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Legislative Council - Fifty-Fifth Parliament, First Session (55-1)
2025-09-03 Daily Xml
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Wine Grapes Industry (Indicative Prices) Amendment Bill

Introduction and First Reading

The Hon. S.L. GAME (16:37): Obtained leave and introduced a bill for an act to amend the Wine Grapes Industry Act 1991. Read a first time.

Second Reading

The Hon. S.L. GAME (16:38): I move:

That this bill be now read a second time.

As I rise to speak on this bill, many South Australian wine grapegrowers are going under, facing financial ruin, and they are going under for two main reasons. The first is simple and straightforward: it is costing these growers more to grow their grapes than they are getting paid for their grapes. Their cost of production is higher than their returns for a number of reasons. To illustrate how far they have fallen, some red wine varieties grown in the Riverland were fetching up to $700 a tonne before the Chinese tariffs, and last vintage the same growers were paid just $150 a tonne. Predictions for the looming vintage suggest even lower price offers ahead.

The second reason many growers are sinking is that an unfair power imbalance is preventing them from making prudent financial plans. It is stopping them from budgeting and charting ahead. Essentially, growers are nurturing their vineyards, paying for all the inputs, such as water, fertiliser, labour costs, ultimately harvesting and everything else in between, without having a clear idea, let alone any degree of certainty, about what prices their grapes will fetch that season.

For some perspective, we are not talking about a handful of unlucky producers. For example, the Riverland-based Consolidated Cooperative Winery (CCW) alone currently represents 494 members. That is 494 growers plus their families. That is 494 small businesses in South Australia, and together they grow around 200,000 tonnes of wine grapes annually, plus other Riverland growers who are not CCW members. Under the current arrangements, many of these growers are dutifully and expertly tending their vineyards during the latter part of the year when inputs largely determine the quality of crops.

But—and this gets to the heart of the legislation—oftentimes they are being forced to wait until December, January and even February to find out what they might get paid for their grapes. This minimum payment figure per tonne, distributed by wineries to every contracted grower, is known as the indicative price. It is what growers will receive approximately for their grapes that particular vintage. As it stands, growers making crucial financial decisions in August, September and October about how much money to spend on producing their grapes have little idea what to expect in December, January and February, when wineries typically decide to release their indicative prices.

However, if growers had earlier notice of what prices per tonne their grapes were likely to fetch, they would suddenly have a powerful new business management tool. This tool would allow them to make a crucial decision two or three months earlier: whether to opt out of the coming vintage or press ahead. Armed with this information, undoubtedly some would indeed decide against producing a crop and spending thousands of dollars on grapes destined to fetch less than their overall cost of production. For others, the prices offered might convince them to forge ahead as usual.

The majority of growers do not own their own water. They lease it in, and it is their biggest cost. Not knowing what the indicative prices are, some growers are forced to go into debt or extend overdrafts to lease enough water to take crops to maturity in February, March and April, only to find those grapes must be left on vines to rot because they cannot afford the harvesting costs. Additionally, pumping water for six months onto a crop that never gets harvested makes zero environmental sense. It would be better if that water remained in the River Murray.

Having prices from processors by 30 September each year—a condition this bill enshrines in law and a condition backed by the Riverland's two biggest grapegrowing representative groups—would stop the bleeding for many growers. It would ensure they are not pointlessly ploughing more money into loss-making crops. By doing so, it would enable them to potentially ride out a bad year, minimise their debt and remain in the industry in the medium to long term.

The Riverland is struggling financially. Wine grapegrowing remains the main financial driver of the region, but our recent discussions with industry figures, including growers and even with the local government leader from the Riverland, confirm our worst fears: people are exiting the industry. Our stakeholders are predicting an increase in the number of rural properties on the market due to grapegrowing becoming unsustainable. The absence of a functioning and successful grapegrowing industry will have serious ripple effects on the local economies. The situation is not dissimilar to what we have seen with the algal bloom crisis currently impacting several South Australian communities.

We have seen the Malinauskas government already acknowledge the seriousness of financial problems created by this algal bloom disaster and deliver financial support to impacted businesses. But in the case of this bill, Riverland grapegrowers are not asking for any taxpayer-funded handout. They are just requesting a simple change to the grower-processor dynamic, aimed at giving them options. This change will not cost taxpayers a cent.

It is important members know that local growers back this legislation and are, in fact, writing to the Premier, to the Leader of the Opposition in this house and to other South Australian politicians, pleading for their non-partisan support. The Riverland Wine Grape Growers Association has told of the desperation among its membership, which is why this bill must be supported by this house and the other place, and swiftly. If this indicative pricing condition becomes law, it will give growers hope for future vintages and hope that they can make better informed decisions, which may allow them to remain in the industry with their dignity intact, and it will mean they do not have to unnecessarily plunge even further into debt.

A quote in an TheAdvertiser story last week summed up the current grower/processor relationship perfectly. Riverland grapegrower and Riverland Wine Grape Growers Association chair Amanda Dimas said, and I quote, 'Not knowing prices until a week before harvest was just mind boggling for me.' She said, 'Waiting until harvest to find out what prices to expect meant—and I again quote—'that you couldn't make the decision whether to supply or not to supply. We were price takers in the end', she said.

Much has been made of a Senate committee and a separate federal review into the existing wine grape purchasing scenario. Indicative pricing was raised multiple times through these processes, along with other factors negatively impacting the industry, including a mandatory code of conduct. That is all well and good, but the earliest this code could be in place is after the 2027 vintage. For many growers relying on change for their financial survival, that will be too late. And what of the much-hyped resurgence in wine sales post the China tariffs? Tanks are still full and the global trend, including in China, of people drinking less wine continues. Sales figures are misleading, because growers living in Australia's biggest wine grapegrowing region have not seen any change to their fortunes since the tariffs were removed.

During our fact finding to develop this bill, we were told that up to one in two full-time Riverland grapegrower families are currently on Farm Household Allowance, which provides support for Australian growers and farmers who are experiencing financial hardship. If the actual figure is even half that, it would still be alarming, given how many grapegrowers are in the region.

As a related side note, the Department of Agriculture, Food and Fisheries Farm Household Allowance dashboard paints a startling picture of the disastrous state of South Australia's primary production industries. Around 1,020 South Australian farmers are currently receiving FHA, the most in the nation, eclipsing Victoria's number of 910 and the NSW figure of 820. Since July 2024, a total of 630 South Australian farmers have been granted FHA, meaning our figure has jumped by over 160 per cent in the last 13 months.

In drafting this legislation to help our grapegrowers, we tried to go further by including a second interim measure raised with the Senate inquiry, which was the final decision of expert determination called in to resolve pricing disputes being binding. But we decided instead to focus on indicative pricing due to the urgent need for grapegrowers to have a game changer, the difference between survival and economic disaster.

This measure, indicative prices by 30 September each year, is a relatively humble change but one that growers recognise could make a tangible, immediate difference. Growers and their families cannot wait for federal changes that may or may not be implemented sometime in the future. This is meaningful change we can make here and now. If mental health and the preservation of functioning family units matter in places like Whyalla and Port Pirie and communities impacted by the algal bloom disaster, they should also matter in South Australian grapegrowing regions like the Riverland.

Debate adjourned on motion of Hon. I.K. Hunter.

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