An Analysis on the Profitability of Wine-Growing Estates in the Light of 2005-2014 FADN Data

Ábel, Ildikó – Hegedűsné Baranyai, Nóra

Keywords: grape and wine production, profitability proportional to income, profitability proportional to production value, work profitability, net liabilities, Q12

The present situation of the grape and wine industry is due to the combined effect of several factors. The economic impact of the political transformation, the global overproduction, the decrease in consumption, the changes in market needs, the increase in the number of grape- and wine-growing countries and the economic crisis worsening the financial situation can be pointed out. After losing the eastern markets, the wine export of our country has diminished by 70%. The subsidies had decreased, the new market institutions and management structures have evolved slowly (10).
The wine-growing area has decreased, the importance of individual estates has increased, while the importance of the corporate estates has dropped. It is necessary to introduce modern technologies to increase competitiveness, but the deficiency of funds is a serious obstacle.
The aim of our analysis is to examine how the profitability of wine-growing estates has changed according to plant size and business form in the period of 2005-2014, after joining the EU. We also examined whether the profitability proportional to production value, total equity, internal funds and work has changed in the industry.
Our analyses were performed based on FADN data of the Research Institute of Agricultural Economics.
The gross production value per hectare was the highest in all the estates of the industry in 2011. The operating expenses were the most significant in the same year, but the increase in expenses was lower than the production. Consequently, the stakeholders of the grape and wine industry could realize the second highest pre-tax profit in the period. However, 2013 was the most favourable year considering pre-tax profit. Producers could achieve lower production with much lower expenses, therefore profitability ratios were the best in 2013.
The income generated was hectic for enterprises of different scales. For large farms, 2007 was the most favourable year, but the same year was the worst for medium-sized enterprises. For small farms, 2013 can be considered the most successful, while they had to experience the biggest loss in 2010. In the period examined, large and medium-sized wine-growers were profitable, but small farms had to close three years with loss.
Both vertical and horizontal integration is inevitable in the industry, accordingly it is necessary to coordinate vine-growing and viticulture, as well as the activities of grape growers and wineries.