Future hangs on prices

Transcription

1 Murray Valley Winegrowers Inc. APRIL MVW News & Views Representing the Murray-Darling and Swan Hill wine regions NSW-VIC NOVEMBER 2015 Future hangs on prices WITH just two months to go before harvest, most Murray-Darling and Swan Hill growers remain in the dark on what they ll be paid for their grapes. This includes those who ve signed supply contracts. Droning on TO find out why a drone has been flying spying missions over vineyards, turn to page 6 and look for Bird s-eye view Compared with this time last year, there s more winery activity to secure white varieties, not so much the mainstream reds. Evidence is mounting that white wine stocks are running down (see story White wine stocks drop, p.2) and wineries are moving to make sure they get what they need next year. But the evidence of what they will pay remains elusive. Put simply, grapes prices must increase next year to help secure the future of the winegrape industry in the Murray-Darling and Swan Hill regions. The annual growers survey conducted by Murray Valley Winegrowers to track changes from the previous year has revealed a net loss of more than 1,500 hectares of wine grapes over the past two years (see story Vineyard area down p.3) in response to prices that have been among the lowest in 10 years. As well, the MVW growers database shows that 105 families quit growing wine grapes over the past two years, and the message from many of the growers remaining is that they will do the same if prices don t improve substantially. Wild over water While grape prices struggle to reach breakeven, the price of water is skyrocketing and will be another factor in determining the future of the winegrape industry. The cost of temporary water has spiralled (around $300/ML when going to print), which presents growers with a dilemma. The high price could be a barrier to those who need to supplement their allocation, while others may be in a position to sell water rather than grapes, MVW Executive Officer Mike Stone said. In this scenario, crops could suffer through lack of water, particularly in heatwave conditions, or may be discarded if irrigation water is sold into a flourishing water market. Growers are questioning whether to buy or sell water now, or wait until they receive information on grape prices. And with water prices rising so rapidly, they may not be willing to wait. Meanwhile, the rice industry has announced up-front prices to ensure growers plant a crop. Wine companies that signed-up to the Australian Wine Industry Code of Conduct are not required to release indicative prices until mid-december, and other companies tend to hold off disclosing what they ll pay until after the release of indicative prices. Frustration growing Winegrape prices traditionally reflect industry performance and conditions. Over supply and high Australian dollar, for example, have depressed prices. But over supply, particularly of white varieties, has eased and the value of the A$ has dropped significantly. On top of this: Australia s wine exports have just notched up their strongest period of growth since export values peaked in 2007 (see story Wine exports surge p.10); white wine stocks are down; free trade agreements are in place with Japan, South Korea and China; the cheaper A$ has made Australian wine much more competitive in key markets; vineyard area is reduced and the national crush fell by 200,000 tonnes in 2014 and Frustratingly, these promising signs are not pointing to better prices. INSIDE Page White wine stocks drop 2 Counting the loss 2 Vineyard area down 3 Projects seek approval 4 Dent joins Advisory Committee 4 Earwig invasion 7 Region gets Senate hearing 8 Wine exports surge 10 After the storm, what then? 13 Chairman s report 16

2 Murray Valley Winegrowers Inc. MVW News & Views White wine stocks drop AUSTRALIA S largest wine broker has reported that bulk inventories for white wine are falling. In its bulk wine market update for October, Austwine highlighted data from the Australian Grape and Wine Authority (AGWA) which showed that in the period to , white wine production peaked at more than 600 million litres in , creating a stockto-sales ratio of 1.40 (stocks available in a given year against forecast sales in the following year). However, production by had dropped to below 550 million litres and the SSR had dropped to around With less white wine in storage, wineries have been more active than at this time last year in securing grape supplies. Austwine reports quite tight inventories of bulk white wine, with Chardonnay reasonably scarce, leading to blenders such as Colombard and Semillon also being scarce. Inventories of Sauvignon Blanc and Pinot Gris were very tight. In contrast, there are reasonably abundant inventories of bulk Shiraz, Cabernet Sauvignon and Merlot. Trading up BUILDING on the momentum of free trade agreements with Japan, South Korea and China, Australia has now signed-up to the Trans-Pacific Partnership (TPP) agreement. Included in the deal are countries that account for around 45 per cent of Australia s wine exports, last year spending more than $800 million buying Australian wine. Twelve countries are party to the TPP Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam. However, the TPP won t alter current arrangements in all countries. For example, the ban on alcohol sales in Brunei will remain, Singapore doesn t impose tariffs on imported wine and Australian wine sold in New Zealand, Stimulating demand Austwine suggests a mixed outlook for The mix includes: Falling bulk white wine inventories, but increasing red wine