Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017

Thomas Nordblom, Christopher Penfold, Melanie Weckert, Mark Norton, Jake Howie, Timothy Hutchings

Research output: Book chapter/Published conference paperConference paper

13 Downloads (Pure)

Abstract

We calculate financial risk profiles for representative vineyards of 50-ha in four wine grape regions of South Australia using straw or living mulches as alternatives to herbicides for under-vine management. Calculations are based on replicated experiments in a commercial vineyard in each district with the most representative vine variety of each; the grape yields were measured in 2016 and 2017. Published district grape prices and yields for the years 2006 through 2017 form the basis for novel stochastic analysis. The herbicide (Control) treatment in Barossa Shiraz (BS) and Riverland Merlot (RM) showed greater median Gross Revenues ($/ha) than the other two districts: Eden Valley Shiraz and Langhorne Creek Cab-Sav. After subtraction of operating costs, and assuming alternative treatments produce grapes of equal quality and price as the Control in a district, the alternatives gave median Gross Margins ($/ha) greater than the Control in BS but lower than the Control in RM. Gross Margin results were mixed in the other two districts. The Gross Margin results above are magnified in financial Risk Profiles based on variations in Gross Margins times 50 ha across multiple ten-year periods after subtracting taxes, drawings, recurrent capital costs and interest on accumulating debt, for decadal cash margins. The Risk Profile of a treatment in a district is its cumulative distribution of decadal cash margins ($M). We show that choice of under-vine treatment can significantly affect a vineyard’s financial viability.
Original languageEnglish
Title of host publicationAustralasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide
Place of PublicationUniversity of Minesota
PublisherAgEconsearch
Number of pages28
Publication statusPublished - 06 Feb 2018
Event62nd Australasian Agricultural and Resource Economics Society (AARES) Annual Conference 2018 - Adelaide Convention Centre , Adelaide, Australia
Duration: 06 Feb 201809 Feb 2018
http://www.aares.org.au/iMIS_Prod/AARES2016/Event/2018AC/2018AC_Home_Page.aspx
http://www.aares.org.au/imis_prod/documents/2018AC/Program.pdf (program)
http://www.aares.org.au/iMIS_Prod/AARES2016/Event/2018AC/Submissions.aspx (paper submission guidelines)
https://esacentral.org.au/event/27555/australasian-agricultural-and-resource-economics-society-aares-annual-conference (conference info)

Publication series

Name
PublisherAgeconSearch

Conference

Conference62nd Australasian Agricultural and Resource Economics Society (AARES) Annual Conference 2018
Abbreviated titleAbundance in an Era of Scarcity? Challenges and Opportunities for Australasian Agriculture, Environment, Food, Resource and Agribusiness Sectors
CountryAustralia
CityAdelaide
Period06/02/1809/02/18
Internet address

Fingerprint

risk profile
wine grapes
vineyards
vines
grapes
herbicides
economics
straw mulches
live mulches
cumulative distribution
debt
operating costs
taxes
South Australia
income
valleys
viability

Cite this

Nordblom, T., Penfold, C., Weckert, M., Norton, M., Howie, J., & Hutchings, T. (2018). Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017. In Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide University of Minesota: AgEconsearch.
Nordblom, Thomas ; Penfold, Christopher ; Weckert, Melanie ; Norton, Mark ; Howie, Jake ; Hutchings, Timothy . / Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017. Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide. University of Minesota : AgEconsearch, 2018.
@inproceedings{8251c42684e1414dbbcf80abfb62d627,
title = "Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017",
abstract = "We calculate financial risk profiles for representative vineyards of 50-ha in four wine grape regions of South Australia using straw or living mulches as alternatives to herbicides for under-vine management. Calculations are based on replicated experiments in a commercial vineyard in each district with the most representative vine variety of each; the grape yields were measured in 2016 and 2017. Published district grape prices and yields for the years 2006 through 2017 form the basis for novel stochastic analysis. The herbicide (Control) treatment in Barossa Shiraz (BS) and Riverland Merlot (RM) showed greater median Gross Revenues ($/ha) than the other two districts: Eden Valley Shiraz and Langhorne Creek Cab-Sav. After subtraction of operating costs, and assuming alternative treatments produce grapes of equal quality and price as the Control in a district, the alternatives gave median Gross Margins ($/ha) greater than the Control in BS but lower than the Control in RM. Gross Margin results were mixed in the other two districts. The Gross Margin results above are magnified in financial Risk Profiles based on variations in Gross Margins times 50 ha across multiple ten-year periods after subtracting taxes, drawings, recurrent capital costs and interest on accumulating debt, for decadal cash margins. The Risk Profile of a treatment in a district is its cumulative distribution of decadal cash margins ($M). We show that choice of under-vine treatment can significantly affect a vineyard’s financial viability.",
keywords = "Farm financial risk, Risk profiles, Decadal cash margin, Simulation, Under-vine treatments, Wine-grape production, South Australia",
author = "Thomas Nordblom and Christopher Penfold and Melanie Weckert and Mark Norton and Jake Howie and Timothy Hutchings",
note = "The web-link to this study is http://ageconsearch.umn.edu/record/273525",
year = "2018",
month = "2",
day = "6",
language = "English",
publisher = "AgEconsearch",
booktitle = "Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide",

