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## versão impressa ISSN 1870-5472

### agric. soc. desarro vol.13 no.1 Texcoco Jan./Mar. 2016

Articles

Profitability of the grape (Vitis vinífera) production systems for table and industry in Aguascalientes, México

1 Instituto Nacional de Investigaciones Forestales, Agrícolas y Pecuarias (INIFAP). Campo Experimental Pabellón. Carretera Aguascalientes-Zacatecas, Km. 32.5. Pabellón de Arteaga, Aguascalientes. 20660. México.

Abstract:

A diagnosis of profitability of the Salvador grape (Vitis vinífera) production for industry and Red Globe for fresh market was performed. The objective was to generate information to support decisions to foster this activity in a sustainable and competitive manner in the study area. A semi-structured survey was applied to grapevine producers in seven municipalities of the state of Aguascalientes, fourth grape producer in México. Based on the characteristics of the producers, the vineyard management, production costs, destination of the production, varieties and irrigation types, were identified in four systems: 1) Salvador + gravity based irrigation; 2) Salvador + drip irrigation; 3) Red Globe + gravity based irrigation; and 4) Red Globe + drip irrigation. The cost-benefit relationship (CBR) was 1.7, 1.9, 2.9 and 3.2, respectively. The four systems are profitable, although higher in the production of table grapes (Red Globe) and with drip irrigation. The financial analysis indicates that viticulture in Aguascalientes is profitable, so it is advisable to implement strategies and actions for its growth in the entity.

Keywords: industry; table; production; rental

Resumen:

Palabras clave: industria; mesa; producción; renta

Introduction

Because of its economic, cultural and religious importance, cultivation of grape (Vitis vinifera) is one of the most ancient in the world. Derived from its diversified consumption, grape is characterized by its high economic value, and currently 31 % of the world production is destined to the fresh market; 67 % to elaboration of wine and other alcoholic beverages; and 2 % is processed as dry fruit (FAO, 2013; OIV, 2012).

In 2012, vineyards in México occupied a planted surface of 28.9 thousand ha and generated a production of 375.3 thousand tons, valued in 7093 million pesos; 71 % of the grape production was destined to the market for its fresh consumption; 25 % was used as input in the elaboration of wines, juices and concentrates; and 4 % was consumed as dry fruit or raisins (SIACON-SIAP, 2012).

In 2012, the state of Aguascalientes occupied the fourth place nationally in grape production. That same year the entity had 32 grapevine varieties planted on a surface of 835 ha; 75 % of the surface was sown with varieties whose production had as destination the juice and concentrate processing industry; 14 % corresponded to table grape varieties and the rest to varieties for the elaboration of table wine (SIACON-SIAP, 2012). Within the diversity of varieties planted in the entity, the ones that stand out are the so-called Salvador, whose production is destined to the industry, and the Red Globe, which is a table grape. Annually, 11.3 thousand t of grape are produced in Aguascalientes, generating a value of 41.5 million pesos that represented 3 % and 0.6b% of the nation’s total, respectively (SIACON-SIAP, 2012).

Vine cultivation has presence in eight of the eleven municipalities that are part of the state of Aguascalientes. Grapevine production makes intensive use of the workforce; from this that the activity is important due to the generation of jobs in the rural environment, for the stages of production, industrialization and commercialization. Data from the Consejo de Viticultores de Aguascalientes, A. C., point out that in 2013, there were 234 producers devoted to the activity, which obtained an average annual yield of 14.3 t ha-1.

In recent years, viticulture in Aguascalientes is undergoing a process of resurgence; the state government hopes to detonate the activity and make it into one of the most important ones in the state and the region (SEDRAE, 2014). Therefore, understanding the economic situation of the activity is fundamental to define actions that allow the development of viticulture in a sustained and competitive manner. In the market economy, profitability is the main criterion that companies use in decisions about the expansion and reduction of production, organization and resource capture; likewise, profitability is an essential part of economic efficiency and, therefore, a necessary condition for production (Timofti and Latisin, 2013). The profitability analysis is of great importance in decision making and the design of agricultural policies. Studies about grape profitability by Carpio et al. (2008) allowed comparing the profitability under different irrigation systems in the southeast of the USA, and served as a guide for grape producers in that country in management and decision making. Baeyens et al. (2005) carried out a diagnosis of the winemaking sector in the Huelva County in Spain; the profitability study of vineyards in the region allowed the development plan of the winemaking sector in the denominations of origin and vinegars from the Huelva County.

