A simulation model for evaluating the long-term financial impact of different wine grape production systems

Rabie, Pierre-Andre (2015-04)

Thesis

ENGLISH ABSTRACT: Agricultural production takes place in an uncertain and complex environment, with production the result of the culmination of a variety of factors within a greater system. Consequently, accounting for the influence of variables in the production system is very difficult, making it a daunting task for decision makers to make good decisions. In the wine grape production context, this problem is accentuated due to the capital intensive and perennial nature of investments, also giving rise to a path dependency. As a result it is essential to make strategically sound decisions in order to ensure the long-term profitability and financial feasibility of wine grape production. Decision making tools, like a model, can be of invaluable support for strategic decision making. A model is used to simplify reality, by imitating and simulating the actual system as closely as possible. A simulation model was therefore developed for this thesis to be able to evaluate the long-term financial impact of different wine grape production systems and to support strategic decision making. This model can be adapted to individual farm specific features, scenarios and preferences, in the evaluation and analysis of different investment and wine grape production system decisions. For this study, the nature of agricultural systems as well as qualities required by a simulation model, were investigated. The former is followed by an investigation of the effect of the grapevine and trellis specific qualities on the possibilities of the production system, as well as the implication of capital budgeting and financing considerations on the performance of the wine grape production system. In view of the above, the model was then applied to simulate and evaluate different wine grape production systems as well as a structural transition and expansion of wine grape production, for a simulated farm in the Breedekloof region, South Africa. The model can be used for decision making and scenario planning purposes by wine grape producers and stakeholders in the wine industry.

AFRIKAANSE OPSOMMING: Landbouproduksie vind plaas in ‘n komplekse omgewing met talle onsekerhede, waar produksie die resultaat is van ‘n aantal faktore binne ‘n groter geheel. Die uitdaging is dus om die spesifieke invloed van veranderlikes binne die produksiestelsel waar te neem sodat besluitnemers ingeligte besluite op grond daarvan kan maak. In die verbouing van langtermyn gewasse, spesifiek die van wyndruif verbouing, word hierdie probleem beklemtoon vanweë die kapitaal intensiewe en meerjarige aard van investerings, wat aanleiding gee tot die afhanklikheid van vorige besluite. Ten einde die langtermyn winsgewendheid en lewensvatbaarheid van wyndruif produksie te verseker, is strategiese en ingeligte besluite deurslaggewend. Hulpmiddels in die besluitnemingsproses, soos modelle, kan onskatbare ondersteuning bied in hierdie konteks. Die doel van ‘n model is om ‘n werklike stelsel te weerspieël, maar terselfdertyd word vereenvoudigende aannames gemaak. Vir die doeleindes van hierdie tesis is ‘n simulasie model ontwikkel om die langtermyn finansiële impak van verskillende wyndruif produksiestelsels te weerspieël en strategiese besluitneming te bevorder. Hierdie model kan aangepas word vir die individuele vereistes, voorkeure en kenmerke van individuele plase, ten einde verskillende investeringsbesluite en wyndruifproduksiestelsels te evalueer. Vir die doeleindes van hierdie studie is die aard van die stelsel waarin landbouproduksie plaasvind, asook eienskappe wat benodig word deur ‘n simulasiemodel, om ‘n goeie weerspieëling van die werklikheid te kan gee ondersoek. Daarna is die invloed van die prieëlstelsel oorweging op die wingerdstok, die uitvoerbaarheid van verskillende bewerkingspraktyke, asook die invloed van kapitaal- en finansiëringsoorwegings op die prestasie van die wyndruifproduksiestelsel ondersoek. In die lig van bogenoemde oorwegings is die model gebruik om verskillende wyndruifproduksiestelsels te simuleer en te evalueer, asook om ‘n strukturele oorgang en uitbreiding vir ‘n plaas in die Breedekloofstreek in Suid-Afrika te ondersoek. Wyndruif produsente en belanghebbendes in die wynbedryf kan hierdie model in scenario beplanning en besluitneming gebruik.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/96864
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