The ongoing trade dispute between Australia and China may lead to millions of grapes being left to rot at vineyards across the country.
China imposed of heavy tariffs on Australian wine in late 2020, claiming that cheap imports were impacting Chinese grape growers. About 800 Australia wine exporters affected, with the Chinese market shrinking by about 97%. Before tariffs were imposed, China was the largest export market for Australian winemakers, with sales passing $1.2 billion a year.
The 2022 Australian winegrape crush was estimated to be 1.73 million tonnes. Wine Australia’s Production, Sales and Inventory Report 2022 recently reported an increase in the national wine inventory for the second consecutive year.
The findings confirmed the impact across the production chain of the significant headwinds the Australian wine sector has faced over the past two years, including tariffs on bottled Australian wine imported to mainland China, the impact of the global freight challenges, and the aftermath of changing consumer habits during the COVID-19 pandemic, all coming at the same time as a record-sized vintage crush in 2021 and a near-average crush in 2022.
The national inventory is estimated to sit at 2.27 billion litres.
Wine Australia director and managing director of Taylors Wines Mitchell Taylor told ABC News that winemakers would be faced with hard decisions when picking starts next month for the 2023 vintage.
“Unfortunately, I think a lot of growers will have to leave grapes on the vine this vintage,” he said.
“We’ve got great oversupply hitting the industry because it takes a lot of time to plan these markets and then to make the wines, particularly red wines, which the Chinese love.”
Federal Foreign Minister Penny Wong travelled to Beijing in December, the first step in thawing trade relations between China and Australian winemakers.
Trade Minister Don Farrell is hoping to arrange a virtual meeting with his Chinese counterpart, Wang Wentao, in the coming weeks. If it eventuates it will be the first meeting between Australian and Chinese trade ministers in more than three years.
“I’ve consistently said since assuming the role of Trade Minister, our preferred pathway to resolve these trade blockages is through dialogue and discussion, rather than disputation,” he told the ABC.
“I look forward to discussing this with my colleagues in China as soon as practicable.”
Taylor hopes for clarity soon on whether the meeting will go ahead.
“The more we can get an early indication about how these talks eventuate, the better off it will be for the long-term prospects of some of the investments that we have,” he said.
Support for wine industry impacted by red grape oversupply
There are a range of support programs that are always available that may assist grape growers impacted by an oversupply of red wine grapes.
The Farmhouse Household Allowance program provides assistance to farming families experiencing financial hardship for any reason. The program is available if you are a grape grower, or you grow grapes at your winery.
The Farm Management Deposits Scheme assists primary producers to deal more effectively with fluctuations in cash flows.
The Regional Investment Corporation administers concessional loans to improve the long-term resilience and profitability of eligible businesses, with loans of up to $2 million.
Rural Financial Counsellors are qualified professionals who provide free, confidential support for those experiencing, or at risk of, financial hardship.