Files
Abstract
Chile's fruit sector, both in production and exports, has grown significantly since 1974. At
that time, Chile introduced structural reforms in its economy which assured that market
principles would operate regarding land ownership. Also, the government began a 'hands-off'
policy which basically allowed free-market principles to prevail. As a result of these
conditions operating in the economy, Chile's agricultural sector diversified from producing
largely annual crops and wool to also producing a significant amount of commercial fruit
crops. A second round of diversification is currently underway within the fruit industry
where pears and peaches are being produced and exported in addition to apples and table
grapes.
In this paper we derive decision criteria when aggregate performance is evaluated from
the perspective of maximizing a risk-averse utility function. Empirical evidence on Chilean
fruit exports indicates that, on an aggregate level, Chilean fruit exporters are following the
path of utility maximization and validates the sequence by which Chilean producers
introduced nontraditional crops over time. While on an individual level there may be
complex factors and constraints involved in the planting decisions, the results of this study
seem to indicate that the sum of producer behavior satisfies the conditions required for
maximizing a risk-averse utility function.