V.H. Moreira, J.L. Troncoso, and B.E. Bravo-Ureta. 2011. Technical efficiency for a sample of Chilean wine grape producers: A stochastic production frontier analysis. Cien. Inv. Agr. 38(3):321-329. Chile has become an increasingly important player in international wine markets. Concurrent with the expansion of Chilean wine output and exports, there has been an increase in production in several other "New World" countries including Argentina, Australia, New Zealand and South Africa. The overall growth in wine supplies has increased competition to capture market share, which highlights the importance of productivity gains among wine and grape producers. The purpose of this paper is to estimate and analyze the technical efficiency (TE) component of productivity for a sample of wine grape producers in Chile. The data includes 38 farms with specific input-output information for individual blocks yielding a total of 263 observations. We use a Cobb-Douglas model to estimate a stochastic production frontier (SPF) and to obtain TE scores both at the individual block and at the farm level. The results suggest that the average farm level TE is 77.2%, while the block level TE ranges from 23.4 to 95.0%. The value of the function coefficient is 1.021, which suggests nearly constant returns to size.

A hedonic function relating the retail price of Chilean wine in the US market to a number of relevant variables was estimated. The variables were: quality ratings, aging, grape variety, valley of origin and membership to an association. Estimates for the percentage impact and marginal prices of these variables are provided. The overall conclusion is that variety and location are more influential in the commercial success of wines than quality ratings and aging, suggesting that oenological practices cannot outweigh judgemental errors in these long-term choices.Additional key words: hedonic function, marginal price, percentage impact. Resumen Nota corta. Determinantes del precio de los vinos chilenos en el mercado de Estados Unidos: un enfoque hedónicoSe estimó una función de precios hedónicos asociando el precio al detalle del vino chileno en el mercado estadounidense a los siguientes atributos visibles: nota de calidad, envejecimiento, cepa, valle de origen y pertenencia a alguna asociación de productores. Se estimó el impacto porcentual y el precio marginal de cada uno de estos atributos. La conclusión general de este estudio fue que la cepa y el valle de origen («terroir») son considerablemente más influyentes en el éxito comercial de un vino que la calidad, medida por juicios expertos, y el envejecimiento. Ello es importante porque indica que malas decisiones de largo plazo no pueden después modificarse mediante tratamientos enológicos (envejecimiento).Palabras clave adicionales: función hedónica de precios, impacto porcentual, precio marginal.The Chilean wine industry has experienced a remarkable expansion over the past decade, based primarily in the advantages offered by the international markets. Thus, while in 1990 most of the wine produced in Chile was consumed domestically and exports accounted for only 7% of total production, in 2002 about 60% of the Chilean wines were sold in the export market. In the same period of time the industry more than doubled production, passing from 2.6 to 5.9´10 6 hl, and the value of exports grew from US$ 80 million, in 1990, to US$ 608 million, in 2002 (Foster and Valdés, 2001; SAG, 2003). Wine is now one of the most important single export commodities in Chilean trade, as it contributes with about 11% of all forestry and agricultural exports.In economic theory, consumer demand is normally derived from a utility function, a theoretical construct that defines preferences over the array of commodities placed at the consumer's disposal. These preferences are based on the ordinal utility (i.e. satisfaction) obtained from the quality attributes of each commodity, as perceived by an ordinary consumer. Thus, it can be hypothesized that prices are the value that consumers attach to the bundle of quality attributes of each commodity, given certain budget restrictions and limited commodity supplies. The determination of market values based on commodity attributes can be carried out through the estimation of a hedonic price

A hedonic price function for Argentinean wines in the U.S market is estimated in order to evaluate the effect of the most important attributes of wine on price. Results show that labeling practices and the choice of the right wine quality attributes are far more influential on price than expert panel opinions or oenological wine improvements such as age. (JEL Classification: Q11, C21, D12)

This paper applies alternative panel data models to a cross-sectional dataset that contains observations at the plot level for a sample of wine-grape farms in Central Chile. The input-output data as well as key attributes of the production system are at the plot level, at which individualized management exists. However, plots belonging to a particular farm are also subject to overall centralized (farm-level) management. Thus, this data configuration offers the possibility of analyzing technical efficiency (TE) both across plots and across farms. A Generalized True Random Effects model, which permits the separate identification of farm-level and plot-level inefficiency while controlling for unobserved farm-level heterogeneity, shows that TE varies across farms but not among plots within the same farm. Geographical location also affects grape production and agro-climatic conditions influence production levels, with grape farms located on cooler zones producing significantly less than their counterparts in warmer zones, as expected. The analysis underscores the value of using recent methodologies typically applied to panel data when cross-sectional information is available for individual plots within a farm unit or in similar settings.

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