Determinants of producers’ choice of wine grape cultivars in the South African wine industry
Thesis (MAgricAdmin (Agricultural Economics))--University of Stellenbosch, 2005.
The wine industry is one of the oldest commercial activities in South Africa. The South African wine grape industry annually produces more than a million tonnes of grapes, making the country the ninth largest producer in the world. The total area under wine grape production is divided into eight regions for administrative purposes. These boundaries are a legacy of the era of controlled marketing and there is continued meaningfulness of having various classifications such as ‘wine of origin’ scheme. The purpose of this study is to identify the factors that determine the producers’ choice of wine grape cultivars in the wine regions in South Africa. Time series data for the period 1990-2003 were used to estimate the parameters of linear regression models. Two equations for each wine grape cultivar in each region were postulated and estimated using Ordinary Least Squares as applied with Eviews. Further, a stepwise regression as applied in STATISTICA was used to eliminate the parameters that were not statistically significant at five percent significant level. In identifying the factors that determine the choice of wine grape cultivars in the regions, the results showed that each wine grape cultivar in each region has its own factors influencing the producers’ choice of that specific wine grape cultivar. Same wine grape cultivars in different regions similarly have its own factors determining the producers’ choice. The implication of this is that there are differences in terms of the requirements and types of crops and wine grape cultivars grown in each region. However, the most important result that emerged with regular frequency is that, the factors determining the producers’ choice of a specific wine grape cultivar for each region is price of other wine grape cultivars and competitive products in that wine region. The price of specific wine grape cultivars only had an influence on few wine grape cultivars. The implication is that the producers in South Africa appears to consider the prices of other wine grape cultivars and competitive products before making a choice of whether to plant or uproot a specific wine grape cultivar more than the price of the specific wine grape cultivar. This supports the theory that farm prices play a key role in allocating resources and in rewarding efficient producers.