Wine grape returns plummet

MURRAY Valley wine grape growers have had returns slashed by almost a third this year amid warnings that the industry is in "absolute crisis''.

The 2010 Murray Valley Winegrape Crush Survey has confirmed that the farm-gate value of grapes purchased from growers for the 2010 vintage has slumped by $35 million to $80 million.

This is a further 31 per cent fall in grower wine grape revenue since 2009.

Released today by Victoria's Department of Primary Industries, the Crush Survey  shows a 13 per cent fall in total Murray Valley wine grape production, down by 47,000 tonnes to 328,000 tonnes this year.

It also reported another sharp decline in average prices for grower supplied fruit, with reds down 24per cent to $311 a tonne and whites down 28 per cent to $283 a tonne.

Average prices are now well below the Murray Valley average vineyard cost of $376 per tonne.

Murray Valley Winegrowers chief executive Mark McKenzie said the loss of value in the regions wine grape purchases over the last 5 years was now at "absolute crisis'' levels.

"Since 2005 grower revenues have fallen from close to $200 million to only $80 million and annual grape purchases by wineries are down by 114,000 tonnes over the last 5 years, so the wine grape sector has really hit rock bottom.

"The loss of another $35 million in farm gate revenue to growers this year underlines the severity of the grower financial crisis.

"The message to wineries is now very clear that the wine grape sector here will not endure without a rise in grape prices in 2011 to get growers back to at least covering their vineyard operating costs.

"Without an improvement in prices we will continue to see an exodus of growers from the industry in the Murray Valley that will irreparably damage the capacity of the industry to supply emerging markets such as China into the future.

"Wineries now need to act to halt the grower exodus by recontracting growers and raising grape prices to encourage them to stay in the industry.''

The survey shows some shifts in the supply-demand balance in the last vintage. 

While shiraz was still oversupplied, cabernet sauvignon and pinot noir supplies were lower than winery demand, and merlot supply was balanced.

Chardonnay tonnage was also lower than winery requirements but all other whites remained above wineries preferred intake levels.

The outlook for the 2011 vintage shows overall winery demand for Murray Valley red wine grapes outstripping projected supply, but projected white wine grape supply still higher than demand.

However, Mr McKenzie urged growers to treat future projections with caution and to discuss required tonnages and prices with wineries.