MURRAY Valley Winegrowers chairman Chris Dent says the local industry is probably facing one of its most difficult years since vines were first planted.
Mr Dent said a number of forces beyond grower control were coming together to create a potential crisis heading into the 2023 vintage.
He said even though the industry knew trouble was coming “it doesn’t lessen the heartache associated with little, or no, demand for the mainstream red grape varieties”.
“Those without contracts face the prospect of having no home for their fruit,” Mr Dent said.
“And at the same time as this, the industry is grappling with high fertiliser and chemical costs and fuel prices, interest rates are on the rise – and then there’s the seasonal outlook.
“Rain is causing major concerns around disease risk and rising management costs.
“It’s a grim outlook. There’s no demand at the moment for shiraz, cabernet and merlot and for those three mainstream varieties, I can’t see any spot market activity going to be happening.
“Which puts those growers in a place where there’s a high likelihood they’re not going to sell their grapes.”
Mr Dent said the dilemma was being compounded by other external factors, such as the global shipping crisis, which he said meant wineries were already full to overflowing.
He said wineries would not be able to fit the next vintage, so when they were prioritising what varieties they could take into their winery, they would put more emphasis on types they knew they could sell – mainly whites and some lesser, mainstream reds.
Some wineries were already having tough conversations with growers.
“I know some wineries are trying to renegotiate some of the terms in the contract to reduce their exposure this year.
“They’re trying to give some incentives, as an example they might try and reduce this year’s supply in return for an extra year on the end of their contract.
“Others are just straight-out asking to reduce supply to less than what their contract said for various different incentives. Contracted supply is not a sure thing if a winery physically doesn’t have the room to take the fruit.
“There’s potentially going to be some below cost of production pricing coming out.”
Mr Dent said, as a grower, he also took stock of costs, variety breakdown and customers.
At pruning time, he made the tough decision to mothball 18ha of merlot and cabernet, even though it was contracted, because he wanted to reduce potential losses.
“It was a strange decision to make but I’ve been comfortable with it ever since. We’re not seeing any relief from the freight issues or oversupply.
“With pricing that has been bandied around, it feels like I’ve made the right decision. I made the decision pretty early and had the discussion with the winery I was contracted to.
“I was thinking it was in my best interest but obviously it was helping them out because they’re not sure they can take everything, anyway.”
While MVW doesn’t have data about how much of the upcoming vintage would be uncontracted, at the end of the 2022 vintage, it forecast about 20,000 tonnes unsold from the region and much of that fruit was picked on the ground to look after the vines.
The tonnage likely to go unsold for 2023 is expected to be higher.
Mr Dent said he expected it to “be worse than that”, adding some people had read the writing on the wall and made even tougher decisions to exit their vineyard and change to a different industry or commodity.
“We’ve certainly got some reports of that. A lot of little growers, and even of late we’ve seen a couple of big guys demonstrate they’re not going to persist with it.
“From my own experience, there is a lot of merit in growers taking stock of their individual situation and being prepared to make difficult decisions if necessary.
“You need to know your numbers and be prepared to cut your losses, given the season we’re having. The rainfall keeps coming.
“We’ve had the floods, and there is still plenty of that water around.
“We don’t want to see growers throw good money after bad for no return.
“If growers are going to spend a lot of money on chemical and things to save their crop (with ongoing rain and disease risk), they may not get any better return for it.
“You might need to cut your losses and not try and save your reds and put your focus and attention on things like whites. There are some reds that are in demand. That’s where you put all your time and money, with a better likely return or to break even.”
