Australia harvest ‘slashed by up to half’

Australia’s unrelenting drought looks set to slash the 2008 grape harvest by up to half, driving grape growers and wine producers out of business and forcing a structural change in the industry.

‘The vintage could be down to around 800,000 to 1.3m tonnes, down from 1.9m tonnes,’ Stephen Strachan, CEO of the Winemakers Federation of Australia told decanter.com.

At least 800 grape growers—more than 10% of the industry’s 7500 growers—are likely to go out of business, Mark McKenzie, executive director of Wine Grape Growers’ Australia, told the Australian media this week.

The drought is having most impact in the Murray Darling Basin of southeastern Australia, which produces up to 65% of Australia’s wine grapes. The majority are used for the production of high volume varietal wines, signalling a possible end to the low cost wines which have built Australia’s export industry.

‘The regions on the Murray Darling rely heavily on irrigation water and the rivers have been depleted,’ explained Strachan, adding that water allocations had dropped by as much as 90%. ‘How governments allocate water has changed forever and the price of water is going to go up significantly over time.’

The reduced yields follow hard on the heels of a glut, which drove grape prices down. Although grape prices are now set to rise, there will be fewer grapes to compensate growers for several years of poor returns.

But Strachan says the situation could be an opportunity to put value back into Australia’s AUS$4.8bn wine industry, as the loss of irrigation could put more emphasis on higher quality production.

‘If you look at what Australia’s been doing for the last couple of years, we’ve been doing a lot of unsustainable deals,’ he says. ‘Those are going to be less prevalent.’

Written by Felicity Carter