Winery Establishment Costs
- Winery owners are required to manage three consecutive years of establishment costs prior to any revenue being received it is often necessary to accumulate the establishment costs until such time as a crop is harvested and revenue is received during evaluation of a Winery enterprise.
- The establishment costs in each of the three years along with their respective interest charges should be accumulated to the fourth year using an interest rate of 5% compounded annually. The total compounded amount represents the cost of establishment of the Winery that is assumed to be repaid over a period of years of harvesting for financial analysis purpose.
- Economic analysis on production costs can be made using assumptions of interest rates based on the investment incentives in which it is stated with free or a minimum interest rate debt. However, for the sake of economics of the farm let interest rate be considered 5%. Hence, it is possible to calculate how much to pay to finish credits in certain years (Table 4).
Table 4: Costs of a Farm to Operate a Mature Winery.
| S/NO | Activities and Items of Variable Costs | Cost Per Item Per Year (USD) |
|---|---|---|
| 1 | Hired Labor (Guards and gardeners) | $ 312.00 |
| 2 | Consultancy and training | $ 216.00 |
| 3 | Viticulture / Pruning | $ 115.00 |
| 4 | Trellis Supplies and Tying Material | $ 15.00 |
| 5 | Pesticides | $ 12.00 |
| 6 | Soil Amendments and Testing | $ 212.00 |
| 7 | Motor pump Expenses (maintenance and fuel) | $ 76.00 |
| 8 | Harvesting cost | $ 76.00 |
| 9 | Bird Control | $ 42.00 |
| 10 | Harvest materials and Transportation | $ 30.00 |
| 11 | Storage materials | $ 32.00 | Fixed Costs |
| Taxes | ||
| Total Expenses | $ 1048.00 |