Commonwealth and state agriculture ministers have announced they are taking urgent action to resolve Australia’s red wine grape glut.
The crisis talks follow Riverland wine growers calling for a moratorium on planting vines in a bid to solve the crisis, with experts predicting millions of vines will need to be destroyed.
In August 2023, Rabobank reported Australia’s oversupply had reached two billion litres of wine or over 2.8 billion bottles of wine. That’s the equivalent of 859 Olympic swimming pools worth of wine in storage due to the glut.
Rabobank predicted two tough years ahead and noted that not even early removal of Chinese anti-dumping tariffs would be enough to prevent Australia’s wine industry facing several years of oversupply.
Among the victims are major Riverland wine producer Salena Estate Wines, which announced last month that it was entering voluntary administration.
Grape prices plummet during grape glut
In regions such as Griffith, grape prices fell to an average of $304 ($200) a ton last year, the lowest in decades and down from $659 in 2020, according to data from Wine Australia.
Reuters reports that millions of vines are being destroyed in Australia and tens of millions more must be pulled up to “rein in overproduction that has crushed grape prices and threatens the livelihoods of growers and wine makers”.
“It feels like an era is ending,” said Andrew Calabria from Calabria Wines.
“It’s hard for growers to look out the back window and see a pile of dirt instead of vines that have been there as long as they’ve known.”
Riverina Winegrape Growers CEO Jeremy Cass said that up to a quarter of the vines in areas such as Griffith must be pulled up to balance the market and lift prices.
Working group established
The agriculture ministers met on 8 March 2024 and discussed the significant challenges facing wine grape growers, particularly in the inland regions. They agreed to establish a viticulture and wine sector working group, comprising representatives of the Commonwealth, state and territory governments, Wine Australia, Australian Grape and Wine and other relevant groups as agreed by the working group, to provide recommendations on how to address the challenges facing growers.
The working group will be expected to visit regions most impacted by the oversupply, including the Riverland in NSW and South Australia and will report back to Agriculture Ministers out of session by the end of April 2024.
Australian Grape & Wine CEO Lee McLean said: “Australian Grape & Wine has been encouraging a coordinated and collaborative approach to deal with the challenges our sector is facing and we are pleased Ministers have agreed to form this working group.
“We know there are a number of regions experiencing acute financial pressure as a result of supply and demand imbalances, including the Riverland in South Australia, the Riverina in NSW, and the Murray Valley in Victoria, and it’s pleasing the group will focus on ways we can work together to relieve these pressures, in these regions.
“Australian Grape & Wine has put a range of options to the Albanese Government ahead of the Federal Budget, including proposals to help rebalance supply, grow demand and boost regional tourism.
“These proposals are all aimed at helping Australia’s grape growers and winemakers to find a pathway through the current challenges towards a sustainable and more profitable future.”
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