Only a third of more than 1000 growers responding to a recent survey by the council said they made a profit in 2010, according to executive officer Peter Hackworth. He estimates about 92 per cent of Riverland growers making a loss last year while two-thirds of grapes harvested in South Australia were sold below the cost of production, an unsustainable position.
This year's vintage is likely to be worse, with prices remaining unchanged on higher cost inputs as growers sprayed to keep fungal diseases at bay. "Anybody selling into the lower end of the market is in trouble, but they're also in trouble at all levels," Mr Hackworth said. "People have been carrying losses for a long time and I'm fearful of the impact and what's happening on family businesses."
The Council believes that growers and processors need to act now rather than waiting in vain for the market to turn. He says many growers are making a false assumption that prices will soon rise. "About a quarter of growers think that prices will rise in the next 12 months, now that's not our view at all and we don't see any evidence for that, so we think it's really important that people who are selling grapes at very low prices in the belief that things will turn around, need to really rethink that," he said reportedly, adding that the current downturn in the wine industry could last for another decade.
"We strongly believe that anybody who has unprofitable vines at this point would be better off removing those vines if they've been making a loss for a number of years on those vines for their sake and also for the sake of the industry," he said.
Fortunately, things are not so bad in India right now. Although there was a loss of crop due to heavy rains last November, of 20-40% within different parts of Maharashtra, more particularly in the Nashik belt, the prices have firmed up anywhere from Rs.3-10 a kg from the last year. With the improving demand from some wineries, the growers may heave a sigh of relief and hope for better times ahead. Many farmers have pulled off the vines during the last couple of harvests; this will also bring some balance in the otherwise desperate situation. The industry has seen a strongly positive upturn during the last few months and hopefully the momentum will continue to build up, increasing the demand for wine grapes.
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Tony Devitt Says: |
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Unfortunately, the gloomy outlook forecast in this article has some truth to it if we continue along our current path. The voluntary removal of vines will not save the industry and we certainly don't want a vine pull scheme. So what do we do? Our whole approach must be directed at image building and education. Easier said than done but some hard decisions need to be made in terms of how we want to promote our industry to the World. Factually, Australia has some of the best grape growing conditions in the World and we make some of the best wines in the World - are these the regions and wines that are driving our industry? I think not! I am hopeful that a large part of our industry is prepared to work together to change this. |
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