Winemaking has been a distinctive activity in Aguascalientes, reaching its greatest importance during the 1970s and beginning of the 1980s, characterized by its specialization in distilled products such as brandy. However, during the 1980s the state’s winemaking sector suffered transformations that slowed down the growth of the agroindustry and caused the virtual extinction of the crop. Vargas (1993) points out that the local winemaking industry was affected by financial problems derived from the economic crisis that severely affected the winemaking sector and drove the producers to devote their lands to crops that had local market and guarantee monetary liquidity.

Rojas et al. (2001) hold that the commercial openness of the Mexican economy had a negative effect on the agricultural and livestock sector by allowing the imports of products derived from grape at a lower price, particularly brandy, which represented a strong competition for national products. Velásquez et al. (2013) point out that the ill management of the vineyards, the incidence of pests and diseases, as well as the water scarcity, promoted a decrease in the yield of Aguascalientes vineyards, and as consequence, in the profitability and competitiveness, causing the severe reduction of the cultivated surface.

In 2012, the surface cultivated with grapevines in the state represented less than 10 % of what there was in the 1980s. However, the Ministry of Agriculture, Livestock Production, Rural Development, Fishery and Food (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación, SAGARPA, 2010) pointed out that during the 1990s winemaking in México grew 12 % annually and Aguascalientes is one of the states where there was a significant growth.

In recent years the winemaking activity in Aguascalientes has been a focus of interest from producers and the state’s government, primarily to stimulate the production and to direct the integration and strengthening of all the links in the productive chain under an agrifood vision (SEDRAE, 2014). However, the actions and strategies should be based on updated information to help in the development of the grape-producing activity in the state.

The objective of this study was to perform a diagnosis of the condition of the production and profitability of grape in Aguascalientes, with the aim of generating information to help guide decision making for the promotion of the activity in a sustainable and competitive manner.

Study area

The study was performed in the grape-producing area of Aguascalientes, which includes seven municipalities: El Llano, Cosío, Rincón de Romos, Asientos, Tepezalá, Pabellón de Arteaga and San Francisco de los Romo (Figure 1). The area is located at altitudes of 1700 to 2400 masl; the climate is semi-dry, with an annual mean precipitation of 400 to 450 mm in the municipalities of Cosío and Tepezalá, and of 450 to 500 mm en El Llano, Rincón de Romos and Pabellón de Arteaga. The annual mean temperature is 16 to 17 °C and the soils are characterized by presenting medium textures that allow the easy penetration of roots and have a medium capacity for moisture retention (Maciel Pérez et al., 2005; INIFAP, 2013).

Materials and Methods

This research is considered of the “non-experimental - transectional descriptive” type, for which data were collected during a single moment and unique time to describe variables and analyze their incidence and interrelation at the given moment (Hernández Sampien et al., 2000). To gather the information, a structured survey was applied, directed at grape producers, during the months of August and September, 2013. The questions were made to determine aspects such as: a) Characteristics of producers; b) Management of the vineyard; c) Income, production costs and profitability; and d) Commercialization.

Based on Sánchez Toledano et al. (2012), a sample was determined for finite populations which has state representativeness. The size of the sample was determined as follows:

n=Z2Npq(N-1)e2+Z2pq

where n is the sample size; N is the population; Z is the level of trust; e is the error; p and q are probability measurements.

