The Determinants of Chemical Input Use in Agriculture: A Dynamic Analysis of the Wine Grape–Growing Sector in France

Abstract

AbstractThis article examines the determinants of chemical consumption by French winegrowers on an individual basis. We introduce criteria relating to the structure of vineyards and the financial situation of the winegrowers. Using data from the Farm Accountancy Data Network (FADN-RICA) for the period 2002–2007 from an annual sample of 607 winegrowers, we study the different factors that encourage winegrowers to use chemical inputs to protect or increase the yield of their vines. Drawing on transversal and longitudinal analyses, we illustrate the benefits derived from differentiating the demand for inputs according to their classification: pesticides or fertilizers. Climatic variables, physical size, and turnover all act as driving forces in the decision to use chemical inputs. We show that taking out crop insurance functions as a substitute for inputs and observe a double moral hazard effect: Winegrowers who increase their insurance coverage reduce their consumption of inputs the most and receive greater compensation; among insured winegrowers, those who use the most inputs make the most claims. As wine grape growing is a consistent activity conducted over a long period, we observe permanence in patterns of use of chemical inputs. (JEL Classifications: Q12, Q13, Q14)