Growers face price plunge

Clearly the pre-Christmas indicative prices, issued by many of the wineries intending to purchase Riverland grapes, have given cause for real concern throughout the community.  It seems that after several years of “mild relief” from unsustainable prices the region’s farmgate income for winegrowers is poised for another major setback.  If we assume no increase on 2013 yields, which were well below the region’s capacity, and if indicative prices translate to final offer prices, farmgate income will plunge to an estimated $86M from the 2013 level of $113M.  The long run average farmgate income to Riverland growers over the past 14 years is $155M with the unimaginable high point in 2002 of $255M. This price plunge will have a huge impact at the enterprise level.

In response, Riverland Wine is convening four breakfast meetings from today through to Friday next week in Waikerie, Barmera, Renmark and Loxton (7 – 10 January, 2014). All registered wine grape growers should have received an invitation via the PGIBSA list and Australia Post by now. Other interested parties are welcome to join these meetings but please ring Kate on 8584 5816, and let her know which meeting you will attend for catering purposes.

Clearly, many other primary producers face similar challenges brought on by circumstances well beyond growers’ control including, northern hemisphere harvests, conflicting information about global markets and exchange rate movements not reflected in prices offered at the farm gate. Perhaps most disappointing aspect is the expectation on the part of others, further up the supply chain, that any improvements in productivity and efficiency on the farm must be shared with all other shareholders along the supply chain, many of whom are blissfully ignorant of the investment risks demanded of primary producers. There are no easy answers but it is important that the community of winegrowers and supporters has the opportunities come together to share ideas about what might be able to be done while also being mindful of the realities that challenge our industry. The familiar cry “get big or get out” is not the answer. Many Riverland growers have improved the size and scale of their operations, only to find they are now numbered among the most vulnerable!

Some are beginning to question the usefulness of the industry’s voluntary code of conduct. Is it working as was intended, to improve working relationships between growers and processors, or is it encouraging lopsided risk management practices? Come along to one of the meetings and join the conversation.

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