ORIGIN DESIGNATION AND PROFITABILITY FOR SMALL WINE GRAPE GROWERS: EVIDENCE FROM A COMPARATIVE STUDY
Keywords:
PDO wines, vine-growing economics, small size farms, Sicilian wine grape production, farm profitability.Abstract
The concept of profitability has been widely debated in the international scientific economic community but there are few studies which contribute to connecting the profitability of micro and small agro-food holdings in PDO or PGI areas with their ability to stay afloat in a competitive market. This study compares the economic results of quality wine grape producers in Sicily providing an analysis of the impact and consequences of raised economic performance in local vine-grower economies. Economic indicators were employed to compare the profitability in two PDO areas, verifying if micro and small size farm quite remain competitive in an increasingly concentrated wine market. Detailed survey data was collected in 2 of the most important Sicilian PDO wine areas, showing the first results of some economic indicators which compare the vine-growing processes in each geographic area and evaluate the profitability of a sample of small grape producers. To evaluate the remuneration of capital and the ability of smallholder to compete in a global market, average farm profitability expressed as farm net value for each homogeneous area was calculated taking into account production costs and total output. Despite several studies demonstrating that PDO certification increases costs and profits our study reveals how DO does not always ensure adequate profitability for micro and small vine growers. The production and sale of unprocessed grapes does not provide any value-added products and local producers do not gain additional remuneration for the intangible components of their PDO grapes. Further analysis has required exploring to what extent these results are caused by increasing costs or by an inefficient market structure.
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References
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27.Di Vita, G. (2003a): Circolo della Qualità e certifcazione di processo nel comparto vinicolo siciliano. Un caso studio, Economia Agro-Alimentare, Vol. 1, pp. 87-110.
28.Di Vita, G. (2003b): I certifcati del vino, Vignevini, Il sole 24 Ore/Edagricole, Vol. 3, pp. 29-33.
29.Di Vita, G. (2002): La gestión de la calidad según las normas ISO 9000:1994 en el sector agro-alimentario europeo: el caso de una región mediterránea, Información Técnica Económica Agraria (ITEA), Zaragoza (Espana), vol. 98, no. 1, pp. 54-70.
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31.European Commission (2011): FADN-RICA: Farm Accounting Data Network, retrieved from http://ec.europa.eu/agriculture/rica/methodology1_en.cfm
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33.European Commission (2005): The new SME definition. User guide and model declaration, Enterprise and Industry Publications.
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35.Golan, A., Shalit, H. (1993): Wine quality differentials in hedonic grape pricing, Journal of Agricultural Economics, vol. 44, pp. 311–321.
36.Grant, B., Dollery, B., Hearfeld, C. (2011): New England Australia: what follows from regional status? A comparative, political economy approach, International Journal of Wine Business Research, Vol. 23, Issue 1, pp. 83 – 98.
37.Harward, Upto (1961): Introduction to Business Finance, Mc Graw Hill, New York.
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41.Josling, T. (2006): The war on terroir, Geographical Indications and Transatlantic trade conflict, Journal of Agricultural Economics, vol. 57(3), pp. 337-363.
42.Kirner, V. L., Bartel-Kratochvil, R. (2007): Effect of off farm income, farm size, natural disadvantage and farming system on the sustainability of dairy farming in Austria, an empirical approach on the basis of farm accountancy data, BER LANDWIRT, vol. 85(2), pp. 195-213.
43.Lorenzini, E. (2010): Origin labelled products, territorial marks and their contribution to rural development. Evidence from Italy and France, Working paper no. 649, Società Italiana di Economia Pubblica, Dipartimento di Economia pubblica e territoriale, Università di Pavia.
44.Marescotti, A. (2003): Typical products and rural development: who benefits from PDO/PGI recognition?, 83rd EAAE Seminar, Food Quality Products in the advent of the 21st Century: production, demand and public policy, September 2003, Chania, Greece.
45.Monke, E., Avillez, F., Ferro, M. (1992): Consolidation policies and small-farm agriculture in northwest Portugal, European Review of Agricultural Economics, vol. 19(1), pp. 67-83.
