Corporate and farmer objectives in the wine business: The key to success or failure

Abstract:

This paper analyzes governance and management patterns in agricultural business. Its main objective is to evaluate business success and value creation as a result of good governance and management practices, and the changed paradigm to combine corporate and farmer objectives. We propose a theoretical framework to assess how effective governance and management can help to create value for farmers, and strengthen co-operative principles and the links between corporate and farmer objectives. The model is evaluated and tested through a survey of wine business managers, chairmen, and grape farmers in the province of Alicante in the Valencia region of Spain. According to data from the Regulatory Council, the registered area of Denominación de Origen in the province Alicante was 14.254 ha in the 2006–2007 harvest (which represented 2.23% of the Spanish total). The 3155 registered grape farmers represented 1.9% of the Spanish total. There were 48 registered companies; 16 of these were not bottling companies. There were 17 registered co-operatives. During the 2005–2006 season, 118,405 hL were marketed (1.20% of the Spanish total). Two thirds went to the national market (1.21% of the Spanish total); the rest was exported (1.18% of the Spanish total).

Keywords::

• wine business
• corporate governance
• Spain
• co-operative