MURRAY Valley Winegrowers has welcomed a Federal Government decision to conduct an independent review of contractual practices in the industry in response to some stakeholder’s concerns.
Chief executive Paul Derrico said making the code of conduct compulsory appeared to be the only way forward, as the voluntary rules appeared to be failing.
A voluntary industry code of conduct was introduced in 2008 to encourage wineries to provide grapegrowers with fairer contract terms and price transparency,
Mr Derrico said unfortunately, the recommendations of the Australian Competition & Consumer Commission’s wine grape market study in 2019 and another review of winery practices in 2021 appeared to have little impact.
“Wineries have had ample time to make meaningful change, but many growers would argue strongly nothing has changed, but in fact things have gotten progressively worse,” he said.
Craig Emerson, the former Minister for Trade in the Labor Gillard Government, is conducting the independent impact analysis of regulatory options for the Australian grape and wine sector.
During the consultation process in September and October, representatives from Murray Valley Winegrowers took part in an online session with Dr Emerson.
Mr Derrico said the meeting was productive and Mr Emerson seemed to have a good understanding of the challenges confronting growers.
“He was quite adamant his aim is to make productive change and not just tick boxes on behalf of the Federal Government in the lead up to the next election,” he said.
Mr Derrico said growers in the Murray Darling and Swan Hill regions were comforted by Dr Emerson’s approach to the consultation process and his knowledge and track record of delivering timely results.
He said this was demonstrated by Dr Emerson’s recent independent review of Australia’s food and grocery code of conduct and his release of a final report in June last year.
Dr Emerson made 11 recommendations to improve the code, including making it mandatory, drawing on submissions received during the review.
Mr Derrico said contractual practices for the wine grape industry needed to be made fairer.
“The timing of price announcements should be much earlier in the year and not in December, as it is too late,” he said.
“Growers have already incurred most of the cost of growing the crop by then.”
He also said pricing announcements needed to be simultaneous or provided to an independent body for release.
“It seems if one major winery releases its offer first, others will follow with similar prices,” he said.
Mr Derrico said wineries needed to provide growers with some sort of compensation to adhere to their requirements.
“Growers presently have to gain costly Sustainable Winegrowing Australia accreditation, without due recognition or compensation,” he said.
He also said the oversupply of red wine allowed buyers to play growers off against another or hold down prices on white grape varieties growers may have in order for their red grapes to be sold.
“We know not all wines are sold at the lowest common red grape price equivalent, but to see most red grapes purchased/sold at the bottom end pricing is one-sided and unwarranted,” he said.
Mr Derrico said in the first instance, a code of conduct needed to be developed between the major supermarkets and wine producers to stop the unscrupulous and predatory behaviour of the liquor chains.
“These unethical practices result in growers being disadvantaged in the market,” he said.
“There needs to be transparency in marketing, with retailers hiding behind their ‘buyers own brands’ and passing the products off as boutique, estate grown wines that are far from it.
“Many consumers would prefer to support hard working, committed and transparent wineries trying to live up to sustainability and ESG practices forced on them by the very retailers indirectly driving winegrape growers out of business.”
Mr Derrico is also calling on the Federal Government to do more to stimulate exports, with the export market development grant being the first port of call for scrutiny and change.
“Exporters should be rewarded for the positive return on the investments made in exporting, by allowing an annual extension of the funding,” he said.
Mr Derrico said he’s hoping governments and industry stakeholders could support the development of a marketing campaign centred around a wine hero or celebrity to promote the consumption of Australian wine over drinking imported wine.
“Presently, one in every five glasses or bottles consumed in Australia is imported,” he pointed out.
“I am confident Australia as a society will support our own in a time of need, to help growers/farmers and its wine industry.”
