for: Murray Valley Winegrowers’ Inc. By: Mary Retallack, Retallack Viticulture June 2012

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Page 1: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Cost of Production

1. Murray Valley Winegrape Cost of Production 2010/11

Prepared for: Murray Valley Winegrowers’ Inc. By: Mary Retallack, Retallack Viticulture

2. Murray Valley Winegrape Cost of

Production 2008/09 Prepared for: Murray Valley Winegrowers’ Inc.

By: Mary Retallack, Retallack Viticulture

June 2012

Page 2: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

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Page 4: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

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Page 28: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

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Page 40: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Appendix 1   

Background information flyers for winegrowers 

Page 41: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Capacity Building for Australian Wine Grape Growers Cost of Production Project ‐ Flier 

 Murray Valley Winegrowers’ Inc is carrying out a Cost of Production Project using the WGGA data collection template. This follows on  from a similar project  in 2008 and has been made possible via  funding  from  the Grape and Wine Research and Development Corporation.  

What will it achieve?  Accurate, up‐to‐date information on the real costs of growing wine grapes in the Murray Valley.  A clearer picture of how  income and costs have changed over recent years and how the profitability of wine grapes has been 

affected.  A greater insight into the gross margin for wine grapes from vineyards of different sizes and management structures.  More informed discussions with wineries on grape prices, the sustainability of wine grape producers and the industry in general.  

How do we intend to collect this information?  We are seeking help from interested growers to provide their vineyard income and cost figures for the project.  Growers will be sent a template for data entry to enter their financial data (either electronically or manually), or you can provide 

raw data for us to enter.  All data will be combined and arranged so you will not be identified. 

THE SHEETS WILL BE CODED TO ENSURE DATA IS KEPT ANONYMOUS AND CONFIDENTIAL  

What do you get out of it?  A copy of the regional comparative analysis summary.  The satisfaction that you are helping your grower organization achieve a more transparent, equitable and sustainable wine grape 

industry.  Workshops are scheduled  to be held by Retallack Viticulture  in Swan Hill, Robinvale and Mildura  in December  to present an 

analysis of the data we have collected.  

What do interested growers do now? Background information and a data entry template are attached. Please contact Liz Singh if you have any questions.  Please forward your financial data to the MVWI office by Friday 23rd October, 2009.    

Liz Singh ‐ Industry Development Officer  PO Box 2745, Mildura, Vic, 3502  Ph: (03) 5021 3911 Fax: (03) 5023 2335  [email protected] 

Page 42: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

 

 

 

 

 

Capacity Building for Australian Wine Grape Growers 

Cost of Production Project – Background Information  

Step 1 ‐ Data Collection Template  Growers are asked to enter their enterprise income and cost data into a simple Excel template, from either tax return ‘Profit and Loss (Income)’ statements or farm records (most recent 2008/09) and prior seasons (if available). 

The  template  categories  are  broadly  divided  into Operating  (variable)  costs  and Overhead  (fixed)  costs  (descriptors  are included in the template). If you wish to supply your ‘raw’ data we can collate this on your behalf (further info below). 

Confidentiality 

Financial  data  supplied  is  coded  so  it  cannot  be  traced  back  to  an  individual  grape  grower when  this  data  is  published. Growers are asked to provide their enterprise data  (income and costs) along with the area  in production  for growing wine grapes. This data can  then be  reported on a $/hectare basis providing a standardised unit  for  reporting while maintaining confidentiality.  

Growers are asked to answer two simple background questions. This allows the data to be coded and assessed on a regional basis by: 

The management structure of the business;  The source of water for irrigation purposes. 

Step 2 –Data Management and Reporting Once data is received it will be consolidated into a comprehensive regional data set. Average values for each input cost can then be presented as feedback. 

Average $/ha costs are graphed to provide a visual summary of the  income and costs for growing wine grapes, over recent seasons (or for individual seasons). 

A summary page for each grower who contributes data to this project can be provided on request, detailing their own income and production costs alongside the regional cost of production data.   