Considering a population of 234 grapevine producers in the state, a level of trust of 90 %, an error of 10 % and a probability of p=0.5, the estimated size of the sample n was 46 surveys; however, 50 surveys were applied which represent 21b% of the total population of producers and 227 ha of vineyards. Later, a stratification of producers was made, considering the surface planted; this, with the aim of classifying the producers from a variable and for the sample to be integrated by a representative percentage from each stratum. Likewise, the stratification was used as a basis for the selection of producers to be surveyed, with which there was an attempt to guarantee a representative sample of viticulture in Aguascalientes. Based on Vivanco (2005) and Namakforoosh (2005), the following strata were defined: E1 (1 to 5 ha), E2 (6 to 15 ha) and E3 (³16 ha) (Table 1). Finally, the producers to be surveyed were selected through a systemic random sampling, for which a constant selection interval was determined. This type of sampling allows selecting the group of individuals from the population in a totally random manner (Scheaffer et al., 2007; Sánchez Toledano et al., 2012).

Table 1 Producer strata based on surface planted with grapevine in Aguascalientes.

Source: elaborated with information obtained through interviews with the manager of the Consejo de Viticultores de Aguascalientes A. C., 2013.

The information gathered in the survey was captured in Excel worksheets and descriptive statistics were used for the analysis of the information. The technological index for the two most important varieties (Salvador and Red Globe) produced in the state was estimated; this index was estimated after determining the main technological components of producers in vineyard management, with information from the survey. Each technological component was divided into tasks and practices which were assigned a weight in an arbitrary manner (Table 2). The results were expressed from 1 to 100, where the value that most approaches 100 indicates a higher technological level.

Table 2 Technological components considered in the estimation of the technological index in grape production in Aguascalientes.

The production costs and profitability were calculated for the Salvador and Red Globe varieties, for each variety the gravity based and drip irrigation systems were considered, which are the predominant ones in the grape-producing area.

The production costs calculated take into account the input prices observed in the Spring-Summer 2013 cycle. Based on Ayala Garay et al. (2014), González Andrade and Fuentes Flores (2013), Di Vita and D’Amico (2013) and Swenson and Haugen (2013), the costs were divided into: a) Direct costs that take into account the payment for chemical and organic fertilizers, pesticides, fungicides, irrigation water, and payment for mechanized and manual work; and b) Indirect costs that included the annual expenditure for equipment replacement, inputs and tools, maintenance of the drip irrigation system, and general expenses, such as carriage and transport expenses, and the money opportunity cost.

Considering (r) grapevine producers in Aguascalientes that use (i) inputs in their production process, the production cost that producer r pays out can be calculated as follows:

1)

where CT is the total cost of production paid out by the producer r; pri is the price of input i that producer r pays; xri is the amount of input i that producer r purchases and uses.

To estimate the income per hectare, the sales price from producers of each grape variety was used, and the average yield reported by producers, that is:

ITr=pr×yr 2)

where IT is the total income that producer r obtains; pr is the sales price for grape received by producer r; and yr is the yield obtained by producer r.

The profitability of the producer r is the difference between the total income and the total production cost, that is:

3)

Based on Terrones Cordero and Sánchez Torres (2011), and Ugalde Acosta et al. (2011), the Cost- Benefit Relation (CBR) of each producer was calculated. This indicator measures the benefits that a producer obtains for each peso invested in the production of one ha of grapevine. The formula to obtain the CBR at the level of producer is:

4)

If the CBRr is equal to one, then the activity does not generate losses or gains, which means that the investment carried out by producer r was recovered. If the CBRr is higher than one, then the activity presents profitability and generates earnings (Herrera et al., 1994; Romero et al., 2009).

Results and Discussion

Characteristics of the producers

Results from the survey indicate that 98 % of producers were men of ages that range from 23 to 81 years. The average age of producers was 59 years old, well above the average age for the state in 2010, which was 24 years (INEGI, 2010a; INEGI, 2010b); 54 % of producers had primary education, 22 % secondary, 10 % high school, 12 % have university education and 2 % do not have studies. Table 3 shows that producers had 7.8 school years; when taking into account that in 2010, 16 % of the population of the state had primary education and 22.5 % secondary (INEGI, 2010c), it can be said that schooling in vine producers is low. Damián Huato et al. (2007), Velasco Fuenmayor et al. (2009) and Vélez Izquierdo (2012), point out that both variables are factors that influence directly the way of cultivating and the willingness to adopt new technologies. Producers said that they had 20 years of experience in grape production, in average, although 34 % were located within a range of 1 to 10 years; 18 % from 11 to 20 years; and 48 % from 21 to 40 years.

