Portal de Periódicos da CAPES

Microeconometric analysis of wine grape supply contracts in Australia*

2005; Wiley; Volume: 49; Issue: 1 Linguagem: Inglês

10.1111/j.1467-8489.2005.00267.x

1467-8489

Iain Fraser,

Economics of Agriculture and Food Markets

Australian Journal of Agricultural and Resource EconomicsVolume 49, Issue 1 p. 23-46 Free Access Microeconometric analysis of wine grape supply contracts in Australia* Iain Fraser, Iain Fraser Iain Fraser (email: [email protected]), Applied Economics and Business Management Section, Department of Agricultural Science, Imperial College at Wye, Wye, Kent, UK.Search for more papers by this author Iain Fraser, Iain Fraser Iain Fraser (email: [email protected]), Applied Economics and Business Management Section, Department of Agricultural Science, Imperial College at Wye, Wye, Kent, UK.Search for more papers by this author First published: 11 March 2005 https://doi.org/10.1111/j.1467-8489.2005.00267.xCitations: 35 * The financial support of the Faculty of Law and Management, La Trobe University to help undertake this research is acknowledged. I would like to thank David Prentice, Geoff Edwards and two anonymous referees for detailed comments on earlier versions of the present paper. Comments from seminar participants at the Annual 2004 Agricultural Economics Society meeting in London, Imperial College London at Wye, La Trobe University, Bundoora, Shepparton and Albury–Wodonga Campuses on earlier versions of the present paper are also noted. I also thank the following who provided comments and assistance in the preparation and distribution of the survey: Lindsay Corby, Mike Stone, Peter Simpson, Peter Hackworth, John Beresford, Anne-Marie Smart, John Saleh, Claire Griffiths, Richard Wiencke and Gail Norris. All remaining errors are the author's. AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Abstract This paper examines wine grape supply contracts used in the main grape growing regions of Australia. An empirical analysis provides insight into specific aspects of contract design and implementation. Statistical analyses of sample data reveal differences between regions in contract specifications. Lower quality grape growing regions place a greater reliance on grape quality assessment to determine bonus/penalty payments compared to higher quality regions. Contracts in higher quality regions place greater emphasis on explicit winery involvement and direction in vineyard management. Results indicate that longer duration contracts are more inclusive in terms of the number of clauses included. Evidence of risk shifting (i.e., winery to grower) for high quality grapes is reported, where the price received by growers is determined by the bottle price of the wine produced. References AFFA (Department of Agriculture, Fisheries and Forestry – Australia). (2002). Submission to the Review of the Trade Practices Act. AFFA, Canberra . Available from URL: http://tpareview.treasury.gov.au/content/subs/120_Submission_AFFA.pdf[accessed 27 March 2004. Alston, J.M. and Smith, V.H. (1983). Some economic implications of minimum pricing: the case of wine grapes in Australia: comment, Review of Marketing and Agricultural Economics 51, 179– 185. Anderson, K. (2001). Where in the World is the Wine Industry Going? Plenary paper for the Annual Conference of the Australian Agricultural and Resource Economics Society, 23–25 January, Adelaide , pp. 23– 25. AWBC (Australian Wine and Brandy Corporation). (2001). 2001 Australian Winegrape Crush and Price Report, AWBC. Available from URL: http://www.awbc.com.au/winefacts/data/free.asp?subcatid=138[accessed 1 July 2004. AWRI (Australian Wine Research Institute). (1999). The Code of Good Manufacturing Practice for the Australian Grape and Wine Industry. The Australian Wine Research Institute , Glen Osmond . AWRI. (2001). Agrochemicals Registered for use in Australian Viticulture 2001/2002: A Must for Grapegrowers and Winemakers Exporting Wine. The Australian Wine Research Institute , Glen Osmond . Bogetoft, P. and Olesen, H.B. (2002). Ten rules of thumb in contract design: lessons from Danish agriculture, European Review of Agricultural Economics 29, 185– 204. D. Burch, R.E. Rickson and G. Lawrence (eds) (1996). Globalisation and Agri-Food Restructuring: Perspectives from the Australasian Region. Averbury Publishing, Aldershot . Chalfant, J.A., James, J.S., Lavoie, N. and Sexton, R.J. (1999). Asymmetric grading error and adverse selection: lemons in the California prune industry, Journal of Agricultural and Resource Economics 24, 57– 79. Chalfant, J.A. and Sexton, R.J. (2002). Marketing orders, grading errors, and price discrimination, American Journal of Agricultural Economics 84, 53– 66. Crocker, K.J. and Masten, S.C. (1991). Pretia ex machina? Prices and process in long-term contracts, Journal of Law and Economics 34, 270– 300. Dambergs, B., Kambouris, B., Gishen, M. and Francis, L. (2000). Measuring Fruit Quality, in Davies C., Dundon C. and Hamilton R. (eds), Modern Viticulture – Meeting Market Specifications. Australian Society of Viticulture and Oenology, Adelaide , pp. 45– 47. Digal, L.N. and Ahmadi-Esfahani, F.Z. (2002). Market power analysis in the retail food industry: a survey of methods, Australian Journal of Agricultural and Resource Economics 46, 559– 584. Fraser, I.M. (2002). Contractual relations between wine grape growers and wineries in Australia: survey results, Australian Viticulture 6, 68– 79. Fraser, I.M. (2003). The role of contracts in wine grape supply