Part of  this project  is  to assess  regional vineyard  income and production costs and  to calculate gross margins  ($/ha)  for a range of vineyard sizes and models. Working closely with growers ensures the financial information collected is both current and reflective of a range of vineyard enterprise models. 

Page 43: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Are you interested in participating? 

We acknowledge there are a number of issues involved in collecting financial data and can offer the following comments: 

Confidentiality. We understand the  importance of keeping grower’s data anonymous. Vineyard data supplied will be handled  confidentially  and  will  not  be  able  to  be  traced  back  to  individuals  when  used  in  this  project.            Each data set is coded prior to analysis to ensure confidentiality. 

Scope of data. Enterprise data is sought for the 2007/08 and 2008/09 seasons (where available). 

Format. A standardised template is provided for the collation of data or you may wish to forward a copy of your ‘Profit and Loss (Income)’ statement to MVWI so they can allocate these costs. 

The next step 

If you would like to participate in this project this can be done in a number of ways (choose the method which best suits you). 1. Send a copy of your enterprise production income and expenses data entered into the supplied template.  

- Enter your data into the supplied template. This process takes about 30 minutes (to allocate costs to the specified headings).    

2. If you wish to supply your ‘raw’ data we can collate this on your behalf. - Send a copy of your enterprise ‘Profit and Loss (Income)’ statement from you tax records.  - If you currently use record keeping software, please send a print a copy of your financial summary. 

If you send raw data (not using the supplied template) please provide the following details with your financial information. − Answers to enterprise ‘background information’ questions − Clearly date the financial year of the data supplied ie 2008/09  − The size of your property (area planted to vines and any other crops)  

This information will be handled confidentially.  − If  you have  any  concerns  you may wish  to  remove  your  company name  from  the header of  any  information 

supplied. On a separate sheet of paper you will be asked to supply your name and contact details. This will be used to send collated regional cost of production results to you and invite you to the presentation of the final report and findings in your local area.   

Please forward your financial data to the MVWI office by Friday 23rd October, 2009.   

Step 3 – Feedback Presentation of Project Results 

You will be invited to a presentation in December which will outline the results of this regional cost of production project. 

Comments 

Recent circumstances  including changing seasonal conditions, drought, market  (supply and demand) etc have had an over‐riding effect on a growers capacity to generate  income (price and tonnage) and manage their production costs (water etc).  The result of this shift is that past cost of production data will be of interest but perhaps of limited use for future projections.  

Our sense  is that production costs are as  ‘lean’ as growers can achieve to grow their fruit to specification (water being the exception). The real variable  in this equation  is the potential for growers to generate  income to cover these costs (and any ceiling on the capacity to do so). Given the extent of these variables, it is important for smaller growers to have a mechanism to assess their capacity to generate a suitable margin to cover all enterprise costs (operational, overhead and debt servicing). 

WGGA’s VineBiz Program  

If you are  interested  in  finding out more about you  financials, Wine Grape Growers Australia  (WGGA) have developed  the VineBiz  Financial  ‘Ready  Reckoner’  that  captures  both  enterprise  and management  unit  costs.  The  ‘Ready  Reckoner’  is  a powerful tool which can be used to measure a grower’s financials data in a standardised way and help with decision making in the future.  

VineBiz Workshops will be run in the Murray Valley in early October 2009. 

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Capacity Building for Australian Wine Grape Growers 

Cost of Production – Check List and Contact Info            

Check List  Tick 

1.    I have answered the two Vineyard Enterprise Background Information questions (Sheet 1)   

2a.  I have attached my enterprise financial data for 2007/08 (and 2008/09 if available).   Data has been entered into the supplied template (one template per financial year) (Sheet 2),  OR 

  

 2b.  I have attached photocopies of my ‘Profit and Loss (Income)’ Statements  

  I have clearly stated the financial year and area of wine grapes in production (ha).  

3.    Please fill in your contact details (below) so we can provide feedback to you at the end of the project and           invite you to a presentation of the regional results in December 2009. 

