AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 224 – Economics

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AAWE Working Paper No. 224 – Economics

Risk Attitudes in Viticulture: The Case of French Winegrowers

Joel Aka, Adeline Alonso Ugaglia & Jean-Marie Lescot

Abstract

The aim of this paper is to analyze risk attitudes of winegrowers in France. An inter- esting feature of French viticulture is that most of the production is carried out under an appellation regime, bearing constraints in terms of maximal yield authorized. We estimate a translog cost function under the constraint of this maximal yield. We jointly estimate cost function parameters, factor share equations and winegrowers’ attitudes to the risk function. Our estimates are based on the FADN database (2005-2014), data from the National Cultural Practices survey (2006, 2010, 2013), data from the French National Institute of Origin and Quality (INAO) and data from guides on production costs in viticulture and œnology (from 2005 to 2014). We find that pesticide demand is inelastic and all types of winegrowers are risk-averse. For the majority of them, risk aversion declines with expected profit (DARA), but for the Champagne region, it is the contrary. Expected profit is far higher than in the other regions and these winegrowers are more averse to risk when expected profit increases (IARA).

This article was written by Karl Storchmann

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