Risk Management in Traditional Agriculture: Intercropping in Italian Wine Production
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RISK MANAGEMENT IN TRADITIONAL AGRICULTURE: INTERCROPPING IN ITALIAN WINE PRODUCTION Giovanni Federico and Pablo Martinelli Lasheras Working Papers in Economic History 2020-04 ISSN: 2341-2542 Serie disponible en http://hdl.handle.net/10016/19600 Web: http://portal.uc3m.es/portal/page/portal/instituto_figuerola Correo electrónico: [email protected] Creative Commons Reconocimiento- NoComercial- SinObraDerivada 3.0 España (CC BY-NC-ND 3.0 ES) 1 RISK MANAGEMENT IN TRADITIONAL AGRICULTURE: INTERCROPPING IN ITALIAN WINE PRODUCTION1 Giovanni Federico (Division of Social Sciences, New York University Abu Dhabi and CEPR, [email protected] ) Pablo Martinelli Lasheras (Department of Social Sciences, University Carlos III of Madrid, [email protected]) Abstract This paper investigates the causes of the traditional practice of intercropping – i.e., of scattering vines across fields rather than concentrating them in specialized vineyards. We interpret it as a risk management strategy based on spatial diversification, which entailed transportation costs. We test our model with data for 1930s Italy, where intercropping was widely but unevenly diffused. We show that its adoption was positively related to the pattern of scattered dwellings which dated back to the late Middle Ages and reduced transportation costs to individual plots. Keywords: intercropping, diversification, risk management, traditional agriculture. JEL classification codes: L23, N63, N64, O13, Q12, R14. 1 Acknowledgments: We would like to thank seminar participants at the Vienna University of Economics and Business, the III Agricliometrics Conference (held at Cambridge University in 2017), and the World Economic History Congress (Boston, 2018) for useful comments and suggestions. We also thanks Michael Kunz, Susanna Mohr, and Heinz-Jurgen Pünge for having shared the hails hazard data with us. Remaining mistakes are our sole responsibility. Pablo Martinelli Lasheras acknowledges funding from the research projects HAR2016-76814-C2-1-P (AEI/ FEDER UE) and ECO2015- 66196-P), both funded by the Spanish Ministry of Economy and Competitiveness. 2 1) Introduction All economic activities are risky, but arguably agriculture is the riskiest of all, bar niche jobs such as firefighting because output depends on climate more than any other. Modern farmers are not exempt from risk, but they can rely on insurance markets and state subsidies, and anyway most of them have enough financial resources to stand all but the most catastrophic events. Traditional peasants had not these options, and even normally adverse weather conditions could raise serious troubles to a population barely above subsistence (Federico, 2005). They adopted a number of risk management strategies, including risk-sharing contracts such as sharecropping and diversification of the output mix, which could protect jointly against time-specific weather shocks and against price fluctuations. Additionally, for any given output mix, diversification could also take place across fields. The most famous (and debated) historical case of such a practice is the Open Fields - i.e. the allocation of common land to households in fields scattered all around the village (Fenoaltea, 1976, McCloskey, 1976, Bekar and Reed, 2003, Richardson, 2005). Peasants adopted another risk-management strategy, which so far has been almost entirely neglected in the historical literature, intercropping (Bardhan and Udry, 1999: 95). The current definition refers to the cultivation of different field crops on the same land in different periods of the year, which is being re-assessed for its potential to increase land productivity 2. However, in the past the word intercropping referred mostly to the joint cultivation of field crops and tree crops. The desert oasis features three layers of cultivation: wheat or barley on the field, short fruit trees in the middle and high palm trees on top (Battesti, 2005). Fruit trees were scattered in the fields in many areas of Northern Europe – the so-called Streuobst system (Herzog, 1998) – and in many other European countries (Ferrario, 2019). In Italy in the 1930s intercropped vines accounted for about three quarters of all acreage and half of the total output. Intercropped trees accounted for one third of the output of olives, for all the production of mulberry leaves, the feed for silkworms, and for most fruit production. Now this type of intercropping seems to have disappeared, at least in Europe, and it is reminded with nostalgia mostly in landscape studies (Pleininger et al., 2006, Zimmerman, 2006). This paper explores its 2 For example Wikipedia defines intercropping as ‘a multiple cropping practice involving growing two or more crops in proximity. The most common goal of intercropping is to produce a greater yield on a given piece of land by making use of resources or ecological processes that would otherwise not be utilized by a single crop’ (accessed Nov 3 2019). 