No easy answers

More than 240 Riverland wine growers attended four breakfast meetings in Waikerie, Barmera, Renmark and Loxton last week.

The main topic of discussion was the plunge in indicative prices issued to date. With very few exceptions prices are simply not sustainable for grape growers. Many will not meet operating costs incurred in growing the grapes. Many expressed despair.

The great majority who have survived the multiple challenges of the past 10 years have done whatever they can reasonably do to improve their competitiveness. In relative terms the hardest hit variety is Chardonnay. It accounts for almost 55 per cent of the region’s white grape crush and 28 per cent of the total grape crush. Last year’s calculated average purchase value for chardonnay was $291. The majority of indicative prices issued to date are lower by about 25 per cent!

Most were expecting a decline in Chardonnay prices but there is a strong sense that the substantial mark downs of indicative prices for red varieties are simply not justifiable. This is a challenge for all of industry, not just grape growers.

Growers are bewildered as to why the industry cannot manage the supply – demand relationship more effectively; in other words, providing all stakeholders with more timely and accurate outlook information about planted areas (by variety), stock levels and bulk wine values.

The growers of today are much more informed than they were 10 years ago. They understand there is strong competition coming from other wine trading nations particularly the southern hemisphere competitors: Chile, Argentina and South Africa. They understand the consequences of large vintages in northern hemisphere regions, California, Italy, France and Spain. When they examine their own performance over the past 10 years they see that the region has contained its production levels while dramatically reducing the number of vineyard enterprises and increasing the average size of vineyards from 14ha to 20ha (50 acres).

All the growers were invited to offer suggestions about what can be done or should be done. The majority have responded that as an industry, we must increase the volume and value of Australian wine sales on world markets. Feedback also demands that there must be much more access to information to help with decision making, not just production costs but also information about stock levels and values. Growers are asking for more information and clarity about the value of wine in different markets and the relationship to the cost of growing the grapes to supply that wine. This will help growers decide whether it is viable to persevere.

Clearly there are no easy answers. Riverland Wine will convene more meetings and workshops throughout the year to assist those trying to access the information needed to manage their businesses. Further to that all levels of government and industry will be informed about the current challenges facing this region’s primary wealth generators.

Those at the breakfasts noted words of wisdom from Paul Clancy, former publisher of the Wine Industry Journal when he wrote, in April 2000, “Despite the best efforts of almost everyone to deny the Riverland and Sunraysia their rightful place as the cornerstones of the Australian wine industry, the regions continue to provide the world with the wine which has forged and driven the export boom – the boom gleefully, but not necessary gratefully, ridden by producers of every other Australian region”. There is much to be done to redress this imbalance.

 

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