Table 3 Sociodemographic characteristics of grapevine growers in Aguascalientes.

Source: elaborated with information obtained in the field during 2013.

The average surface planted by producers surveyed was 4.8 ha, although the most frequent size of the plot is 2 ha. Data from the Consejo de Viticultores de Aguascalientes A.D. indicate that 95 % of the producers have their vineyard on ejido lands with a plot size of up to 5 ha, while the other 5 % are vineyard producers with 6 to 143 ha in lands under the regime of smallholding. Land ownership marks differences in the management of the crop and the technology employed. Smallholding observed a larger surface planted with grape and greater diversification of varieties destined to industry, table and wine production; in addition, they use different management practices such as grafting, they have knowledge about pest and disease control, fertilization, drip irrigation, and give added value to the product with the industrialization and elaboration of products derived from grape. In turn, the ejido sector shows a trend in the production of two varieties, the Salvador and Red Globe grapes; their management practices are not as technified and the use of graft-holders and establishment of drip irrigation systems is incipient.

In addition to grapevine cultivation, 58.7 % of the producers complement their income with other crops such as maize and bean; 19.6 % with livestock production activities; 10.9 % with income from a second job; and 10.8 % with a business of their own.

Crop management

Fernández Alcázar (2011) points out that each vineyard presents a particular way of managing the crop, which depends on several factors, such as size of the plot, plant formation system, age of the plantation, machinery, localization and available workforce, among other variables; therefore, a model based on the tasks that are mainly performed in the vineyard should be established. In Aguascalientes, the activities in the vineyards begin at the end of January, with preparation of the land that depends on the type of irrigation; 55 % of the surface planted with grapevine has gravity based irrigation in furrows and through streets, and 45 % uses drip irrigation. In the gravity based irrigation system, before each irrigation event, furrowing is done, and then dragging to eliminate weeds and conserve moisture in the terrain. In the drip irrigation system, only dragging is performed, to eliminate weeds mechanically.

Of the producers surveyed, 98 % use vine shoots as vegetative propagation material; only 8b% indicated that they also use cuttings and grafted plant, primarily, for the Salvador varieties on the graft-holder 1113 and Red Globe on Rupestre. The use of graft-holders in the Aguascalientes vineyards is low, even when the importance of their use has been highlighted, as well as the advantages generated by a decrease in problems with pests and diseases, the contribution in the adaptation of grapevines to soils with different physical and chemical characteristics, problems of excess or lack of moisture, compacted soils, of low fertility and with problems with salts; likewise, it represents a way of non-chemical control, less damaging to the environment (INIFAP, 1998; Muñoz and González, 1999). According to Según Márquez Cervantes et al. (2007), the use of graft-holders contributes to fruit production with lower irrigation water demand and improves the quality of the grape under a scheme of innocuousness and sustainability. In face of this outlook, it is important to guide the producers, primarily to those in the ejido sector, in the use of graft-holders in their vineyards.

The average density of vines in the vineyards was 2660 plants per hectare of the Salvador variety and 2339 of the Red Globe variety. It was observed that the grapevines are planted at an average distance of 1.3 between them, and the distance between rows was 3.0 m. The system of vineyard conduction is different depending on the grape variety. For Salvador, the system used is bilateral conduction between two benches, the first bench at a height of 0.7 m and the second at 1.4 m. For Red Globe, the system of conduction is to one bench and it is established at a meter of height. Aliquó et al. (2010) points out that there are many types of pruning, although, in general, there are three principal ones: short, mixed and long. The name of the type of pruning depends on the length of the vine shoot and the number of buds that the pruner leaves behind. In the case of vine producers in the state, mixed and short pruning is practiced; the producers of Salvador grape leave vine shoots of between 15 to 50 cm on the vine, with 12 loaders and 18 buds, while for the table grape the length of the vine shoot is between 5 and 40 cm long, with 8 loaders and 14 buds. Both the type of conduction and the pruning of grapevines are cultural practices that modify the production of grape and its quality (Walteros et al., 2012). Aliquó et al. (2010) mention that the pruning systems are not applied interchangeably, but rather that each vine has its own demands in function of the location of the fructifying buds; from there, the importance of determining the number of buds that are left on the grapevine.