inventories; Expensive water and very dry weather outlook, increasing the likelihood of smaller yields, and Poor grower sentiment, with low grape prices leading to minimal vineyard inputs. However, the October Austwine report also highlights the positive developments, led by a significant fall in the value of the Australian dollar against the currencies of key wine export markets, and the signing of free trade agreements with Japan, South Korea and China. The value of the Australian dollar in our top five export markets United States, United Kingdom, China, Canada and Europe - has tumbled against their currencies, making our wine far more competitive. Chile and United States has been tarifffree for some time. Australia also has a free trade deal in place with Japan. Tariffs on wine will be phased out in Mexico and Peru, but at this stage these are relatively small markets for Australian wine. Under the TPP, tariffs on Australian wine sold in Vietnam and Malaysia will be phased out over 11 years and 15 years respectively. While the group of 12 has agreed to TPP arrangements, individual parliaments and governments are yet to ratify the agreement. And with not much news forthcoming on the details surrounding negotiations, it remains to be seen whether domestic politics derail or delay full implementation. Counting the loss UPDATING our growers database is an ongoing chore for MVW Office Manager Helen Hynes. But between August and November it was busier than usual due to the processing of replies to the annual update survey. Survey forms were mailed to all growers in early August, with the request they be amended, if necessary, and returned by September 4. An incentive was offered for the forms to be returned within the specified period a draw for two nights free accommodation, courtesy of the Best Western Travel Inn, Carlton, and assistance with travel costs. The name drawn was Irymple grower Joe Zagar. More than half our growers got their survey forms back promptly, leaving around 200 to be contacted by telephone. This process is largely complete. The database is now a lot different from 12 months ago, as shown in the following summary: Net winegrape removals of 747 hectares, compared with 770 in Main removals: Chardonnay 221 ha, Cabernet Sauvignon 111 ha, Shiraz 105 ha. 392 growers, down from 443 at the end of the survey period in New plantings of 73 ha, led by Pinot Gris 38 ha, Durif 10 ha, Sauvignon Blanc 10 ha Joe Zagar, winner of the draw for two nights accommodation in Melbourne, donated by Best Western Travel Inn Carlton. 2

3 Vineyard area down THE latest Vineyards Australia report from the Australian Bureau of Statistics (ABS) shows a decline in winegrape area across Australia of more than 13,300 hectares over the three years The report has been compiled from the 2015 Vineyards Census that ABS conducted earlier this year. More than one third of the decline (4,520 hectares) occurred in the inland wine regions of Murray-Darling/Swan Hill, Riverina and Riverland. Chardonnay bore the brunt of removals. Given that the growers database maintained by Murray Valley Winegrowers (MVW) points to a net winegrape removal of 1,853 hectares in the Murray-Darling/ Swan Hill regions over the past three years (around 40 per cent of inland-region vineyard removals), it s a little surprising that the ABS census recorded a 1 per cent increase in Shiraz plantings and 10 per cent increase in area planted to Semillon. Not surprising, though, is the revelation that yields in the inland regions increased by 32 per cent, compared with 2012, as growers tried to compensate for a succession of low grape prices. Cool and temperate regions Overall, yields have dropped marginally in the cool and temperate regions of Australia. Of the 10 largest regions, two had an increase in yield compared with 2012, with Coonawarra up 2 per cent and Adelaide Hills up 44 per cent. Vineyeard area has declined by 11 per cent. But, in Tasmania, plantings have increased by 14 per cent to 1,505 hectares since In Langhorne Creek, plantings increased by 6 per cent to 5,368 hectares, with an increase in Shiraz of 12 per cent and an increase in Cabernet Sauvignon of 14 per cent. There has also been a small increase in plantings of Pinot Gris and Sauvignon Blanc in Langhorne Creek. In McLaren Vale, there was growth in less common varieties such as Grenache, Mataro and Tempranillo, and plantings of Shiraz also increased by 1 per cent. The latest vineyard statistics from around Australia highlight the following: Register now A WINE Grapes for Sale Register has been introduced by Murray Valley Winegrowers (MVW) to help Murray- Darling and Swan Hill growers find buyers for their fruit. Letters have been sent to all growers on the MVW database, alerting them to the service and inviting them to send us information on fruit which hasn t yet been placed. Around 40 wineries that are known to buy grapes from the Murray-Darling and Swan Hill regions have received information on the register, and asked to contact MVW should they wish to take advantage of it. The service has the potential to connect growers with buyers. On being contacted by a winery, MVW will inform registered growers of that winery s Red winegrape production increased 5 per cent in 2015 (compared with 2012) to an estimated 844,000 tonnes. Of this, the most prolific variety was Shiraz (395,000 tonnes), accounting for 47 per cent of all red winegrape production. White wine production decreased by 2 per cent to an estimated 764,000 tonnes, compared with 2012 estimates. Chardonnay continues to be the top white winegrape variety produced, contributing 