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Australia faces grape glut

Grapes in Australia are being left to rot on vines as growers again face a serious grape glut across major wine-producing regions.

Despite 2005 promising to be a good-quality year, grape prices have continued to fall and, facing over-production and a slowdown in wine exports, many growers are unable to find a market for their grapes.

Prices have fallen across major wine areas including the Barossa Valley, Hunter Valley and Riverland. Australian wine writer Max Allen said he felt a ‘strong sense of déja vu’ at this year’s Barossa Vintage Festival.

‘It all sounded horribly reminiscent of of the situation in the Barossa in the late 1970s,’ he said, referring to Australia’s dramatic move to the production of white wine causing an almost complete collapse in the red grape market.

Allen also said that major companies were backing out of their contracts with growers. Although this remains unconfirmed, large companies are squeezing growers in a bid to cut costs.

‘At Hardys prices are still in that range where we can make a bit of money and survive,’ Riverland grape grower Peter Harman told The Australian. ‘[But] Simeon McGuigan has offered us prices representing about a 50 or 60% decrease in the past two years,’ he claimed. ‘If we go any lower than what we are now there is going to be some heartbreak out here.’

Brian McGuigan, head of McGuigan Simeon, admitted earlier this month that ‘growers were not very happy’ about his company’s minimised grape prices and restructured operation.

With growers being forced to produce around double the amount of grapes as they did four years ago – for the same price – many are considering leaving the grapes on the vine to rot.

‘I think they [the grapes] will be scalped at a much less than cost-of-production price or they will stay on the vine,’ Chris Byrne, head of the Riverland Winegrape Grower’s Council, told The Australian yesterday.

Mike Stone, head of the Murray Valley growers, estimated that nearly 20,000 tonnes could be left to rot on the vines. He predicts the loss to the local economy could be more than $8 million with grape prices in some areas dropping to nearly a third of their original value.

Written by Roseann Campbell

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