Of the producers, 65 % pointed out that they apply bovine manure to fertilize the vineyard and the amount of organic material ranges between 3 and 15bt per year for both varieties. Concerning the chemical fertilization in table grape, the most common N-P-K treatment is Triple 17 and urea; on the leaves, they apply sulfur. In the Salvador grape, they apply urea, soil salt (combination of nitrate and phosphorus), and Triple 16 and 17, as well as boron, zinc and sulfur on the leaves. The weeding of the vineyard is done manually with mattock and only 12b% of the producers applied any type of herbicide. Pest and disease control is done chemically. In 2012, the most damaging pests that attacked the vineyards were the following: Western grapeleaf skeletonizer Harrisinia brillians Barnes and McDunnough, thrips Frankliniella sp, plant louse Aphis illinoisensis (Shimer) and leafhopper Erythroneura spp. González Gaona et al. (2014) mention the presence of other pests such as vine shoot screw-worm Micropate labialis Lesne and Frailecillo beetle Macrodactylus spp. The producers point out that the most important pests were powdery mildew Oidium spp, dead arm of grapevine Eutipa armeniacae Hansf & Carter, Texas root rot Phymatotrichum omnivorum (Shear) Dug, corky bark-rugose wood (viral complex) and mildew Plasmopara vitícola (Berk and Curt). Velázquez Valle et al. (2013) indicate that there are other diseases of viral origin that affect the vineyards in Aguascalientes, such as the Grapevine leafroll-associated virus GLRaV and the Grape fanleaf virus, GFLV.

Table 4 presents the estimated technological index for the two types of grape. The results indicate that in the production of table grape, a higher level of technology is used, mainly because it is a product in which the quality of the fruit must be taken care of; for this purpose, the grapevines require a better preparation of the terrain, higher fertilization, particularly foliar, and greater pest and disease control.

Table 4 Technological level used in the production of Salvador and Red Globe grape in Aguascalientes.

Source: elaborated with information obtained in the field during 2013.

Fruit harvesting is done from August to September; cutting of the Salvador grape is determined by the maturity and the Brix degrees of the fruit. Producers point out that the grape can be harvested when it has 17 Brix degrees minimum, although the ideal is 20 to 22 degrees; the degree of sweetness of the fruit also influences the price paid to the producer. In the case of the table grape, the harvest depends on the degree of maturity of the fruit; only 18 % of the producers mentioned that they perform the selection and packing of the fruit themselves, since these activities are usually performed by intermediaries.

Commercialization of the grape for industry is carried out wholesale, and 80 % of the production is absorbed by the juice and concentrate industry present in the state (SEDRAE, 2014). The table grape is sold in the state’s local markets and distributed to other cities like Guadalajara, Monterrey and Zacatecas.

Production costs

Table 5 shows the production costs for the Salvador and Red Globe varieties, under the modalities of gravity based and drip irrigation. The production costs for the Salvador variety with the gravity based irrigation system were calculated at 36 270 $ha-1, and 33 990$ ha-1 for the drip irrigation system. For Red Globe, the production costs with gravity based irrigation were 40 843 and 37 562 $ha-1 with drip irrigation. Manual labor represents the highest cost, followed by inputs for production, indirect costs and mechanized tasks. This structure of costs is similar to the one estimated by Torres Álvarez (2013), where manual labor represents the highest percentage of production costs, because grape demands a large amount of labor due to the care that must be used with the fruit. Table 5 Production costs of Salvador and Red Globe grape varieties per type of irrigation (Pesos per ha). Source: elaborated with information obtained in the field during 2013. Table 6 shows the number of times that each cultivation task is performed in the vineyard, and the workdays required for each occasion. Grapevine is an intensive crop in terms of labor, primarily for some cultivation practices such as formation pruning, weeding and fruit harvesting. According to the field data, an average of 130 workdays was estimated per ha in each agricultural cycle. Table 6 Number of cultivation practices and workdays used in the vineyards of Aguascalientes. Source: elaborated with information obtained in the field during 2013. Profitability analysis The average yield in the Salvador grape production in the gravity based irrigation system was 16.3 t ha-1, and it was 17.8 t ha-1 in the drip irrigation system, while the Red Globe grape had an average yield in gravity based irrigation of 14.6 t ha-1and in drip irrigation, 15 t ha-1. The sales price obtained by the producer was 3700$ t-1 for the Salvador grape and 8000 $t-1 for Red Globe. Table 7 shows the investment per ha, the income and the profit, taking into account the yields per ha for each irrigation system and variety, the sales prices for producers, and the cost-benefit relationship. Profitability in the production of Salvador grape was 24 040 and 31 870$ ha-1 in the gravity based and drip irrigation systems, respectively, while profitability in the Red Globe grape production destined to the fresh market was significantly higher (75 957 and 82 438 \$ ha-1). This difference is due to the higher price of the table grape (2.16 times higher than the price paid by industry), since the production costs were higher for the Red Globe grape.