 

 Your enterprise and contact information remains confidential  

Name    

Address 

    

    

  

Please return this sheet (with attachments listed in the checklist) by Friday 23rd October to:  

Murray Valley Winegrowers’ Inc Cost of Production Project Liz Singh ‐ Industry Development Officer  

PO Box 2745, Mildura, Vic, 3502  Ph: (03) 5021 3911 Fax: (03) 5023 2335  

[email protected]  

Page 45: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Appendix 2   

Data collection template used to capture the cost of production 

Page 46: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley
Page 47: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Location of Vineyard (Circle Region) Mildura Region Robinvale Region Swan Hill Region

Management Strucutre (please circle) Owner ManagerSmall Vineyard

Owner ManagerMedium Vineyard

Owner ManagerLarge Vineyard

Corporate/Investor OwnerLarge Vineyard

Water Source (please circle) Private Water Diverter

Irrigator within Pumped Districts

Yes No I will speculate on the spot market

Yes No Occasionally

Ha

Sheet 1: Murray Valley Winegrowers' Cost of Production - Vineyard Enterprise Background Information

The owner manages the business but employs a full time vineyard manager for operational work, monitoring, planning etc. Contractors and casuals are also used.

A full-time vineyard manager is employed plus permanent employees, casuals and contractors (similar to No. 3 but Corporate or Investor owned, which will (may) have different overhead costs)

Q1

Q2

Owner/operator who has one or two permanent workers (for example vineyard hand or tractor driver) and uses casuals and contractors.

Owner/operator who does not employ any outside permanent labour but does use contractors/casuals for some tasks ie harvesting, pruning.

Do you have a grape purchase contract for the upcoming season? (Circle)

I have off farm income (Circle)

Water is sourced directly from a river or bore, annual water access fees are usually low but pumping costs (power) are high.

Water is sourced from an irrigation water provider who supplies water to the farm gate. Annual water fees are usually high but pumping costs (for the grower) are low.

Variety

Q3

Q6 List the winegrape varieties grown on your property.

Q4

Q5

Ha

Tonnes

Ha

Did you mothball any varieties for the financial year listed?

If so, please list varieties and area (ha).

Crop

Variety

Variety

Did you harvest any fruit onto the ground in the financial year listed?

If so, please list varieties and estimated volume (tonnes).

Q9

Q8

Q7

Do you grow crops other than winegrapes?

If so, please list the crops grown and the area (ha)

CommentsQ10

Page 48: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

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urra

y Vall

ey W

ineg

rowe

rs' C

ost o

f Pro

duct

ion

Proj

ect -

Dat

a Col

lectio

n Te

mpl

ate

Total

Pro

perty

Are

a (ha

)

Enter

the i

ncom

e fro

m W

ine G

rape

Sale

s (thi

s will

be us

ed to

calcu

late t

he gr

oss m

argin

) and

Win

e Sale

s sep

arate

ly.

Wine

Gra

pe S

ales

Vine

yard

Are

a (ha

) Y

ear:

INCO

ME

Farm

Labo

urCo

ntrac

t Lab

our

Fruit

Tra

nspo

rt

Levie

s

Sub

Unit

Wine

grap

es (h

a in p

rodu

ction

)

Sotes

tg,

soa

eo

ato

(e/g

ypsu

),b

oadc

ast

et

se,c

oe

cop/s

eed,

uces

eae

oa

yo

gete

tass

eot

caed

outa

oa

uaba

ss

Sund

ry ha

nd to

ols, m

iscell

aneo

us ite

ms, r

epair

s <$1

00 ea

.

Oil, g

as an

d gre

ase,

basic

servi

cing a

nd m

ainten

ance

of vi

neya

rd m

achin

ery (

tracto

rs, ut

es, A

TV, p

umps

).

Fuel

(dies

el or

petro

l) for

vine

yard

mac

hiner

y (tra

ctors,

utes

, ATV

, pum

ps).

This

is se

para

ted to

allow

for e

nviro

nmen

tal ac

coun

ting.

