Grape growers seek new passion

Wine grape growers are switching to farming other fruit and vegetable crops

The Murray Valley Winegrape Growers is supposed to represent vineyards, but its newsletter recently profiled a family who had turned to farming passionfruit. It was a sign of the times for the beleaguered industry.

"The irony wasn't lost on us," Growers chief executive Mike Stone says.

"Yes, we exist to represent wine grape growers and our income comes from that source, and there we were giving some tips on what other alternatives there were, but that is just reality."

Wine grapes are at least 20 per cent oversupplied. Prices have crashed and, after several years of low water allocations and high water prices, growers are leaving the engine room -- the Murray River region of Victoria and South Australia -- in droves.

Nationally, the number of growers is officially estimated to have fallen from 7500 to 7000, but Wine Grape Growers Australia executive director Mark McKenzie admits the number is probably lower and still falling.

This year's grape harvest was 1.53 million tonnes, down from the record 2004-05 vintage of 1.94 million tonnes.

Pernod Ricard Pacific director and group chief winemaker Philip Laffer says tonnage must fall further. "By anybody's reckoning, we need to be 30 or 40 per cent down on the high vintages we had in 2008 and 2009 (1.84 and 1.68 million tonnes)."

He argues the industry needs to stop the "rather damaging export of bulk wine from Australia" and focus instead on quality.

"We should never claim or set out to be the low-cost producer in the world, because we aren't."

Mr Laffer admits vines are being removed faster than expected. He says it is "almost inevitable there will be an imbalance. Too much fruit will come out of the wrong areas, but that will probably happen before we get ourselves back into balance."

Mr McKenzie agrees that the industry is "risking overcorrection". So far, most of the vines have come out of the Victorian Murray Valley and the Riverland. Growers in the NSW Riverina have had more water available to them, but Mr McKenzie says they are considering their options.

The Wine Restructuring Action Agenda last year identified 130,000 tonnes that were unviable. "On the basis of what has come out in the Riverland and the Murray Valley alone, we have probably reduced our production potential by 160,000 tonnes already," Mr McKenzie said. "Noises are starting to emerge from Foster's that there may well be potential shortages of some varieties next year in the inland regions."

But while the grapevines are being ripped out in the warm inland, much of the identified oversupply is in cooler-climate regions. "We still have a structural oversupply," Mr McKenzie said.

"We still have far too many vineyards that have A and B- grade cost structures, but are only getting C and D-grade prices for their fruit, and that is not sustainable.

" But because of a whole lot of factors -- investor funds, external income, hobby farms or absentee vineyard owners and so on, in some cool districts -- I think it is going to take much longer for that message to come through."

He says regions that are going to see reductions include Orange, Mudgee, Cowra and Hilltops in central western NSW.

Mr Stone also worries too many grapevines are coming out of the Murray Valley and the Riverland.

In the Riverland, many grapegrowers have retired, with 289 receiving the federal government's Small Block Irrigators Package. The package offered exiting growers $150,000 on the condition they took part in the government's water buyback.

Mr Stone says other former grapegrowers are concentrating on dried fruit or citrus, growing vegetables and selling them on roadside stalls and weekend markets, or have taken local jobs or bought small businesses.

"People have run out of resources to easily switch to something else," Mr Stone said. When Don Wheatley bought his farm

13 years ago, he had every intention of turning the rundown dried fruit property into a wine grape property. His plan was to rip out the dried fruit vines on the 16ha property at Merbein on the Murray River in northwest Victoria, grow vegetables as an interim measure, then replant with wine grapes.

Back then wine grape prices were $800 to $1500 a tonne for chardonnay and $500 to $800 a tonne for reds. The cost of production was about $250/tonne.

"Now chardonnay is $100 a tonne if you are lucky enough to get it bought," he said. "The grapevines were not worth the water we were going to put on them."

Mr Wheatley mainly grows button squash. Too many other grapegrowers had the same idea and the market became oversupplied. Wheatley hopes leeks will fare better.

He said switching crops was not easy. "We were lucky we had vegetables in our model of how to change. Leeks are very specialised vegetables. You have to transplant them and furrow them and throw the dirt up them. It is labour-intensive, and a completely different way of growing."

The country around him is a patchwork of dead and dying grapevines. Land is cheap around Merbein. "It is water that is expensive," he said. "You just have to treat it like a business -- too many farms aren't treated that way."

Wineries are also feeling the pressure of oversupply. This week the Victorian Wine Industry Association released a survey revealing 20 per cent of that state's 740 small and medium-sized wineries say they are unprofitable.

Chief executive Joanne Butterworth-Gray wants to support them. "We can't afford to lose them," she said. "They form the fabric and diversity of the Victorian wine story."