3 economic rationale. Why did peasants scatter their vines, losing the economies of scale derived from planting neighboring fields with the same crop (Holmes and Lee, 2012)? The paper fills a gap: there is, as far as we know, no specific analytical work about this ‘historical’ version of intercropping, possibly because hard data on its diffusion are very scarce. Italy was an exception, as statistics of land use have recorded separately acreage of pure vineyards (coltura specializzata) and of intercropped fields (coltura promiscua) throughout the 19th century, and the data for the late 1920s are exceptionally detailed. Furthermore, Italy offers a unique opportunity of testing alternative models for the causes of intercropping because the practice was not uniformly adopted in the country. Broadly speaking, and with some substantial exceptions, intercropping prevailed in the Centre-North while in the South vines were grown in specialized vineyards. This difference offers us a unique insight in the causes of adoption of intercropping as opposed to the cultivation of the same number of vines in a specialized vineyard. We hypothesize that the choice between scattering vines in the fields and growing them together depended on the trade-off between the reduction in risks of catastrophic weather events, such as hailstorms, by scattering the plants, and the additional costs of tending plants far apart. These latter depended on the pattern of settlement – they were the greater the more concentrated population was. In the next Section, we describe the main features of intercropping, we discuss the hypotheses on its adoption in the technical literature and we present our intuition (with a more formal model in Appendix). We then discuss the available data (Section Three) and our estimation strategy (Section Four). We report the results in Section Five and we discuss the causes of the demise of intercropping since the late 1950s in Section Six. We conclude in Section Seven. 2) What is intercropping and why was it adopted? As said in the introduction, intercropping is possible with any type of tree, but in this paper we will focus on intercropping of vines. This generic term included a number of different technical options (Ferrario 2019, Desplanques 1956). Vines could be sustained by poles of wood, as in the production of vinho verde in Portugal (Ferrario, 2019: 21), but in Italy it was much more common to hang them to other trees (piantata). In the words of an Austrian official surveying the countryside of Lombardy-Venetia in the 1840s: ‘There is nothing more striking to the eye of a Northern traveller as those parallel rows of different trees that rise amid the wheat fields, 4 and from the foot of which the vines rise, climb up to the beginning of the branches and are then stuck from tree to tree in the manner of garlands hanging in the air and full of fruit … Getting from the same field a crop of grain and wine, is something that can be had only in a climate as warm as is that of Italy. This method is ancient, as Cato and Varro already talked about it nineteen centuries ago, as a common practice in the country. If the climate were less hot, the shade of trees would damage far more the harvests of grains, and the grapes would be located so far from the ground to be not able to ripen … Most of the wine of the Regno Lombardo- Veneto is produced on flatland … On flatland, vines are never cultivated otherwise than in the midst of cultivated fields … Vines are stuck to many kinds of trees, such as maple, poplar, willow, ash, cherry and even walnut …’ (Burger, 1843, pp. 61–63). He does not quote mulberry trees, which were widely used as support, because they supplied leaves to feed silkworms. As said by Burger, the practice was first described by Roman authors, but it was much more ancient (Sereni, 1972). It had been abandoned in the early Middle Ages, when vines had to be cultivated in enclosed vineyards to protect grapes from animals, but diffused again since the late Middle Ages (Desplanques, 1956, Sereni, 1972) as part of an overall growth of cultivation of tree-crops in all the Mediterranean basin (Tabak, 2008: 161-168). In Veneto, intercropping was widely adopted during the wave of investment in landed properties by the Venetian patriziato in the XVI century (Cosgrove, 1993). In the early 19th century, it was prevalent all over Centre-North Italy, with the noticeable exception of Southern Piedmont and some Alpine regions (cf. Section Three). The technical and historical literature offers a lot of details on intercropping, but very few hypotheses on its economic rationale (Desplanques 1956, Ferrario 2019). In theory, the decision of intercropping can be seen as an additional step in the decision-making process of farmers. They first decide the income-maximizing crop mix, given factor endowments, production technology and prices and then, if the optimal mix includes both field crops and tree crops, decide whether to scatter the latter across fields or concentrate them in vineyards (or olive trees groves, or orchards).