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Canberra Today 8°/15° | Tuesday, April 23, 2024 | Digital Edition | Crossword & Sudoku

Grim outlook for wine, but on the other hand…

The value of wine grape production is forecast to fall by 2 per cent to $926 million in 2024-25.

“Maybe for our region, the increasing cost of land and the problems with issues of water supply will see a switch from growing grapes to more housing development,” writes wine columnist RICHARD CALVER.

It is a flashback moment. I’m reading an Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) report on the outlook for wine. 

Richard Calver.

In the late 1990s and early 2000s in my role with the Farmers Federation, I read a lot of these outlook reports as they assisted to guide the cases that we ran in the now Fair Work Commission about increases to minimum wages. 

The quotation that reverberates from those days is one that I shared with the economist who assisted me to write these submissions: “I believe that economists put decimal points in their forecasts to show they have a sense of humour.” 

I like this quotation by William Gillmore Simms because maybe economists do have a sense of humour even though they’ve forecast 10 out of the last five recessions. 

Economics is appropriately called the dismal science, notably in the context of the outlook for wine revealed in the March 2024 report. Here are the headline points:

  • Value of wine grape production to fall by 2 per cent to $926 million in 2024-25.
  • Value of wine exports to fall by 3 per cent to $1.8 billion in 2024-25.
  • Declining demand for wine and high existing stocks weighing on prices, both domestically and globally.
  • National prices to fall by 4 per cent for red wine grapes and 1 per cent for white wine grapes in 2024-25.

The cliché that every cloud has a silver lining is evident in the last dot point; wine consumers are likely to benefit from a fall in wine grape prices. 

But then again (or as economists would say, on the other hand) the lower price points for grapes is forecast to have a negative effect: “In 2024-25, wine grape production is forecast to increase marginally. This is on the back of forecast good growing conditions, high water availability and easing disease pressure. 

“However, the higher production potential will likely be constrained as growers leave grapes on vines, or engage in heavy pruning to put their vines in ‘survival mode’. This is due to continuing low prices with the ongoing excess supply of red wine varietals in warm inland regions and sluggish domestic and international demand for wines.”

Linked to this forecast is a prediction that some wine grape growers are expected to leave the industry or switch to growing more profitable crops with ABARES singling out almonds as a likely switch product. 

When I recently drove to Yass for a walk along the river with the bushwalking club, I was astounded by the level of development around Murrumbateman. 

Maybe for our region, the increasing cost of land and the problems with issues of water supply will see a switch from growing grapes to more housing development. 

I asked Ken Helm, who is an expert on the Canberra District with 50 years’ experience, for his opinion: “There is some pressure on local vineyards and we’ve seen Shaw Vineyard Estate sell before Christmas with all the vines pulled out, about 30 hectares gone. 

“It’s definitely for rural residential housing development. We see that as devastation for the district because here we are short of fruit and we are bringing it in from other areas like Tumbarumba. 

“Unlike the Riverland where growers are being offered $150 a tonne, in this district we are paying $3000 per tonne. Canberra is a standout because the premium end of the market is ignoring a downturn. 

“Here at Helm we are allocating wine to restaurants because we can’t produce enough to meet demand. We are different to the Riverland. We are so different – they’re going backwards but we are enjoying good prices because we grow premium fruit.”

“The only function of economic forecasting is to make astrology look respectable.” –JK Galbraith

 

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Richard Calver

Richard Calver

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