Legislative Council: Wednesday, April 10, 2024



Wine Industry

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (16:43): I move:

That this council—

1. Recognises the importance of South Australia’s wine industry to the state’s domestic and international export economy;

2. Acknowledges the resilience of our wine grapegrowers through a time of uncertainty and the need to explore structural adjustments on-farm going forward;

3. Urges the Malinauskas Labor government to enable more diverse global partnerships for South Australian wine exporters by facilitating a higher trade presence in both traditional and emerging trading countries; and

4. Calls on the wine industry bodies to unite as one to rebuild our global reputation.

On 28 March this year, China announced that it would remove the heavy tariffs imposed on Australian wine that have been in place since 2020. The tariff's sum, levied at over 200 per cent, on premium Australian wine had an immediate and crippling impact on Australian wine sales in China, with Australian wine dropping from over 27 per cent of market share to just 0.14 per cent of the imported wine market in China.

As both the largest producer of Australian wine and also a premium producer, South Australian growers and winemakers were heavily affected. Not only was China a significant market for Australian wine in terms of volume but it was also a premium value market at an average value of around $10 per litre and a total export value of around $1.2 billion. As such, the Chinese market was treated seriously by South Australian premium winemakers. Approximately 47 per cent of our state's wine exports were destined for this market at the time those tariffs hit in 2020.

The Malinauskas Labor government has announced a $1.85 million China re-engagement support package to be rolled out over two years. The aim of this package is to reinvigorate wine sales into the Chinese market. While any assistance to the state's wine producers is welcome, this measure unfortunately does not address the critical long-term needs currently affecting the South Australian wine industry's viability.

I think it is important to recognise that the China wine market has markedly changed since 2020. According to Wine Australia figures, the total market for imported wine has contracted from 688 million litres in 2018, to 248 million litres in 2023, or around one-third of what it was before the introduction of tariffs on Australian wine in 2020. It is also worth noting that imports of wine into China from France have fallen by 29 per cent, from Chile by 18 per cent, from Italy by 31 per cent, and from Spain by 48 per cent. Clearly, this is a contracting market for all exporters, including those that have not suffered the same tariff impacts that Australia has endured.

The likelihood that this package will rapidly—or even over some period of time—reclaim the previous sale figures and underpin a much needed wine sector recovery in this state is remote. I would even say that to state they will is perhaps irresponsible. As I have mentioned, Australian wine is highly regarded in China and the possibility of reopening the market is welcome, and there is the potential for positive sale results. However, grossly exaggerating the potential benefits risks offering false hope and helps no-one, least of all growers and wine producers trying to make decisions during some of the most challenging times in recent memory.

What is needed at this critical and stressful time is solid evidence and leadership, not political spin, because there are other influences negatively impacting sales of our wine, and they also need attention if the South Australian wine sector is to recover. There has been a discernible slowdown in global consumption of commercial wine, which is heavily impacting wine producers and grapegrowers, particularly in South Australia's Riverland. Currently, there is an estimated oversupply of wine in the order of three billion litres, or three times Australia's annual crush.

It is also worth noting that producers in the Bordeaux region in France are in the process of removing 9,500 hectares of commercial wine grapes as they know that they have an overproduction for the market. In California, there are plans to remove 55,000 acres, or over 22,000 hectares, of commercial wine grapes for the very same reason. They have made some hard decisions for the dignity and sustainability of their local industry.

So, while there is clearly an urgent need to boost marketing efforts, there is also a need to focus on adjusting supply. This is simply the reality of a global wine market in 2024. South Australian growers, in particular those in the Riverland region, need assistance to adjust either to higher value grapes and wine or, should they wish, alternative food and fibre production. Failure to do so, and as a matter of urgency, risks socio-economic damage not only to the wine sector but to regional support industries such as irrigation trusts, allied and support businesses, retail businesses and the greater community.

There is a need to focus not only on rebuilding the South Australian presence in China but building a sales presence in traditional markets such as Europe and North America, and also new and emerging markets. It is essential that there is support for wine sector bodies at regional, state and national levels, and that they are working together towards adjustment of both supply and demand for Australian wine. I commend the motion to the chamber.

Debate adjourned on motion of Hon. J.E. Hanson.