46.Nehring, R., Gillespie, J., Sandretto, C., Hallahan, C. (2009): Small US dairy farms: can they compete?, Agricultural Economics, vol. 40, pp. 817-825.
47.Panattoni, A., Campus, F. (1983): Economia dellazienda agraria, UTET, Torino.
48.Pappalardo, G., Scienza, A., Vindigni, G., DAmico, M. (2013): Profitability of wine grape growing in the EU member states, Journal of Wine Research, Vol. 24, no. 1, pp. 59-76.
49.Pinto Correia, T. (2000): Future development in Portuguese rural areas: how to manage agricultural support for landscape conservation?, Landscape and Urban Planning, vol. 50, pp. 95-106.
50.Pomarici, E., Rocco, L., Iannini, C. (2005): Redditività e costi di produzione delluva in Campania, confronto tra differenti condizioni di coltivazione, Working paper, no. 5/2005, Università degli Studi di Napoli Federico II.
51.Sluiter, R, De Jong, S. M. (2006): Spatial patterns of Mediterranean land abandonment and related land cover transitions, Landscape Ecology, vol. 22, pp. 559–576.
52.Stasi, A., Nardone, G., Viscecchia, R., Seccia, A. (2011): Italian wine demand and differentiation effect of geographical indications, International Journal of Wine Business Research, Vol. 23, Issue 1, pp. 49 - 61.
53.Sturiale, C. (eds.) (2006): Analisi economiche dellagrumicoltura biologica e convenzionale in Italia: valutazioni dei risultati delle indagini e prospettive, Emme Erre Grafca, Catania.
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55.Tregear, A., Arfni, F., Belletti, G., Marescotti, A. (2007): Regional foods and rural development: The role of product qualification, Journal of Rural Studies, vol. 23, no. 1, pp.12-22.
56.Tudisca, S. (eds.) (2007): Analisi tecnico-economica della vitivinicoltura nellarea occidentale della Sicilia, Ed. Fotograf, Palermo.
57.Unioncamere (2010): Rapporto nazionale sul settore vitivinicolo.
58.Vastola, A., Tanyeri-Abur, A. (2009): Non-conventional viticulture as a viable system: a case study in Italy, Working paper no. 43, American Association of Wine Economists.
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60.White, G. B. (2008): Cost of Establishment and Production of Vinifera Grapes in the Finger Lakes Region of New York, Cornell University Publication E. B 2008-05, May, 2008.
2. Đuričin Sonja, Bodroža Duško
1 This paper is a part of research project 31005 (Modern Biotechnological Approach to Solving Problem of Drought in Agriculture of Serbia) fnanced by the Ministry of Science and Technological Development of the Republic of Serbia
2 M.Sc., Institute of Economic Sciences, Zmaj Jovina Street no. 12, Belgrade, Serbia, Phone: +381 11 2638 820, E-mail: sonja.djuricin@ien.bg.ac.rs
3 M.A., Institute of Economic Sciences, Zmaj Jovina Street no. 12, Belgrade, Serbia, Phone: +381 11 2635 823, E-mail: dusko.bodroza@ien.bg.ac
2. Arfni, F., Albisu, L. M., Giacomini, C. (2011): Current situation and potential development of geographical indications in Europe, in Barham, E., Sylvander, B. (Eds), Labels of origin for food: local development, global recognition, CABI, Cambridge, pp. 29-44.
3. Bazin, G., Roux, B. (1995): Resistance to marginalization in Mediterranean rural regions, Sociologia Ruralis, Vol. 35, Issue 3-4, pp. 335–347.
4. Belletti, G., Marescotti, A. (2011): Origin products GI special protection schemes and rural development, in Barham, E., Sylvander, B. (Eds), Labels of origin for food: local development, global recognition, CABI, Cambridge, pp.75-91.
5. Blank, S. C., Erickson, K. W., Nehring, R., Hallahan, C. (2009): Agricultural Profits and Farm Household Wealth: a Farm-level analysis using Repeated Cross Sections, Journal of Agricultural and Applied Economics, vol. 41, no. 1, pp. 207–225.
6. Bouamra-Mechemache, Z., Chaaban, J. (2010a): Determinants of Adoption of Protected Designation of Origin Label: Evidence from the French Brie Cheese Industry, Journal of Agricultural Economics, Vol. 61, Issue 2, pp. 225–239.