341,000 tonnes in The second-largest white winegrape variety was Sauvignon Blanc with an estimated 84,000 tonnes. Winegrape production is highest in South Australia - 739,324 tonnes, followed by New South Wales, 495,789 tonnes. An estimated 440,000 megalitres were used to irrigate vineyards across the country, representing an 18 per cent increase on 2012 usage. South Australia accounted for 46 per cent of the total water used on vineyards nationally; NSW vineyards used 32 per cent. The report Vineyard Census is available for free download from the ABS website NOVEMBER 2015 interest and name of the person to contact. MVW Executive Officer Mike Stone said MVW would not be involved directly in selling registered fruit. We will be informing growers of any interest; the details of the query and advise follow-up, he said. In return, all we ask is that we re told immediately when registered grapes are sold otherwise we ll be communicating information that s not correct. MVW will also be able to provide delivery dockets to growers, using a generic version that s been developed by Wine Grape Growers Australia (WGGA). Murray Valley Winegrape Industry Development Committee Murray Valley Winegrowers MVW News & Views NOVEMBER 2015 Published by: Murray Valley Winegrowers Inc Editor: Mike Stone mike@mvwi.com.au Website: Representing winegrape growers in the Murray Valley region within the Shires of Wentworth and Balranald, and Rural Cities of Mildura and Swan Hill. Murray Valley Winegrowers Inc 62 Madden Avenue, Mildura 3500 PO Box 2745, Mildura, Victoria 3502 Phone: (03) Subscription: $40 per year plus GST Free to winegrape growers who pay levies to the Murray Valley Winegrape Industry Development Committee. Advertising and editorial supplied to this publication does not necessarily reflect the views of Murray Valley Winegrowers Inc. and unless otherwise specified, no products and/or services are endorsed by this organisation. 3

4 Murray Valley Winegrowers Inc. MVW News & Views Dent joins advisory committee MYSTIC PARK winegrape grower Chris Dent, 31, has been appointed to the Victorian Government s Wine Industry Ministerial Advisory Committee. He was nominated for the position by Murray Valley Winegrowers (MVW). As Chairman of the Swan Hill Wine Region Grape Growers Association, Chris also serves on the board of MVW. Before taking over the running of his family s 70 hectare vineyard at Mystic Park, Chris worked with Orlando Wines (now Pernod Ricard) as a Grower Liaison Officer. On leaving university with a degree in viticulture, Chris worked as a vineyard supervisor for Casella Wines. Victorian Agriculture Minister Jaala Pulford says the committee will support the future growth of Victoria s wine industry. The new advisory committee brings our best and brightest wine experts together from across the state to help our wine industry grow and prosper, she said. Committee members were chosen for their abilities to represent the views of key industry stakeholders, and their expertise and experience in relevant areas including wine making, grape growing, local government, research science, extension, wine trading, marketing, packaging, logistics and tourism. Four members of the 13-strong committee were nominated by industry association representatives, with the other nine chosen through a public expression of interest process. In addition to Chris, another two committee members are familiar with the Murray-Darling and Swan Hill regions, they being Kim Chalmers of Chalmers Wines and Dr Mark Krstic, who before joining the Australian Wine Research Institute (AWRI) worked with the Department of Primary Industries, based at Irymple. Victorian Agriculture Minister Jaala Pulford Projects seek approval PROJECTS submitted to the Murray Valley Winegrape Industry Development Committee (IDC) for have been endorsed by the IDC board and now await growers approval. By now, all growers should have received an information pack from the IDC, containing the annual report and explaining the projects and services that Murray Valley Winegrowers (MVW) hopes to roll out from July next year. MVW Executive Officer Mike Stone says most of the projects will be familiar because they fund core activities such things as biosecurity management, grower communications, industry development officer, weather station maintenance, annual crush survey and production of a spray diary. Four new projects will result in the delivery of more services to growers. We wanted to broaden the role of our IDO David Coombes, who has now been with us for more than six months, he 4 said. David took over projects from Liz Singh, and with those under control he s had time to develop plans for additional activities. "Details of these are in the IDC information pack, along with nine other projects that growers are being asked to support. The new projects that growers will be asked to support are: Vine Spring Health Provide growers with latest information on vineyard sprayers and chemicals for protection from Powdery Mildew, Downey Mildew and Botrytis. Integrated Pest Management Monitoring Provide regional update of the potential for Pest & Disease outbreaks through monitoring vineyards throughout the growing season, using an IPM approach. Spray Drift Awareness Conduct a regional awareness and education campaign to combat damage to vineyards from agricultural spray drift. (Of particular relevance to Swan Hill region). Field Day Participation Provide information on latest extension programs and viticultural services available to growers. MVW will be represented at the Mildura Field Days in May next year, and in 2017.