Wate

r deli

very

costs

and e

lectric

ity to

powe

r pum

ps (in

clude

wate

r rate

s or s

tandin

g fee

s). S

epar

ate fr

om P

ower

(buil

dings

) whic

h is a

n ove

rhea

d cos

t.

Annu

al wa

ter le

ase (

perm

anen

t wate

r pur

chas

es sh

ould

be re

cord

ed se

para

tely a

s a ca

pital

expe

nse)

. Sep

arate

from

Land

Rate

s and

Tax

es w

hich i

s an o

verh

ead c

ost.

Vine

yard

repa

irs an

d main

tenan

ce in

cludin

g re-

planti

ng de

ad vi

nes,

trellis

repa

irs (d

o not

includ

e majo

r cap

ital e

xpen

ses).

Perm

anen

t man

agem

ent (

includ

ing ow

ner o

r man

ager

who

pred

omina

ntly m

anag

es ra

ther t

han c

arryi

ng ou

t 'han

ds on

' task

s).

Esti

matio

n or a

ctual.

Don

’t dup

licate

this

amou

nt if i

t has

alre

ady b

een c

aptur

ed in

'Per

mane

nt Ma

nage

ment'

. See

calcu

latio

n ov

er th

e pag

e.Do

n’t in

clude

wate

r rate

s (or

stan

ding f

ees)

inser

t the

se co

sts in

to wa

ter an

d dra

inage

costs

(ope

ratin

g).

Elec

tricity

(othe

r tha

n pow

er us

ed fo

r pum

ps/irr

igatio

n sy

stem)

.

Publi

c liab

ility,

prop

erty,

conte

nts or

crop

insu

ranc

e.

Cons

ultan

t, re

sear

ch, a

ccou

ntant,

lega

l, sec

retar

ial, a

udito

r fee

s.

Phon

e, so

ftwar

e, sta

tiona

ry, po

stage

, reg

istra

tion.

Land

or m

achin

ery.

Perso

nal P

rotec

tive E

quipm

ent (

PPE)

, fire

extin

guish

ers,

safet

y sign

age.

Huma

n res

ource

costs

, staf

f tra

ining

, sub

scrip

tions

, mem

bersh

ips, c

ourse

fees

, tra

vel a

nd ac

comm

odati

on.

Reve

getat

ion, w

ater t

reatm

ent,

catch

ment

mana

geme

nt.St

aff D

evelo

pmen

t En

viron

ment

Oh

d Ri

& M

it

Desc

riptio

n fo

r eac

h ca

tego

ry

Offic

e/Adm

inistr

ation

Le

ase o

r Ren

t Pay

ments

Perm

anen

t Man

agem

ent

Mach

inery

Fuel

OH&S

Req

uirem

ents

Owne

r's L

abou

r La

nd R

ates a

nd T

axes

Powe

r (Bu

ilding

s)Ins

uran

cePr

ofess

ional

Servi

ces

Mach

inery,

Plan

t & E

quipm

ent H

ireW

ater a

nd D

raina

ge C

osts

Sub

Unit

Vine

yard

Floo

r Man

agem

ent

Sund

ry Ma

terial

s and

Sup

plies

Wate

r Lea

seVi

neya

rd R

epair

s & M

ainten

ance

OVER

HEAD

(FIX

ED) C

OSTS

Mach

inery

Expe

nses

Fenc

es, r

oads

, fire

brea

ks, s

heds

, gro

und m

ainten

ance

.

Inter

est p

aid on

loan

s, ba

nk fe

es &

char

ges.

Do no

t inclu

de ca

pital

or pr

incipa

l repa

ymen

ts.Ov

erhe

ad R

epair

s & M

ainten

ance

Debt

Servi

cing (

Inter

est a

nd F

inanc

e

Page 49: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Supe

rann

uatio

n an

d W

orkc

over

Calcu

latio

n

Full T

ime S

alary

(In

cludin

g 'on

costs

')%

Sala

ry

(inclu

ding '

on co

sts')

Estim

ate %

up to

a tot

al of

100%

(full

tim

e)

Selec

t a b

ase s

alary

(u

se $4

0K as

a mi

nimum

star

ting

point

)

Grap

e gro

wing

exam

ple:

(9%

Sup

eran

nuati

on, 3

.2%W

orkc

over

+ 0.

