Grape vines are being ripped out in the New South Wales Riverina in response to historic low prices, with reports that excavators are booked out for months.
Some Riverina wineries have capped deliveries, and even if growers found a home for their fruit, prices were below the cost of production.
Riverina Winegrape Growers chief executive Jeremy Cass said there were losses of up to $2,000 per hectare on some varieties.
“This year we’re seeing prices as low as $150 a tonne for some red grapes, which equates to about 15 cents worth of grapes in a bottle,” Mr Cass said.
“That’s well below the cost of production.”
Griffith rural financial counsellor Bonnie Hayes said there had been a surge in the number of grape growers seeking advice.
“We are seeing people taking out their vines completely … decreasing the land that they have planted with wine grapes, and they’re going to other permanent plantings or diversifying into other areas,” she said.
“We have people selling water just to try to get to that next vintage or that next income.”
Diversification to spread the risk
Like his father and his grandfather before him, Peter Raccanello grew wine grapes at Yenda, but this vintage is his last.
“I threw the emotion out the door. It’s a straight-out business decision,” he said.
“While we’re still in a position where we can afford it, we just have to knock them out and start again.”
Along with cash crops such as lucerne and basil, Mr Raccanello is going to plant more of his farm with prune trees.
“You’ve got the fresh sugar plum market, and I could also dry them, and you can keep some of those dried prunes and sell at markets,” he said.
“It’s a more versatile crop.”
Unlike the glut of wine grapes, there is a shortage of supply of Australian prunes and one major processor is offering planting incentives.
Mr Raccanello estimated that if he accounted for his labour, it would cost more than $8,000 a hectare to remove vines, clean up, prepare the ground and plant other crops.
More pain ahead
Demand for wine is falling, and there were high carryover stocks from previous vintages due in part to the loss of the lucrative Chinese market when crippling tariffs were imposed in 2020.
Those tariffs were only lifted on Thursday.
Riverina Winemakers Association president Andrew Calabria said the whole supply chain was impacted.
“Some wineries have changed ownership, some wineries have folded,” he said.
“I think it’s definitely one of the toughest times that the wine industry has seen.”
He said China would be an important market for Australian wine industry.
“However, I do think it will take time for that to rebuild, a lot has changed,” Mr Calabria said.
“Consumer habits have changed in China, the economy has changed.
“COVID and the pandemic have really changed our position.”
Mr Calabria believed a correction in the supply of grapes was inevitable.
“When things are going well, we tend to go into overdrive and we over-plant,” he said.
“Where people are looking to pull grapes out, that’s a correction that will probably get us out of the hole that we’re in.”
Mr Cass estimated up to 5,500 hectares, or a quarter of the vineyards in the Riverina, would need to be removed to bring the local supply of grapes into line with demand.
“I know that a lot of people would rather see a market-led recovery, but it’s just not going to be the case,” he said.
“We’ve just got way too much oversupply.
A national task force of industry and government is looking for a way forward for the struggling wine sector.
“We need some financial assistance to help these guys transfer out of grapes into another commodity,” Mr Cass said.
“We believe that we’ll probably see some significant amounts of vines actually abandoned, which causes biosecurity issues going forward.”
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