5 NOVEMBER 2015 Code of conduct growers guide IT S BEEN around for seven years, but many growers (and some wineries) remain unclear on how to use the Australian Wine Industry Code of Conduct. The code was introduced after lengthy negotiations between representatives of Wine Grape Growers Australia (WGGA) and Winemakers Federation of Australia (WFA). It s a voluntary code, with signatories agreeing to prepare grape purchase contracts that clarify obligations between the parties, and provide an avenue to resolving disputes over price and/or fruit quality. In short, the code provides the platform for fair and equitable dealings between signatories (grape buyers) and growers. Code-compliant contracts contain clauses for price determination and notification, terms of payment, fruit standards, contract variations, and most importantly outline a process for resolving disputes. Code companies Of the more than 40 wineries known to purchase wine grapes from the Murray- Darling and Swan Hill wine regions, seven are signatories to the Code of Conduct: Accolade, Brown Brothers, Dorrien Estate, Pernod-Ricard, Treasury, Trentham Estate and Yalumba. MVW was pleased to see WFA President, Tony D Aloisio AM, sign the code this year on behalf of Oakridge Wines, setting an example for the hundreds of other wineries around Australia that haven t. In terms of production, the code covers about 40 per cent of Australia s winegrape industry while efforts continue to encourage more wineries to endorse the code. The full code can be viewed on the MVW website There s also a dedicated code website How to use Code of Conduct dispute resolution: Price disputes If a Notice of Dispute has been lodged before April 30 in the harvest year, the parties have 60 business days to negotiate a mutually agreed outcome. If the notice is lodged after April 30, the parties have 14 days in which to negotiate an outcome. If a dispute has not been resolved within these time frames, the matter can be referred to an independent expert to make a determination. Following is a step-by-step guide: 1. Within seven business days of receiving price advice, the grape seller sends a Notice of Dispute to the purchaser, and forwards a copy to the Code Secretariat. (Secretariat details and Notice of Dispute form can be found at under Contact Us and Downloads). 2. Within seven days of receiving this notice, the grape purchaser replies in writing, advising if the desired outcome is agreed or if there is another offer. A copy of this response must also be sent to the Code Secretariat. 3. The Code Secretariat will contact the parties to try to help them resolve the dispute informally. 4. If the dispute hasn t been resolved within the prescribed periods, the parties must jointly appoint an independent expert (panel of experts also to be found at the code website under Downloads). If they cannot agree on the appointment within seven business days, the Code Management Committee (details available at www. wineindustrycode.org) will select an expert from the panel of experts. 5. The independent expert has 14 business days to complete the assignment, but can request more time if extensive research is required. The parties agree to be bound by the determination of the independent expert, and share costs equally. Disputes over fruit downgrade and/or rejection pre harvest Disputes can arise over a decision by the purchaser to downgrade or reject grapes following a vineyard inspection. With harvest looming, obviously the dispute must be resolved quickly. The Code s dispute resolution provisions can be utilised in a similar way to disputes over price, with one major difference fruit downgrades or rejection must be dealt with urgently. Following is a step-by-step guide: 1. Notice of Dispute issued to grape purchaser and copy sent to Code Secretariat. (Secretariat details and Notice of Dispute form can be found at under Contact Us and Downloads). 2. Winegrape purchaser must respond in writing to the grower within 48 hours, and send a copy to the Code Secretariat. This response will indicate whether the original assessment stands or if an alternative is offered. 3. The Code Secretariat will contact the parties to help them resolve the matter. 4. If, after 72 hours, the issue remains unresolved the parties should jointly appoint an independent expert (see code website for panel of experts, under Downloads). However, if agreement cannot be reached, either party can apply to the Code Management Committee (see code website) to make the appointment. 5. The independent expert will deliver a determination within 48 hours of his/ her appointment. The parties agree to be bound by the determination of the independent expert, and share costs equally. Weighbridge disputes over downgrades or rejection Speedy resolution is essential and these are the steps to follow: 1. Grape purchaser to notify grower as soon as practicable. 2. Grower or grower s representative given the opportunity to inspect the rejected or downgraded load. 3. Parties confer to attempt agreement on whether the original assessment stands, or if the position can be modified. Due to the obvious need to resolve weighbridge disputes as a matter of urgency, the Code does not extend in these situations to the appointment of independent experts. 5