6%

OHS&

W re

gistra

tion f

ee).

B X

CB

+ DE

X A

AB

CD

E

Inse

rt thi

s figu

re in

to the

wo

rkshe

etOw

ner's

Labo

ur

Exam

ple50

% $

40,0

00

12.8%

$

5,12

0 $

45,1

20

$

2

2,560

Owne

r's La

bour

(yo

ur ca

lculat

ion)

$

-

$

-

$

-

It is i

mpor

tant to

alloc

ate a

value

to ow

ner’s

labo

ur (if

this

has n

ot alr

eady

been

done

in P

erma

nent

Mana

geme

nt).

To us

e the

calcu

lator

, esti

mate

the pe

rcenta

ge of

time s

pent

runn

ing th

e vine

yard

over

the y

ear,

selec

t a ba

se sa

lary (

this s

tarts

at $4

0K) a

nd ca

lculat

e the

total

salar

y (in

cludin

g ‘on

costs

’) usin

g the

form

ula pr

ovide

d.

Desc

riptio

n

Form

ula

Com

men

ts

Calcu

latin

g Ow

ner's

Lab

our

Estim

atio

n of

Ow

ner's

Lab

our

Estim

ated

% o

f tim

e spe

nt

runn

ing

viney

ard?

Base

Sala

ry

Supe

rann

uatio

n +

Wor

kcov

er

Chec

k the

curre

nt %

re

quire

ments

.

Page 50: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

Appendix 3   

Vineyard coding form 

Page 51: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley

REGIONAL VINEYARD COST INDICATORS ‐ BLOCK CODES ‐ 

 

Each data set collected from data suppliers/growers will be coded in such a way as to identify the following attributes: 

 

1. LABOUR STRUCTURE 

The  following categories will be used  to define what  labour structure  is  in place  in  the vineyard business. This is often related to vineyard size but not always. It has an important impact on how the labour costs are dealt with in this analysis. The number associated with the closest description of the enterprise is used in the code. 

 

 

2. IRRIGATION WATER SOURCE 

It is of some interest to know how a vineyard operator sources water for irrigation purposes. Two broad categories are proposed for the code. 

 

3. VINEYARD BLOCK NUMBER 

This  is a sequential number attached on to the end of the code to differentiate blocks of similar description. 

 

CODE  LABEL  DESCRIPTION 

1 Owner Manager Small Vineyard 

Owner‐operator who  does  not  employ  any  outside  permanent  labour but  does  employ  the  services  of  contractors/casuals  for  certain  tasks such as harvesting. 

2 Owner Manager Medium Vineyard 

Owner‐operator who has one or  two permanent workers  (for example vineyard hand or tractor driver) and uses casuals and contractors. 

3 Owner Manager Large Vineyard 

The  owner  manages  the  business  but  employs  a  full  time  vineyard manager for operational work, monitoring, planning etc. Contractors and casuals are also used. 

4 Corporate/Investor Owner Large Vineyard 

Full‐time  vineyard  manager  plus  permanent  employees,  casuals  and contractors (similar to No. 3 but Corporate or Investor owned, which will (may) have different overhead costs) 

CODE  LABEL  DESCRIPTION 

1  Private Water Diverter 

Water  is  sourced directly  from  the  rivers or bores,  annual water  access fees are usually low but pumping costs (power) are high. 

2 Irrigator within pumped districts 

Water  is  sourced  from  irrigation water  providers who  supply water  to farm  gate  at  various  pressures. Annual water  fees  are  usually  high  but pumping costs (for the grower) are low. 

Page 52: Cost of Production - Retallack Viticulture Benchmark Booklet FINAL 121112.pdf · Cost of Production 1. Murray Valley Winegrape Cost of Production 2010/11 Prepared for: Murray Valley