Look before you leap…Don’t sign!

It’s taken a long time and cost a lot of money to grow this year’s crop and to prepare it for harvest.  Don’t give it all away.  Make sure you have a contract that protects your interests before you load up the truck and send it to the crusher, especially if the offer looks too good to be true and even more so if you don’t know who the buyer is!

 

Over the difficult years most Riverland growers enjoyed the protection of medium to long term contracts with well-known wineries.  The great majority of those buyers are well aware of their obligations under the Wine Grapes Industry Act (1991) and most are fully compliant.  It is vitally important not to become complacent though.  There are still many risks despite the security of such contracts the status of growers as unsecured creditors remains.  Lots of lessons were learnt the hard way over previous decades.  For this region’s growers, perhaps the harshest of those was the collapse of the Normans Winery at Monash in 2001 that left growers out of pocket to the tune of $11 million.  Even the fairest of contracts doesn’t help in that sort of situation.

So when a grower rings to ask if a certain buyer is likely to comply with the Act, it’s easy, if the buyer is well known with a solid reputation.  On the other hand, if the buyer doesn’t have a track record at all for grape purchases in this region, or worse, if there is evidence of ‘slow payment’ or ‘no payment’, alarm bells should ring loud and clear and growers are well advised to steer clear, be patient and hope for a better opportunity.  It’s not just the ‘no payments’ to be wary of; in the last couple of years one significant buyer from outside the region has developed a reputation for being very slow and repeatedly breaking promises. This buyer has certainly paid penalty interest, as required under the Act but that’s not the point. Slow payment causes severe hardship and severe embarrassment in many cases when growers are unable to pay their own suppliers.

So, be warned; insist on a formal contract and if you have any doubts make sure to ring Stuart Andrew (8582 3222) or one of the other legal advisers in the region for an opinion. As a minimum, growers should be satisfied with nothing less than having both parties sign the Riverland Wine contract template available from Kate (8584 5816) or online.

 

Copyright: vectora / 123RF Stock Photo

 

 

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