6 Murray Valley Winegrowers Inc. MVW News & Views Bird s-eye view DRONE technology is being used in a project managed by Murray Valley Winegrowers (MVW) to examine which parts of a vineyard are suffering water stress. A drone fitted with a thermal imaging camera takes pictures across the entire vineyard, revealing signs of stress that a ground inspection might not. The project Thermal infrared diagnosis of vine water stress received funding from the Australian Grape and Wine Authority (AGWA) through its regional program, and started in , collecting data from a Chardonnay patch at Nangiloc. MVW Industry Development Officer David Coombes has expanded the project this year, with the drone also flying over Shiraz blocks on vineyards at Curlwaa, Gol Gol and Merbein. Drone operator and owner of UAV Mapping Richard Waters launching the device Simple science Water absorbed by plants through their roots travels upwards and is finally released by pores on the underside of the leaf surface (stomata) as part of a plant s cooling mechanism. When water is restricted, the plant becomes stressed and tries to conserve moisture by shutting the stomata, which essentially stops the cooling process. When this happens, the temperature of the plant starts to rise and this temperature differential can be captured by a drone carrying a thermal imaging camera. MVW Industry Development Officer David Coombes says a three-year trial period will be necessary to accumulate the required data, using the drone to take aerial images at flowering, veraison and pre-harvest. The technology is becoming cheaper and more user-friendly, bringing it within the reach of growers in the not too distant future, he said. This project will demonstrate whether drone technology is able to play a useful role in vineyard management. 6

7 NOVEMBER 2015 Earwig invasion EUROPEAN earwigs in big numbers are attacking vines across the region, leaving significant foliage damage in their wake. Earwigs range in size from 12-20mm long with dark, shiny brownish/black bodies, pale yellow legs with pincers on their rear. Research has reported that fruit yield or quality doesn t suffer as a result of earwigs feeding frenzy, as subsequent growth is sufficient to maintain the vine s health. However, close monitoring of bunches is advisable. Monitoring involves looking under the bark of vines, around posts in their cracks and under debris on the vineyard floor. European earwigs are most active during the night when they feed on the young growth. Control is not generally warranted, as earwigs have been found to be predators of soft-bodied insect pests that can cause greater economic impact, such as light brown apple moth larvae. Further information is available from Industry Development Officer David Coombes on or Vintage Reports THE Winemakers Federation of Australia (WFA) 2015 vintage report was published too late for it to be included in our July newsletter. However, the July MVW News & Views did include a comprehensive report of the 2015 crush in the Murray- Darling and Swan Hill regions, which soon after was also made available on the MVW website For readers who receive the MVW Easy Update service, the full WFA vintage report was circulated on July 17. The headline news included: Crush totals: Red crush 835, 523 tonnes White crush 834,041 tonnes Total crush 1.67 million tonnes Top three red varieties: Shiraz 391,649; Cabernet Sauvignon 209,588; Merlot 107,280 Leaf damage from earwig attack is apparent, but generally new growth outpaces the pest s ability to cause lasting damage. App assists vine control A NEW, free phone app developed by University of Adelaide researchers will help grape growers and viticulturists manage their vines by giving a quick measure of vine canopy size and density. The ipad and iphone app uses the devices camera and GPS capability to calculate the size and density of the vine canopy and its location in the vineyard. The aim is to help users monitor their vines and manage the required balance between vegetative growth and fruit production. The development of the app called VitiCanopy has been supported by the Australian Grape and Wine Authority (AGWA) as part of a wider project investigating the relationships between vine balance and wine quality. Over-cropped vines or vines with excessive canopy are referred to as out-of-balance generally being associated with lower quality fruit and hence lower returns, says project leader Dr. Cassandra Collins, Senior Lecturer in Viticulture with the School of Agriculture, Food and Wine. To achieve vine balance, grapevines require enough leaf area to ripen the fruit and produce a desired fruit quality, but not too much that it s detrimental to fruit development through shading or a higher incidence of disease. Chief Investigator Dr. Roberta De Bei says the app offers a very simple way to measure leaf area index (LAI). This measurement can then be related to fruit yield for an assessment of vine balance as well as capture canopy variation across a vineyard. The GPS capability of the app means that information gathered can also be mapped. The app is available from Apple s app store. To use the app, an image is taken of the vine canopy. The app then analyses the image and calculates LAI, taking into account the canopy shape and density, and recording the time and location of the image. An android version of the app is being developed. More information and assistance is available from MVW Industry Development Officer David Coombes on or Top three white varieties: Chardonnay 376,339; Sauvignon Blanc 89,125; Semillon 66,572 Crush by state/region: South Australia: 716,592 tonnes (47% of national production) Murray-Darling/Swan Hill: 381,732 (23%) NSW (ex. Murray-Darling/Swan Hill): 332,092 (20%) Victoria (ex. Murray-Darling/Swan Hill): 60,258 (4%) Western Australia: 30,069 (2%) Tasmania: 7,197 Queensland: 610 ACT: 21 Prices: Across Australia, average price of $463/tonne, up 5%. (The Murray- Darling Swan Hill average price was $288/tonne, down 2%) Across Australia, 85% of winegrape production was unprofitable. The rate of unprofitable production was higher in inland regions: Riverina NSW 97%; Riverland SA 92%; Murray-Darling/ Swan Hill 88% 7