Table 7 Profitability of grape for the industry and for fresh consumption in Aguascalientes.

Source: elaborated with information obtained in the field during 2013.

The cost-benefit relationship was higher than one and was between 1.7 and 3.2, which indicates that grapevine is profitable in all the production systems. The CBR indicates that for each peso invested in the production of Salvador grape, 80 cents of net profit are obtained in average. Similarly, for each peso invested in the production of Red Globe grape, an average net utility of 2.0 pesos is obtained. This result indicates that the table grape is more profitable compared to the production of grape destined to the industry.

It is also observed that the CBR is lower in the gravity based irrigation systems for the Salvador grape (1.7 vs. 1.9), and for Red Globe (2.9 vs. 3.2), indicating that drip irrigation is more profitable because of the decrease in costs from mechanized tasks (furrowing), and the savings in workforce for some activities like pruning. The difference in profitability sets the standard to conclude that there is a need to make production systems that use gravity based irrigation more efficient, through programs of technological innovation and the development of new capacities for producers in the use of new technologies that allow them to increase their yields at a better cost. In addition, caring for the environment should be emphasized through practices that imply saving water.

It is important to foster scientific research that supports the production and post-harvest management of the grape. Organization between grape producers must also be promoted, to gain access to credit, more affordable input prices, and mechanisms that ease commercialization. There should be support with training for product processing, and access to information about markets and prices.

An important factor that influences the crop’s profitability is the behavior of prices. Data from SIACON-SIAP (2012) indicate that during 2002- 2013, the real prices of grape for industry and for fresh consumption in Aguascalientes showed a mean annual growth of 7.9 and 12.8 %, respectively, compared to the growth rate for real grape prices at the national level (14.3 and 1.8 %). It was observed that grape prices for industry in Aguascalientes had a lesser increase than nationally. These data indicate that the real grape prices that Aguascalientes producers receive have not grown in the same proportion as the national ones.

Conclusions

Most of the grapevine growers in Aguascalientes are older than 50 years of age, have experience in their productive activity, and studied at least the primary education. The Salvador grape, destined to the industry, and the Red Globe for fresh consumption are the principal varieties cultivated in the state and, depending on the market to which they are destined, there are important differences marked in the agronomic management and technological level required for production. The Red Globe grape demands a better preparation of the terrain, as well as higher fertilization and pest and disease control, which is associated to the care of the fruit quality, an aspect that is of utmost importance in the market. In addition, the agronomic management and technology used in the production of each variety determine differences in the production costs, level of yield obtained per surface unit, income per hectare and profitability level.

Grape production for the industry and for fresh consumption is profitable in Aguascalientes, although the profitability of the Red Globe grape is sensibly higher than the Salvador grape; this difference is consequence of the higher sales price that the first presents. The profitability can be bolstered by using technologies that allow a decrease in production costs and make the use of natural resources more efficient. This study indicates that the investments in the grape production sector of the state guarantee the capital invested plus a considerable profit margin; therefore, the actions and strategies directed at growth of the activity in the state must be focused on developing the capacities of grapevine producers, giving access to technological innovations and fostering technology transfer, particularly of that which allows to decrease the production costs and conserve natural resources.

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