ChileanJAR

This study aimed at describing the current technological levels of the irrigated vineyard farm industry of the Central Valley of Chile, by estimating the production, cost and productivity variations associated with size and estimating the optimal plantation size. To that purpose, a survey of 82 randomly selected vineyard farms, equivalent to 4.8% of the statistical universe, located within the V to VII Regions of Chile, was carried out between September 1997 and March 1998. It was found that the majority of the farms use flood or furrow irrigation with only 12 percent employing drip irrigation, mainly larger farms. The use of agrochemicals increased with size. On the other hand, labor showed similar coefficients of usage at all size levels. In all cases the most labor-intensive farm tasks were performed with temporary labor. Mechanization was low but increased with size. A long-term production function was estimated, using planted area as an independent variable. The coefficients showed the existence of diminishing unit costs (per hectare) and diminishing returns of scale. However, the marginal product value was always greater than the marginal cost for the size range surveyed, suggesting that optimum plantation size lies beyond the biggest farm in the sample (i.e. beyond 193 hectares). Depending on the average price for wine grapes and the opportunity cost of land, the optimum plantation size would be found in the 232 to 315 hectares range. Unfortunately these estimates have no statistical support, as they fall outside the range of the sample, and they are offered here only as a ‘best’ estimate.