Economics in Viticulture and Winemaking

Objectives and competences

The task of the course is to acquaint students with the fundamentals of business economics so that they can evaluate viticulture & enology business activity from its economics point of view.
The course is designed so that a student on the basis of economic mechanisms and costs conquers logic of management, comprehensive understanding of business, the role of markets and the importance of projects for the development.
The purpose of this course is the training of winegrowers and winemakers for successfull management of their small agricultural enterprises and/or for participation in the management of enology & viticulture companies. Therefore, attention is also given to some managerial methods.
The course also aims to raising awareness of the importance of the economic aspect of technological innovations in the production of grapes and wine.

Prerequisites

Knowledge of mathematics.

Content

  1. Introduction to business economics

• concept and aspects of business economics
• subjects and methods of business economics
• characteristics and types of business
• entrepreneurship

  1. Business assets and the theory of production
    • production formers
    • long-term assets
    • the capacity of long-term assets
    • working capital
    • total, average and marginal returns
    • concept and design/type of production function
    • the use of the production function

  2. Management of the production process element:
    • basic principles of management
    • work and management
    • investments and management
    • working resources and management
    • investment in working capital and management
    • capital and management
    • management of materials

  3. Characteristics of the production process in agriculture
    • agricultural production
    • other impacts, risks and peculiarities of the process of agricultural production

  4. Costs and management
    • costs identification
    • costs (material costs, amortisations, internal costs, external)
    • interest
    • original and derivative costs
    • business functions costs
    • the method of allocating costs to different cost objects

  5. Costs dinamics
    • The link between cost and size of business
    • fixed costs
    • variable costs
    • marginal cost
    • total and average costs
    • costs and revenues
    • long-term view of costs

  6. Price calculations
    • identification of the type and purpose of calculations
    • calculation self business impact costs, transfering of the costs on products and services
    • calculation of costs of buildings
    • calculation of the cost of using machines
    • analytical calculations in viticulture production
    • analytical calculations in wine production
    • calculations based on the variable costs

  7. Calculations of investment projects

• definition and types of investment projects
• Investment projects in winemaking
• characteristics of investment projects in winemaking
• methods of project evaluation
• Investment calculation
• NPV method
• method of internal rate of return
• static method investment calculations
• Planning an investment loan repayment

  1. Benchmarks business
    • earnings
    • absolute benchmarks
    • labor productivity
    • economy of operation
    • profitability

  2. Clearing and analysis of business
    • the concept of business final closure
    • income
    • expenses
    • forms of business income statement
    • preparation of annual business plan
    • analysis of business performance and costs
    • business size and business results
    • dependence between busines income statement and income
    • dependence between business result in and total expenses

Excercises

• calculations of costs and business decisions
• calculations of costs and production program selection
• costs curve graph and business decisions
• marginal costs and operating decisions
• selection of technology and costs
• analysis of performance through the analysis of the profitability threshold
• assessment of effectiveness of the projects

Students prepare written report/seminar on selected topic from the course.

Intended learning outcomes

Students learn the basics of business economics, which contributes to their understanding of the main problems of the company and also ts parts. Students are capable to study economic phenomena in a particular company. They learn how to find the causes of problems, to contribute to their elimination in order to achieve the best business results.
They know general and specific business economics theory methods, which can also be used in the agrarian-economic analysis, especially in viticulture and enology. This will help them to take the right business decisions. Students learn how to assess the key factors of business success. The students become familiar with planning and analysis of costs and incomes in the small viticulture/enology estate or wine business. The students learn how to use special procedures by which the obtained results can be further improved.

Readings

Basic:
• Turk, Jernej: Agrarna ekonomika - teorija in aplikacije. Univerzitetni učbenik, Fakulteta za kmetijstvo Univerze v Mariboru, 1998, 176 str. E-version
• Photocopies of slides from lectures.

Additional:
• Karić, Marijan, Tolušič, Zdravko, Lacković Zlatko: Ekonomika voćarske i vogradarsko-vinarske proizvodnje, Požega, Veleučilište u Požegi, 2002, 156 str.
• Peters, G. H. (Ed.): Agricultural economics. - Aldershot ; Brookfield : E. Elgar Publishing, 1995, 633 str.
• Turk, Jernej: Teoretične in empirične analize v agrarni ekonomiki. Učbenik za podiplomski študij, Fakulteta za kmetijstvo Univerze v Mariboru, 2001, 225 str. Catalogue
• Downey, D. W., Erikson S. P.: Agribusiness Management, McGraw-Hill, New York, 1987, 477 str. E-version
• VADNAL, Katja. Agrarna ekonomika : osnove, trg, država. 1. izd. Ljubljana: Biotehniška fakulteta, Oddelek za agronomijo, 2003. 237 str., graf. prikazi, tabele. E- version
• VADNAL, Katja. Agrarna ekonomika : osnove, trg, država : delovni zvezek za vaje. 1. izd. Ljubljana: Biotehniška fakulteta, Oddelek za agronomijo, 2002. 88 str., graf. prikazi, tabele.
• Avsec, Franci, Erjavec, Emil: Evropsko kmetijsko pravo. 1. natis. Ljubljana, GV založba, 2005. 461 str.
• Erjavec, Emil: Skupna kmetijska politika in slovensko kmetijstvo. V: FERFILA, Bogomil (ur.), ČERNE, Fedor, FERFILA, Bogomil. Slovenia and European Union, (Knjižna zbirka Politični procesi in inštitucije). Ljubljana, Fakulteta za družbene vede, 2002, str. 333-349. E-version
• Slides and Miteam classroom of UNG.

Assessment

Successfully prepared seminar is a prerequisite for taking the written examination. Final grade 30 % from seminar/70 % from exam.

Lecturer's references

Higher Lecturer for the field of Accountant business at University of Nova Gorica.