Economy

Grape growers forced out

SmartCompany /

Australian wines might be popular overseas but the drought is forcing Australian wine grape growers off the land, with the 2008 harvest expected to fall well below average.

Past grape hauls have averaged 1.9 million tonnes, but Wine Grape Growers Australia says the ongoing drought means next year’s vintage is unlikely to reach 1.3 million tonnes.

The executive director of the wine grape growers’ body, Mark McKenzie, says the drought could force as many as 1000 of Australia’s 7500 wine grape growers out of the industry.

He says growers planning on leaving the industry were waiting for federal election results, to see what the incoming government’s attitude toward the water market might be.

“If some of these growers are to exit, a major part of their financial plan is going to be what they can expect to get in terms of retiring their water rights; and secondly, what the taxation treatment of that might be,” says McKenzie.

“People will see what, if anything, they can get in terms of revenue, where they stand in a financial sense at the end of vintage because, quite clearly, people are sailing close to the breeze.”

The Murray Darling basin supplies 60–70% of Australia’s wine grape production, with most growers operating on just 16% of their water entitlements.

McKenzie says many growers have been buying water in with the help of wine companies, who have advised growers on water prices.

The Australian Bureau of Agricultural and Resource Economics forecasts the industry will return to “normal” yields in vintage 2009.

But according to the WGGA’s outlook for 2007–11, if normal rain patterns don’t return to southern Australia before vintage 2008 and irrigation water from the Murray-Darling system continues to be limited, the drought impact may carry over into 2009.

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