Productive efficiency of wine grape producers in the North of Portugal

Abstract

Portugal is a country traditionally dedicated to viticulture and characterized by the production of wines of high quality. However, although it continues to be a major player in the world, both in the extension of vineyards and in the production of wine, it is certain that in recent years Portugal have lost market share in these areas. In this context, it is interesting to analyze if this situation could be related to the level of productive efficiency of vineyards. Therefore, the aims of this study are to analyse the farms that are efficiently allocating resources to achieve maximum production and to identify characteristics that make the farm more efficient. In addition, we want to analyse the productive efficiency of the farms from a regional perspective. To achieve this purpose, we use a database collected by face-to-face surveys from a sample of 154 wine-growing farms with specific input-output information from 2017. These farms are locating in the three regions of the North of Portugal (Minho, Douro and Trás-os-Montes), which represents more than 40% of the Portuguese vineyard area. To analyse the productive efficiency of the farms, we use the Stochastic Frontier Analysis (SFA). The results show that the efficiency level in the wine-growing farms from the North of Portugal is arround 67%, but with significant differences at regional level. Many of these discrepancies may be due to structural factors, such as the type of grape produced in each region. In conclusion, the findings make evident that the most efficient farms are not the most profitable due to the structure of the existing value chain.