}

Nordblom, T, Penfold, C, Weckert, M, Norton, M, Howie, J & Hutchings, T 2018, Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017. in Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide. AgEconsearch, University of Minesota, 62nd Australasian Agricultural and Resource Economics Society (AARES) Annual Conference 2018, Adelaide, Australia, 06/02/18.

Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017. / Nordblom, Thomas; Penfold, Christopher; Weckert, Melanie; Norton, Mark; Howie, Jake ; Hutchings, Timothy .

Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide. University of Minesota : AgEconsearch, 2018.

Research output: Book chapter/Published conference paperConference paper

TY - GEN

T1 - Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017

AU - Nordblom, Thomas

AU - Penfold, Christopher

AU - Weckert, Melanie

AU - Norton, Mark

AU - Howie, Jake

AU - Hutchings, Timothy

N1 - The web-link to this study is http://ageconsearch.umn.edu/record/273525

PY - 2018/2/6

Y1 - 2018/2/6

N2 - We calculate financial risk profiles for representative vineyards of 50-ha in four wine grape regions of South Australia using straw or living mulches as alternatives to herbicides for under-vine management. Calculations are based on replicated experiments in a commercial vineyard in each district with the most representative vine variety of each; the grape yields were measured in 2016 and 2017. Published district grape prices and yields for the years 2006 through 2017 form the basis for novel stochastic analysis. The herbicide (Control) treatment in Barossa Shiraz (BS) and Riverland Merlot (RM) showed greater median Gross Revenues ($/ha) than the other two districts: Eden Valley Shiraz and Langhorne Creek Cab-Sav. After subtraction of operating costs, and assuming alternative treatments produce grapes of equal quality and price as the Control in a district, the alternatives gave median Gross Margins ($/ha) greater than the Control in BS but lower than the Control in RM. Gross Margin results were mixed in the other two districts. The Gross Margin results above are magnified in financial Risk Profiles based on variations in Gross Margins times 50 ha across multiple ten-year periods after subtracting taxes, drawings, recurrent capital costs and interest on accumulating debt, for decadal cash margins. The Risk Profile of a treatment in a district is its cumulative distribution of decadal cash margins ($M). We show that choice of under-vine treatment can significantly affect a vineyard’s financial viability.

AB - We calculate financial risk profiles for representative vineyards of 50-ha in four wine grape regions of South Australia using straw or living mulches as alternatives to herbicides for under-vine management. Calculations are based on replicated experiments in a commercial vineyard in each district with the most representative vine variety of each; the grape yields were measured in 2016 and 2017. Published district grape prices and yields for the years 2006 through 2017 form the basis for novel stochastic analysis. The herbicide (Control) treatment in Barossa Shiraz (BS) and Riverland Merlot (RM) showed greater median Gross Revenues ($/ha) than the other two districts: Eden Valley Shiraz and Langhorne Creek Cab-Sav. After subtraction of operating costs, and assuming alternative treatments produce grapes of equal quality and price as the Control in a district, the alternatives gave median Gross Margins ($/ha) greater than the Control in BS but lower than the Control in RM. Gross Margin results were mixed in the other two districts. The Gross Margin results above are magnified in financial Risk Profiles based on variations in Gross Margins times 50 ha across multiple ten-year periods after subtracting taxes, drawings, recurrent capital costs and interest on accumulating debt, for decadal cash margins. The Risk Profile of a treatment in a district is its cumulative distribution of decadal cash margins ($M). We show that choice of under-vine treatment can significantly affect a vineyard’s financial viability.

KW - Farm financial risk

KW - Risk profiles

KW - Decadal cash margin

KW - Simulation

KW - Under-vine treatments

KW - Wine-grape production

KW - South Australia

UR - http://ageconsearch.umn.edu/record/273525

M3 - Conference paper

BT - Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide

PB - AgEconsearch

CY - University of Minesota

ER -

Nordblom T, Penfold C, Weckert M, Norton M, Howie J, Hutchings T. Economic and financial risks in under-vine management alternatives to herbicide in four South Australian wine-grape districts, 2016 & 2017. In Australasian Agricultural & Resource Economics Society Annual Conf 2018, Adelaide. University of Minesota: AgEconsearch. 2018