M ARKET F ORCES IN THE R IVERINA G RAPE I NDUSTRY M URRAY D ARLING A SSOCIATION 74 TH N ATIONAL C ONFERENCE
T HE R IVERINA R EGION • 20,485 hectares wine grapes (64 varieties) • 53% whites, 47% reds • Major varieties: Chardonnay, Semillon, Pinot Grigio, Shiraz, Merlot, Cabernet Sauvignon • 328,000 tonnes (30% winery owned) in 2018 • 320 Winegrape grower business (650 in 2000) • Farm Gate Value approx. $113 million (2018) • 18% volume, 10% value, nationally (2018)
W HO IS THE R IVERINA • Riverina processes 25% of all Australian wine • The engine room of the wine industry • Home to: Calabria, Casella, McWilliam’s, DeBortoli, Warburn, Berton’s , Yarran, Dee Vine, Wickham Hill. • 6 of the top 20 wineries in Australia • Local production in 2018 equates to: 27 million cases • Home to the Wine Grapes Marketing Board a NSW Statutory Authority representing growers since 1933
T HE M ARKET • 95% of regions production sold locally • Family owned business dominant • Competition issues rising eg. 1 buyer takes 45% • Perishability of the crop a limiting factor • Voluntary Wine Industry Code largely ignored • Desperate for better regulation in the market • ACCC investigating current business practices
W ATER I MPACTS • Majority of growers hold High Security entitlements • 75% of the region using drip systems • Average growers use 4.3 - 4.7ML/ha • Top Growers can use 5.2 - 5.6ML/ha • Excess entitlements can be lucrative eg Temp trade • Many have expanded using excess entitlement • Some need to purchase annual allocation
D EMOGRAPHICS • Dominate migrant population • Ageing population avg 65+ • Low number of generational growers • Average grower has other commodities • Small farm size dominant 26ha • Both owners generally work fulltime
G RAPE PRICE PRESSURES • Issue of sustainability • Planted area decreasing • $ per litre v $ per hectare 2018 Highlights sustainability issues • Whites 17.6 tonnes per hectare (7.1t/acre) • Reds 14.4 tonnes per hectare (5.8t/acre) • COP $3,500/acre (including viable return) Price required Whites: $492 Reds: $603 2018 Average Whites: $348 Reds: $464
P ROFITABILITY LINKED TO YIELD Avg. $492
P ROFITABILITY LINKED TO YIELD Avg. $603
French paradox Aussie paradox Last drought
F UTURE P ROSPECTS • Developing trust in the industry important Industry Codes, Consultative meetings ▪ • Truth in pricing (sharing of wealth) Provisions to allow price disputation ▪ • Export growth strong, China, US Need to maintain relationships ▪ • Cost of replanting need resourcing Rootstocks needed, labour intensive ▪
P OSITIVE MESSAGES • Family owned wineries have a long term focus • Water security in the MIA is beneficial • Location to major ports and markets good • Land availability good and fit for purpose • Potential for the Riverina to be Australia’s largest
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