8 Murray Valley Winegrowers Inc. MVW News & Views Region gets Senate hearing THE Senate inquiry into the Australian Grape and Wine Industry took evidence from Murray Valley Winegrowers (MVW) at a hearing in Adelaide in late September. The inquiry by the Senate s Rural and Regional Affairs and Transport References Committee conducted hearings in only three locations Adelaide, Launceston and Swan Valley, WA. We had hoped that a hearing would be held in Mildura, as happened when the Senate investigated the grape and wine industry in 2005, MVW Executive Officer Mike Stone said. Represented by Chairman Brian Englefield and EO Mike Stone, MVW was one of 12 witnesses invited to present evidence to the Adelaide hearing. Their opening presentation allowed them to inform Senators of growers battle to manage vineyard businesses in an environment of continuing low grape prices, sometimes questionable commercial behaviour, inadequate information on supply/demand factors and conflict over tax reform. Following are extracts of the presentation given to Senators: Code of Conduct The future of the code is at a crossroads. After six years, its coverage of the Australian wine industry remains well short of targets, leaving many growers still exposed to the possibility of unethical and unfair treatment. Code signatories abide by standards that non-signatories are able to ignore. It is surprising to us that the great majority of wineries are opposed to the Code of Conduct, particularly when the Winemakers Federation of Australia is working with national retail chains to adopt an industry code based on agreed principles and practices. Growers shoulder an unfair risk load. Eighty per cent of vineyard input costs are expended between June and January, developing a crop for next season. Even under the Code of Conduct, signatories are not required to talk about price until mid-december when indicative prices are provided. 8 Prices usually are finalised in January, just when harvest has started or is about to start. Growers need credible information on next season s price prospects much earlier than the current December/January. If they knew of a looming unprofitable season, the expenses associated with pruning, and application rates of fertiliser and water could be reduced. Information deficiency The Australian wine industry has dropped the ball on the information it needs to help guide its decision-making, and now it is trying to catch up. Thankfully, the creation on July 1 last year of the Australian Grape and Wine Authority has brought a more enlightened view to information collection. In developing its strategic plan, AGWA asserted that it would invest in data sets throughout the supply chain and obtain better information about the supply side so that we can understand what grapes are grown where and have more reliable information about expected crop size. A national vineyard and wine database is essential for industry planning and decisionmaking, government policy development and biosecurity management. Growers need an accurate profile of the Australian vineyard landscape, supply/demand data, global market conditions and reliable projections. Taxing times Governments for years have been pressured to switch from the current system of taxing wine according to its value to one based on alcohol per volume. Studies suggest that a volumetric tax would more than double the price of cask wine and add around 30 per cent to the cost of so-called popular premium wine, or everyday wine. These are the wines that the Murray-Darling and Swan Hill regions produce, in tandem with the other major inland regions. These are the wines of choice for most people who enjoy a glass or two of wine with dinner on a daily basis. Under a volumetric tax, the demand for cask wine would drop by around 40 per cent, and demand for popular premium wines, i.e. affordable wines (sub $12/bottle), would fall by a third. Prices for major grape varieties are the lowest they ve been in 10 years and losing up to 40 per cent of customers at this time would be catastrophic. From savings delivered by reform of the WET rebate scheme, industry has suggested to government that another $44 million be diverted to the Australian Grape and Wine Authority for marketing purposes to grow the demand for Australian wine. Murray Valley Winegrowers agrees with this approach, but believes that Australia will need to do far more to capitalise fully on the potential presented by more favourable currency conditions and free trade agreements with South Korea, Japan and China. Of course, if the WET rebate is the only thing that s maintaining production for the bulk and clean-skin trade its removal could leave many grapes without buyers, creating in the short-term even more grief for growers in the inland regions. While there s no argument that savings from WET rebate reform should help pay for additional marketing to stimulate demand for Australian wine, the plight of growers left without buyers for their fruit also needs to be addressed. Over the past two years, the exodus of growers in the Murray-Darling and Swan Hill regions has been at a rate we haven t experienced before. Net vine removals in 2014 and 2015 exceeded 1,400 hectares. Over the same period 100 growers left our industry, and we are expecting more as a consequence of winegrape prices this year being among the lowest in 10 years. This inquiry is acknowledgment that the Australian grape and wine industry is under extreme duress, and growers are on the frontline of that. The Senate inquiry into the Australian Grape and Wine Industry is required to report to Parliament by February 12 next year.

