Efficiency in wine grape production: comparing long-established and newly developed regions of South Africa.

Piesse, J., Conradie, B., Thirtle, C. and Vink, N., 2018. Efficiency in wine grape production: comparing long-established and newly developed regions of South Africa. Agricultural Economics. (In Press)

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DOI: 10.1111/agec.12409

Abstract

Efficiency, partly based on technology, is central to international competitiveness. This article applies a stochastic frontier inefficiency model to a panel of 77 wine grape farms in South Africa between 2005 and 2015 and allows the comparison of efficiency levels for the old established wine regions with those of newer entrants. Thus, we investigate whether experience plus first choice of location matters more than the follower's advantage of newer technology. In all regions, a greater share of permanent labor and increased supervision raised efficiency, while more inorganic fertilizer and less irrigation has the opposite effect. Innovations in trellising had insignificant effects (except in the old regions) but not replacing old vines reduced efficiency. However, a higher proportion of red varietals also lowered efficiency in the old regions due to a fall in the price of red wine as these farmers continued to concentrate on quality reds. The new regions compensated for falling prices by increasing crop size with irrigation and fertilizer and extending the area planted, but with less concern for quality. This appears to be more successful in efficiency terms, but as international demand for quality wine increases it may be a poor long-term strategy.

Item Type:Article
ISSN:0169-5150
Additional Information:This is the peer reviewed version of the following article: Piesse, J., Conradie, B., Thirtle, C. and Vink, N. (2018), Efficiency in wine grape production: comparing long-established and newly developed regions of South Africa. Agricultural Economics, which has been published in final form at 10.1111/agec.12409 This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Uncontrolled Keywords:South Africa wine grape production; Stochastic frontiers; Farm efficiency
Group:Faculty of Management
ID Code:30295
Deposited By: Unnamed user with email symplectic@symplectic
Deposited On:05 Feb 2018 11:13
Last Modified:05 Feb 2018 11:13

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