Wine Grape Market and Prices

Wine and wine tourism are vital to the New South Wales economy. However, it is widely recognised that the wine industry is going through a very difficult period. With the Australian dollar high and increasing competition from other wine-producing countries, demand for Australian wine has stabilised. At the same time, the growth of the industry during the 1990s generated an expansion in vineyard plantings and has led to oversupply in the wine-grape market. As a result, prices have fallen and some growers are now receiving prices that are lower than the cost of producing grapes, which threatens their viability.

The Committee visited Griffith and heard evidence from stakeholders in the wine industry in the Riverina. The Riverina produces over half of the state's grapes, and both winemakers and grape growers in the region have been hard hit by falling prices. However, it's not all about prices. The Committee also heard disturbing evidence about the conduct of some of the region's wineries in their business dealings with growers.

The key recommendation arising from the Inquiry is that the NSW Minister for Primary Industries pursues the introduction of mandatory Code of Conduct. The wine industry already has a voluntary Code of Conduct, but uptake has been disappointing. The Committee believes that a mandatory Code is the way forward in the wine grape industry, as it has been in the horticulture market.

A mandatory Code may not increase grape prices, but it will help to provide some consistency and stability to the industry. Wineries and growers must work together to build a better future for the industry, and the Code of Conduct provides a framework for them to do that. In order to be effective, the Code needs to be introduced nationally. If this is not possible, the Committee has recommended that the NSW government establish an independent dispute resolution body for the wine industry.

The Committee has also made a recommendation to require wineries to publish indicative prices for grapes by 30 June each year. Such a requirement was in place some years ago, and it did not prove effective. However, the Committee feels that improved price signals are essential to enable growers to make informed business decisions and that, in the right form, a requirement to publish indicative prices could assist. The Committee has also made other recommendations designed to help growers.