7. Bouamra-Mechemache, Z., Chaaban, J. (2010b): Protected Designation of Origin Revisited, Journal of Agricultural and Food Industrial Organization, Vol. 8, no. 1, pp. 5.
8. Bouamra-Mechemache, Z., Chaaban, J. (2010c): Is the Protected Designation of Origin (PDO) Policy Successful in Sustaining Rural Employment?, Paper presented at International EAAE-SYAL Seminar – Spatial Dynamics in Agri-food Systems, Parma.
9. Bracco, S., DAmico, M., Di Vita, G. (2008): Analisi economiche dellolivicoltura dellarea DOP Monti Iblei, Tecnica Agricola, Olivicoltura e sviluppo rurale, no. 1-2, pp. 40-55.
10.Bramley, C., Biénabe, E., Kirsten, J. (2009): The Economics of Geographical Indications: towards a conceptual framework for Geographical Indication research in developing Countries, in WIPP (Ed.) The Economics of Intellectual Property. Suggestions for Further Research in Developing Countries and Countries with Economies in Transition, Geneva, pp. 1, pp. 09-141.
11.Brugarolas, M., Martinez-Carrasco, L., Bernabeu, R., Martinez-Poveda, A. (2010): A contingent valuation analysis to determine profitability of establishing local organic wine markets in Spain, Renewable Agriculture and Food Systems, 25:35-44, Cambridge University Press.
12.Brunori, G., Rossi, A. (2000): Synergy and coherence through collective action: some insights from wine routes in Tuscany, Sociologia Ruralis, 40:4, pp. 409-423.
13.Bryant, R. (2010): Wine sector in decline, IBISWorld, available at http://www.smartcompany.com.au/food-and-beverages/20100407grapegrowing-sector.html (accessed 10 October, 2011).
14.Caniglia, E., DAmico, M., Peri, I. (2008): An analysis of consumers perception of the quality of the Etna DOC wine, New Medit, vol. VII, no.3, pp. 32-41.
15.Chinnici, G., Bracco, S., DAmico, M., Di Vita, G., Pappalardo, G. (2011): Economic evaluation of quality wine grapes (PDO) sector in Sicily, Paper presented at the 5thAnnual Conference of American Association of Wine Economists (AAWE), 22-25 June 2011, Free University of Bozen-Bolzano.
16.Charters, S., Clark-Murphy, M., Davis, N., Brown, A., Walker, E. (2008): An exploration of managerial expertise in the Western Australian wine industry, International Journal of Wine Business Research, vol. 20, no. 2, pp. 138 – 152.
17. Costa-Font, M., Serra, T., Gil, M., Gras, A. (2009):Explaining low farm-gate prices in the Catalan wine sector, International Journal of Wine Business Research, vol. 21, no. 2, pp. 169- 184.
18.Crescimanno, M., Fardella, G. G., Schifani, C., Tudisca, S. (1998): I costi della produzione delluva da vino nella Sicilia occidentale, Arti Grafche Siciliane, Palermo.
19.DAmico, M., Di Vita, G., Pappalardo, G., Vindigni, G., Zarbà, A. S. (2011a): The profitability of wine grape growing in the European Union, Paper presented at the 5th Annual Conference of American Association of Wine Economists (AAWE), 22-25 June 2011, Free University of Bozen-Bolzano.
20.DAmico, M., Pappalardo, G., Vindigni, G. (2010): Degree of development and competitiveness in the wine sector in EU member states, Paper presented at International Conference Enometrics XVII, 09-12 June 2010, Palermo.
21.DAmico, M. (2005):Analisi della competitività del sistema vitivinicolo italiano nellUnione Europea, in Romeo del Castello, R., E. Schillaci, E. (eds.), La sfda del vino made in Sicily: strategie di crescita del settore e del territorio, Giappichelli Editore, Torino.
22.DAmico, M., La Via, G., Di Vita, G., Peri, I. (2011b). Calitatea produselor agroalimentare din sicilia, Calitatea-acces la succes, vol. 12, p. 56-64
23.De Benedictis, M., Cosentino, V. (1979): Economia dellazienda agraria, Il Mulino, Bologna.
