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House of Assembly - Fifty-Fifth Parliament, First Session (55-1)
2023-06-28 Daily Xml
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Wine Industry

Mr WHETSTONE (Chaffey) (15:25): I rise to give an industry outlook, particularly in the Riverland, with the wine industry in the doldrums that it is currently in. Sadly, I speak on the perilous condition of the wine industry at the moment, and a lot of it is derived from the red wine sector and, yes, it has been the loss of the Chinese wine market that the wine industry had been geared up for. The majority of wine grapes in South Australia are red wine grapes and a lot of that red industry has been geared up for the China market.

Back in 2014 is where it all began, and what I have seen over a number of recent years is a world decline in wine consumption. That has been a part of the problem, as well as other issues and headwinds that the industry is currently facing. The oversupply of red wine has already been stated, particularly with the loss of the Chinese wine market, but one in two South Australian wine businesses has reported a huge amount of unused oversupply.

The 2022 vintage was the beginning of the rot. We know that China had put tariffs and barriers on Australian wine, as they have on other commodities, but what we have seen it do to an industry that has specifically geared up for red wine exports into China is that that huge export driver that it has been over a number of years currently has high inventory levels. Red wine stock is expected to last a further 2.6 years if there are no more wine grapes grown. The 2023 red grape intake has not been low enough to reduce stock levels and now winemakers are likely to be restricting intake of red grapes for 2024. Shiraz, cabernet and merlot will need to be reduced by some 250,000 tonnes. If we put that into bottles, if we put that into cases, if we put that into pallets, it is a significant inventory of wine that will go begging.

Currently, sadly, if we look around South Australia—and I see this on my travels—as a former wine grape grower, I have witnessed a lot of fruit that has now been harvested onto the ground and a lot of fruit that has been left on the vine. It is not just in the Riverland, but the significant amount of tonnage that is affecting the Riverland wine industry is going to have a significant ripple effect, not only on the wine industry but it is going to have a significant impact on the local economy. Sixty per cent of the local economy is derived from the wine industry, and unless we see a move to redirect some of the inputs into growing vineyards and growing wine grapes, we are going to see a huge cliff fall by that industry.

The 8.3 per cent increase in red wine is now being exacerbated by wineries and buyers looking for growers to convert from red to white grapes. What has been reported to me is that it would not take much of an adjustment and then we will see an oversupply of white. So in my recent travels I have not heard anything from the state government, there was nothing in the budget, and I know that the Minister for Primary Industries and the Minister for Trade and Investment are aware of the situation that we currently face. Sixty-five per cent of businesses will still be impacted by wine duties and just under half of South Australian businesses are classified as extremely affected.

As I said, we are looking at diversifying our markets but what we need now is some level of diversification. We do not want to see the industry collapse in a heap, and so my meetings most recently in Canberra were about initiating some form of solution. Those solutions are around diversification; it is about diversifying those irrigation properties and it is about diversifying those farm businesses so that we can put other commodity sectors into the mix so that we are not totally reliant on wine grapes.

It happened in the sugar industry. I know that small family businesses in Mackay were given a restructuring package so they could diversify their economy, so that the region could move on and not fall off the cliff with what we see coming now. The adjustment mechanism is more diversity—new crops, new ideas—and of course our next generation needs some level of certainty so that we can produce food and wine for the world.

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