Linking Spanish wine farmers to international markets: Is direct export better than indirect export in improving farm performance?

Abstract

Selecting an appropriate export channel is one of farmers’ most important strategic decisions as it determines farm performance. Although direct and indirect exports are two important channels linking farmers to international markets, little is known about whether direct export is better than indirect export in improving farm performance. This study addresses this research gap by analyzing the impact of export channel choice on wine export farm performance, utilizing data collected from 479 wine-exporting farmers from Spain. An inverse probability-weighted regression adjustment estimator addresses the selection bias issue of export channel choice. The results show that the wine export price received by the direct exporters is significantly lower than that received by the indirect exports. Using domestic intermediaries for exportation (i.e. indirect export) can reduce information asymmetry and transaction costs, which enable indirect wine exporters to sell their products at higher prices. However, there are no significant differences between direct and indirect exporters in export volume, value, diversity, and satisfaction. The findings highlight that direct and indirect exports do not generate differentiated profits, and wine farmers should choose one of them that can facilitate their access to international markets.