24.Deselnicu, O., Costanigro, M., Souza-Monteiro, D. M, McFadden, D. T. (2011a): A meta analysis of geographical indication food valuation studies. What drives the premium for origin based labels? Working paper no. 93, American Association of Wine Economists.
25.Deselnicu, O., Costanigro, M., Souza-Monteiro, D. M, McFadden, D. T. (2011b): What Determines the success of a Geographical Indication? A price-based meta-analysis for GIs in food products, Paper presented at the Agricultural & Applied Economics Associations 2011, AAEA & NAREA Joint Annual Meeting, Pittsburgh, Pennsylvania, July 24-26, 2011.
26.Di Cocco, E. (1970): Elementi di economia agraria, Edizioni agricole, Bologna.
27.Di Vita, G. (2003a): Circolo della Qualità e certifcazione di processo nel comparto vinicolo siciliano. Un caso studio, Economia Agro-Alimentare, Vol. 1, pp. 87-110.
28.Di Vita, G. (2003b): I certifcati del vino, Vignevini, Il sole 24 Ore/Edagricole, Vol. 3, pp. 29-33.
29.Di Vita, G. (2002): La gestión de la calidad según las normas ISO 9000:1994 en el sector agro-alimentario europeo: el caso de una región mediterránea, Información Técnica Económica Agraria (ITEA), Zaragoza (Espana), vol. 98, no. 1, pp. 54-70.
30.Di Vita, G. (2004), Le politiche di qualità nel comparto vitivinicolo in Spagna, il mercato dei VQPRD, Economia Agro-Alimentare, Vol. 9, pp. 139-160.
31.European Commission (2011): FADN-RICA: Farm Accounting Data Network, retrieved from http://ec.europa.eu/agriculture/rica/methodology1_en.cfm
32.European Commission (2010):Developments in the income situation of the EU agricultural sector, Directorate-General For Agriculture and Rural Development, Brussels, December.
33.European Commission (2005): The new SME definition. User guide and model declaration, Enterprise and Industry Publications.
34.Fuller, K. B, Alston, J. M. (2012): The demand for wine grapes in California, Paper presented at Enometrics XIX, Coimbra & Viseu, Portugal, May 30 - June 2.
35.Golan, A., Shalit, H. (1993): Wine quality differentials in hedonic grape pricing, Journal of Agricultural Economics, vol. 44, pp. 311–321.
36.Grant, B., Dollery, B., Hearfeld, C. (2011): New England Australia: what follows from regional status? A comparative, political economy approach, International Journal of Wine Business Research, Vol. 23, Issue 1, pp. 83 – 98.
37.Harward, Upto (1961): Introduction to Business Finance, Mc Graw Hill, New York.
38.Ikerd, J. (2002): Small farms: the foundation for long-run food security, University of Illinois, Nov. 13-14, 2002.
39.Ikerd, J. (1996): Sustaining the Profitability of agricultural, paper presented at the Extension Pre-conference: The Economists Role in the Agricultural Sustainability Paradigm, San Antonio, TX, July 27, 1996.
40.ISMEA (2011): Analisi della struttura e del mercato dei vini DOC, DOCG e IGT, Roma.
41.Josling, T. (2006): The war on terroir, Geographical Indications and Transatlantic trade conflict, Journal of Agricultural Economics, vol. 57(3), pp. 337-363.
42.Kirner, V. L., Bartel-Kratochvil, R. (2007): Effect of off farm income, farm size, natural disadvantage and farming system on the sustainability of dairy farming in Austria, an empirical approach on the basis of farm accountancy data, BER LANDWIRT, vol. 85(2), pp. 195-213.
43.Lorenzini, E. (2010): Origin labelled products, territorial marks and their contribution to rural development. Evidence from Italy and France, Working paper no. 649, Società Italiana di Economia Pubblica, Dipartimento di Economia pubblica e territoriale, Università di Pavia.
44.Marescotti, A. (2003): Typical products and rural development: who benefits from PDO/PGI recognition?, 83rd EAAE Seminar, Food Quality Products in the advent of the 21st Century: production, demand and public policy, September 2003, Chania, Greece.