9 NOVEMBER 2015 Swanning around Judges for the Australian Inland Wine Show, comparing notes. SWAN HILL has completed another highly successful Australian Inland Wine Show. Chief Judge David Morris of Rutherglen, assisted by six senior and five associate judges, worked their way through offerings from across the country, awarding Best Wine of Show to a De Bortoli, 2013 Noble One Botrytis Semillon. Other trophy winners included: Best Dry Red Wine Magnificent Moscato For the second year, the National Moscato Challenge was held in conjunction with the inland wine show, with a Chalmers Wines 2014 Montevecchio Moscato announced as the winner of the 2015 award. This wine is made from Moscato Giallo, a variety we imported into the country ourselves and have been promoting for over a decade, Kim Chalmers said. The National Moscato Challenge was open to any winery in Australia that produced a Moscato style wine from a true Muscat variety, giving them an opportunity to benchmark their Moscato against wines of similar style in a class all of its own. More than 50 wines competed for the award. The Montevecchio Moscato will be the feature wine of the Inland Wine Show s public tasting at the Swan Hill Food & Wine Festival in March next year, which is expected to attract well over 2,000. Westend Estate, Riverina, 2014 Calabria Private Bin Nero D Avola Best Dry White Wine De Bortoli Wines, Riverina, 2015 Sacred Hill Chardonnay Best Large Volume Wine Best of Class Casella Family Brands, 2015 Yellow Tail Shiraz Grenache Best Organic/Bio Dynamic Wine Best of Class Angove Family Winemakers, 2014 Organic Shiraz Cabernet Sauvignon Moscato Challenge spokesman Chris Dent, Kim Chalmers, Tennille Chalmers and show organiser Colin Free 9

10 Murray Valley Winegrowers Inc. MVW News & Views Wine exports surge AUSTRALIAN wine exports continue to grow, with Wine Australia s September Export Report revealing the strongest period of growth since export values peaked in The total value of wine exports for the 12 months to September increased 8 per cent to A$1.96 billion, while volume increased 5 per cent to 734 million litres. Key aspects included: Strongest growth for the year was achieved in the latest quarter in the three months to September, value increased by 15 per cent; All key price segments recorded growth premium price segments achieved the strongest growth; In the price segments commonly associated with larger volume brands, the A$5.00 to A$7.49 segment rose 6 per cent to A$235 million; In the price segment of most interest to the Murray-Darling/Swan Hill regions - A$2.50 to A$4.99 sales increased 3 per cent to A$732 million. Wine exported in the under A$2.50 segment, usually bulk and packaged in-market, rose 2 per cent to A$432 million. Asia is now the top region by value for Australian wine exports, increasing 31 per cent to A$644 million in the 12 months to September. Wine Australia s Chief Executive Officer Andreas Clark said the export results were unambiguously good news for our grape and wine community. However, he said the improvement in exports in the past 12 months hadn t yet flowed through to the grape growing community but there were pockets of growers who reported improved prices in vintage 2015 and we hope to see this trend continue next vintage. We re seeing the strongest rates of growth in our premium price segments, he said. Wines above A$10 per litre grew in value 28 per cent to A$426 million, a 10 record for this segment, while wines in the A$20-$50 segment increased 13 per cent to A$88 million. Key performance features of Australia s largest export markets for the year to September included: Asia Now the number one region for Australian wine exports by value, grew 31 per cent to a record A$644 million. China again saw the strongest growth, rising 47 per cent in value to a record A$313 million, driven by demand for wines in the higher price points. Japan continued to see an increase in bulk wine exports, up 388 per cent as exporters benefit from the removal of tariffs under the Japan-Australia Economic Partnership Agreement (JAEPA). Since JAEPA came in to force, value is also up 14 per cent to A$35 million. South Korea is a growing market for Australian wine, with exports increasing 16 per cent in both value and volume to A$9.8 million and 1.5 million litres respectively. Growth was strongest in the under A$2.50/litre segment (up 127 per cent to A$0.6 