Study: Agritourism can increase operations’ profit
A 2013 study from Virginia Tech’s department of agriculture and life sciences has concluded that agritourism can boost the profitability of farms and agriculturally based operations.
Gustavo Ferreira, assistant professor of agriculture and applied economics at Virginia Tech and Virginia Cooperative Extension Economist, headed a statewide effort that looked at the financial impact of agritourism.
Ferreira said they surveyed over 450 agritourism operations across the state and found that more than half of the operations surveyed reported being profitable.
According to the results from a study released earlier this year, 47.8 percent of the operations surveyed reported being at least “somewhat profitable” in the area of agritourism. Only 8.6 percent of the operations surveyed reported being “not at all profitable.”
Ferreira said, “[Agritourism] merges two very powerful industries in the commonwealth” between agriculture and tourism.
“Agriculture is still the largest industry in the state and … tourism might be in the top three and is a fast-growing industry,” Ferreira said.
There are many agricultural-based operations that could be considered “agritourism,” between wineries and seasonal attractions like corn mazes.
With the lack of a unified definition, Ferreira said that they employed the definition used by the state of Virginia for the 2013 study.
The state defines agritourism as any farm or ranch activity “that allows members of the general public … to view or enjoy” a variety of activities between wineries and natural activities.
Ferreira noted that, of the 450 operations surveyed, 44 percent were wineries or vineyards.
Will Elledge, owner and operator of Wolf Gap Vineyard in Edinburg, expressed similar notions regarding his winery and vineyard.
Elledge opened the tasting room for Wolf Gap in 2008, after he had begun planting grapes in 2005. This opening greatly improved visitation for Wolf Gap.
“I would say that [visitation] has probably increased ten-fold since we opened the tasting room,” Elledge said.
One of the biggest factors leading to increases in visitors has to do with tourism. Elledge said, “50 percent of our clientele are a result of people coming out of town for vacations.”
“I think vineyards attract a lot of people to Virginia, for tourism,” Elledge said, adding that the combination is a “mutually beneficial relationship.”
The 2013 study actually found that opening a winery is one way to decrease the possibility of higher profits.
“Wineries tend to be less profitable than a pick-your-own or a pumpkin patch,” Ferreira said, noting that part of the reason is the larger initial cost of starting a winery.
Elledge said there can be a five-year delay in the establishment of a steady or positive stream of cash flow. “This is tough for someone who is not prepared, financially, to do that.”
Regardless of the costs and delay in revenue, Elledge said that starting up a winery “can be a worthwhile” business venture.
Elledge explained that owners who can “start big enough and produce enough wine” as well as market their products successfully, can overcome these initial hurdles.
The pick-your-own model has been a big boost to the business at Showalter Orchard and Greenhouse in Timberville — a Shenandoah Valley mainstay since 1965.
According to Sarah Showalter, part owner and operator of the farm, they added a pick-your-own aspect to the orchard in 2010.
Showalter said they saw a 111 percent spike in revenue between 2010 and 2014, which she partially attributed to their pick-your-own expansion.
“We feel also like it has to do with our advertising … our marketing has shifted to … marketing our farm as an experience,” Showalter explained.
Showalter Orchards has also added hard cider products as well as a gift shop as sources of additional revenue outside of the pick-your-own season.
“The window for apples and peaches begins, for us, in late August,” Showalter said, adding that the last apples are “picked at the end of October.”
Agritourism and the pick-your-own model, Showalter said, has not “changed the seasonality so much, just the amount of traffic during the season.”
For operations seeking agritourism, Ferreira said that some of the bigger takeaways from this study, such as consumer spending, can be vital in the start-up process.
With consumer spending, Ferreira said, “the bottom line” in terms of agritourism is that “you have to find ways for them to spend their money while they are there.”
Showalter explained that revenues from agritourism have helped her and her husband, Shannon, “sustain our farm, which is what we are all about.”
“Who knows how long this will continue, but for right now, it’s all positive,” Showalter said.
Contact staff writer Kevin Green at 540-465-5137 ext. 155, or firstname.lastname@example.org