SUNRAYSIA wine grape growers may face “years rather than months” of waiting before the red-grape market adjusts to the loss of access to the Chinese market, says ANZ’s agribusiness head.
Mark Bennett, who spoke this week at an agribusiness summit hosted by Mildura Regional Development, said it would take time for the market to adjust to an oversupply problem in Australia.
“We have been producing more than we’ve been consuming,” Mr Bennett said.
He said he expected domestic consumption to increase but was uncertain to what extent economic pressures would affect the market.
“If you’ve got this rapidly rising inflation and interest rate environment … what will all those changing economic settings bring to household expenditure on things that are discretionary?”
Demand from China for Australian wine grew between 2015 and 2019 before the market disappeared as China applied import duties in 2021.
The 2021 Australia red grape harvest outsized those of the previous three years by 23 per cent, resulting in an oversupply of grapes.
Grape and wine industry figures now expect demand for red grapes from inland regions in 2023 to reduce by 40 per cent.
Mr Bennett said there could be hope for more of an upturn in demand for domestic grapes as conditions worsened in other countries.
“We’ve seen extremely hot conditions and dry conditions playing out in key wine producing regions like France,” he said.
North West Farmer has heard from local growers who are unsure about their long-term prospects and have considered switching to other industries.
Mr Bennett said any potential move from growers to alternative commodities may be the best option for some.
“When you’re invested in wine-grape production, it’s not easy to suddenly do something different,” he said.
“But it will be a sensible answer for some. Less supply starts to rebalance the price.”