coordination: an overview. Australian Agribusiness Review (Serial online), 11. Available from URL: http://www.agribusiness.asn.au/Review/2003v11/index.htm[accessed 1 July 2004. Gillespie, J. and Eidman, V. (1998). The effect of risk and autonomy on independent hog producers' contracting decisions, Journal of Agricultural and Applied Economics 30, 175– 188. Goodhue, R.E. (1999). Input control in agricultural production contracts, American Journal of Agricultural Economics 81, 616– 620. Goodhue, R.E. (2000). Broiler production contracts as a multi-agent problem: common risk, incentives and heterogeneity, American Journal of Agricultural Economics 82, 606– 622. Goodhue, R.E., Heien, D.M. and Lee, H. (2004). Contracts and quality in the California winegrape industry, Review of Industrial Organisation 23, 267– 282. Greene, W.H. (2000). Econometric Analysis, 4th edn. Prentice Hall, Upper Saddle , New Jersey . Griffith, G. (2000). Competition in the food marketing chain, Australian Journal of Agricultural and Resource Economics 44, 333– 368. Haughton, G. and Browett, J. (1995). Flexible theory and flexible regulation: collaboration and competition in the McLaren Vale wine industry in South Australia, Environment and Planning A 27, 41– 61. Hennessey, D. and Lawrence, J. (1999). Contractual relations, control and quality in the hog sector, Review of Agricultural Economics 21, 52– 67. Hueth, B. and Ligon, E. (1999). Producer price risk and quality measurement, American Journal of Agricultural Economics 81, 512– 524. Hueth, B., Ligon, E., Wolf, S. and Wu, S. (1999). Incentives instruments in fruit and vegetable contracts: input control, monitoring and measuring, and price risk, Review of Agricultural Economics 21, 374– 389. Jones, W.O. (1951). A case study in risk distribution: the California lettuce industry, Journal of Farm Economics 33, 235– 241. Kleibenstein, J. and Lawrence, J. (1995). Contracting and vertical integration in the United States pork industry, American Journal of Agricultural Economics 77, 1213– 1218. Knoeber, C.R. and Thurman, W.N. (1995). 'Don't count your chickens … .': risk and risk shifting in the broiler industry, American Journal of Agricultural Economics 77, 486– 496. KPMG (1999). National Competition Policy Review of Agricultural Industry Development and Marketing Legislation, Final report. Department of Natural Resources and Environment , Melbourne . Available from URL: http://www.nre.vic.gov.au/web/root/domino/cm_da/nrencor.nsf/frameset/NRE+Corporate[accessed 1 July 2004. S.E. Masten (ed.) (1996). Case Studies in Contracting and Organisation. Oxford University Press, Oxford . New South Wales Government Review Group (2000). Review of Proposed Powers and Functions of the Wine Grapes Marketing Board, Issues paper. NSW Government, Sydney . Available from URL: http://www.agric.nsw.gov.au/esu/ncp/[accessed 1 July 2004. O'Mara, L.P. (1981). Some economic implications of minimum pricing: the case of wine grapes in Australia, Review of Marketing and Agricultural Economics 49, 107– 124. Pritchard, B. (1999a). National competition policy in action: the politics of agricultural and wine grape marketing in the Murrumbidgee irrigation area, Rural Society 9, 421– 441. Pritchard, B. (1999b). The regulation of grower-processor relations: a case study from the Australian wine industry. Sociologia Ruralis 39, 186– 201. Scales, W., Croser, B. and Freebairn, J. (1995). Winegrape and Wine Industry in Australia, Report by the Committee of Inquiry into the Winegrape and Wine Industry. Australian Government Publishing Service, Canberra . Sheldon, I.M. (1996). Contracting, imperfect information and the food system, Review of Agricultural Economics 18, 7– 19. Silke, B. (2001). Quality and contractual choice: a transaction cost approach to the polish hog market, European Review of Agricultural Economics 28, 241– 261. Stanford, L. (2000). Vintage 2001 – The New Order Emerging?, Seminar presented to the Agribusiness Association of Australia, Sydney, 7 June. Australian Wine and Brandy Corporation . Available from URL: http://agribusiness.asn.au/Events/eventpapers/Wine_2001.pdf[accessed 1 July 2004. Swann, M. (2002). Contracting around the world, Australian Viticulture November–December, 58– 67. Swinburn, G. (2001). Are grape prices a good indicator of quality within a region?, The Australian Grapegrower and Winemaker March, 21–22. Sykuta, M.E. and Cook, M.L. (2001). A new institutional economics approach to contracts and cooperatives, American Journal of Agricultural Economics 83, 1266– 1272. Taylor, P. (2000). As the winegrape market develops, price determination is reviewed, Australian Viticulture July–August, pp. 47– 50. Taylor, W. (1996). Fruit supply and distribution contracts: what they should cover, Wine Industry Journal 11, 162– 170. Tirole, J. (1990). The Theory of Industrial Organisation. The MIT Press, Cambridge , MA . Tsoulouhas, T. and Vukina, T. (1999). Integrator contracts with many agents and bankruptcy, American Journal of Agricultural Economics 81, 61– 74. Tsoulouhas, T. and Vukina, T. (2001). Regulating broiler contracts: tournaments versus fixed performance standards, American Journal of Agricultural Economics 83, 1062– 1073. Vagnarelli, B. (2000). Targeting and achieving quality improvements, in Davies C., Dundon C. and Hamilton R. (eds), Modern Viticulture – Meeting Market Specifications. Australian Society of Viticulture and Oenology, Adelaide , pp. 30– 32. Citing Literature Volume49, Issue1March 2005Pages 23-46 ReferencesRelatedInformation