45.Monke, E., Avillez, F., Ferro, M. (1992): Consolidation policies and small-farm agriculture in northwest Portugal, European Review of Agricultural Economics, vol. 19(1), pp. 67-83.
46.Nehring, R., Gillespie, J., Sandretto, C., Hallahan, C. (2009): Small US dairy farms: can they compete?, Agricultural Economics, vol. 40, pp. 817-825.
47.Panattoni, A., Campus, F. (1983): Economia dellazienda agraria, UTET, Torino.
48.Pappalardo, G., Scienza, A., Vindigni, G., DAmico, M. (2013): Profitability of wine grape growing in the EU member states, Journal of Wine Research, Vol. 24, no. 1, pp. 59-76.
49.Pinto Correia, T. (2000): Future development in Portuguese rural areas: how to manage agricultural support for landscape conservation?, Landscape and Urban Planning, vol. 50, pp. 95-106.
50.Pomarici, E., Rocco, L., Iannini, C. (2005): Redditività e costi di produzione delluva in Campania, confronto tra differenti condizioni di coltivazione, Working paper, no. 5/2005, Università degli Studi di Napoli Federico II.
51.Sluiter, R, De Jong, S. M. (2006): Spatial patterns of Mediterranean land abandonment and related land cover transitions, Landscape Ecology, vol. 22, pp. 559–576.
52.Stasi, A., Nardone, G., Viscecchia, R., Seccia, A. (2011): Italian wine demand and differentiation effect of geographical indications, International Journal of Wine Business Research, Vol. 23, Issue 1, pp. 49 - 61.
53.Sturiale, C. (eds.) (2006): Analisi economiche dellagrumicoltura biologica e convenzionale in Italia: valutazioni dei risultati delle indagini e prospettive, Emme Erre Grafca, Catania.
54.Tatoni, T., Roche, P., Médail, F., Barbero, M. (2004): The impact of changes in land use on ecological patterns in Provence (Mediterranean France), in Mazzoleni, S., Di Pascale, G., Di Martino, P., Rego, F., Mulligan, M. (eds.) Recent dynamics of Mediterranean vegetation and landscape, John Wiley & Sons, London, pp. 107-120.
55.Tregear, A., Arfni, F., Belletti, G., Marescotti, A. (2007): Regional foods and rural development: The role of product qualification, Journal of Rural Studies, vol. 23, no. 1, pp.12-22.
56.Tudisca, S. (eds.) (2007): Analisi tecnico-economica della vitivinicoltura nellarea occidentale della Sicilia, Ed. Fotograf, Palermo.
57.Unioncamere (2010): Rapporto nazionale sul settore vitivinicolo.
58.Vastola, A., Tanyeri-Abur, A. (2009): Non-conventional viticulture as a viable system: a case study in Italy, Working paper no. 43, American Association of Wine Economists.
59.Vecchio, R. (2009): The e-mail responsiveness of Italian wineries, working paper no. 47, American Association of Wine Economists.
60.White, G. B. (2008): Cost of Establishment and Production of Vinifera Grapes in the Finger Lakes Region of New York, Cornell University Publication E. B 2008-05, May, 2008.
2. Đuričin Sonja, Bodroža Duško
1 This paper is a part of research project 31005 (Modern Biotechnological Approach to Solving Problem of Drought in Agriculture of Serbia) fnanced by the Ministry of Science and Technological Development of the Republic of Serbia
2 M.Sc., Institute of Economic Sciences, Zmaj Jovina Street no. 12, Belgrade, Serbia, Phone: +381 11 2638 820, E-mail: sonja.djuricin@ien.bg.ac.rs
3 M.A., Institute of Economic Sciences, Zmaj Jovina Street no. 12, Belgrade, Serbia, Phone: +381 11 2635 823, E-mail: dusko.bodroza@ien.bg.ac
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Published
2013-01-31
How to Cite
Di Vita, G., & DAmico, M. (2013). ORIGIN DESIGNATION AND PROFITABILITY FOR SMALL WINE GRAPE GROWERS: EVIDENCE FROM A COMPARATIVE STUDY. Economics of Agriculture, 60(1), 7–24. Retrieved from https://www.ea.bg.ac.rs/index.php/EA/article/view/505
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