Vineyards in Northern U.S. states: Farm size and productivity relationship

Purpose - The production efficiency of agricultural crops has been the subject of numerous studies in the field of agricultural economics. This study examines the production efficiency of emerging vineyards in the 14 northern U.S. states and aims to understand raw input and managerial factors affecting the grape production with focusing on the effect of farm size. Research design, data, and methodology - Using a unique survey dataset that was collected from 176 vineyards in 2012, we employed data envelopment analysis (DEA) for estimation of production efficiency in individual vineyards. Production efficiency is regressed on various input and managerial covariates to understand factors influencing the productivity. Results - Although there exists positive correlation between the farm size and productivity of vineyards in Northern U.S. states, we find negative relationship when the farm size is instrumented by the additional farm size expansion indicator. The negative effect is more pronounced for the recently established vineyards. Conclusions - This study suggests that there needs to be adequate managerial improvements for emerging vineyards in northern states for the achievement of increased productivity.