million), but the A$7.50 to A$9.99 segment and the above A$10 segment also grew 23 per cent and 33 per cent respectively. Exports to Hong Kong continued to rise, up 24 per cent to A$118 million. UK and Europe The UK remains Australia s biggest export market by volume, up 2 per cent to 250 million litres, but value declined 2 per cent to A$370 million. Exports to Germany increased 10 per cent in value to A$51 million while exports to Finland, where Wine Australia recently hosted trade and consumer tastings, increased 12 per cent to A$15 million. United States Exports for the year to September declined 4 per cent to A$428 million, but grew 12 per cent to A$117 million in the final quarter. Of the six priority US states - California, New York, New Jersey, Florida, Texas and Illinois - all but one saw growth in bottled wine exports in the latest quarter with California, Florida and New York all seeing double digit growth, up 20 per cent, 56 per cent and 14 per cent respectively. Canada Exports grew 4 per cent in both value and volume to A$189 million and 63 million litres respectively. Ontario and Quebec make up 65 per cent of the market at 30 and 35 per cent respectively. Quebec grew 5 per cent in value to A$39 million and 9 per cent in volume to 19 million litres. In Ontario, value rose 5 per cent to $A73 million and volume lifted 9 per cent to 21 million litres. Wine Australia s complete September 2015 Export Report is available at Wine Australia CEO Andreas Clark

11 NOVEMBER

12 Murray Valley Winegrowers Inc. MVW News & Views Breathing more life into soil GETTING more oxygen into the soil to boost vine growth is the aim of a project being undertaken by Murray Valley Winegrowers (MVW). With funding from the Australian Grape and Wine Authority (AGWA), a fully automated data logging system has been installed in a vineyard at Curlwaa to monitor soil oxygen content throughout the growing season. A venturi has been attached to irrigation outlets to increase dissolved oxygen in the irrigation line and in the soil. Six data loggers, which measure water activity and oxygen content, have been placed around the vineyard. Soils with inadequate oxygen levels can harm root growth, restricting the intake of water and nutrients. Drainage and soil microbiology can also be adversely affected. Increasing oxygen levels in the soil is difficult without destroying soil structure, however irrigation water which is targeted at the root zone creates a medium for delivering oxygen to the soil profile. With an increase in soil oxygen levels, research has shown increases in plant performance, yield outcomes and suppression of disease. The science behind this project is being produced and replicated in many crops, including grapes, by the Centre for Plant and Water Science, University of Central Queensland. Trial site The Curlwaa, NSW, vineyard where the oxygation trial site is established is owned by Justin Kassulke. In March next year he will join MVW in hosting a field day at the site to inform growers of the project s progress. NSW DPI Irrigation Officer Jeremy Giddings has been contracted by MVW to collect and analyse data, and prepare a report on findings. MVW Industry Development Officer David Coombes explains that, as well as maintaining the current trial site, which is situated in heavy clay soil, another trial site will be established in a vineyard that s predominately sandy loam. This will examine the impact of different soil profiles on oxygen content, and whether injecting oxygen at the pump would be more efficient than using venturis at irrigation outlets. More information on this project is available from David Coombes on or Jeremy Giddings, Irrigation Officer (Horticulture) NSW DPI, installing one of the soil oxygen sensors. 12

13 NOVEMBER 2015 After the storm, what then? ALMOST one year after ferocious wind and hail carved a path of destruction through vineyards in the NSW south west around Gol Gol, Buronga and Mourquong, Murray Valley Winegrowers (MVW) continues to monitor vine health to establish which recovery techniques were most effective. Industry Development Officer David Coombes and NSW Local Land Services Officer Greg Moulds regularly inspect hail-affected vineyards. Their observations will assist in the development of fact sheets for growers. After the November 22, 2014, storm event when growers were surveying damage growth stripped from vines and collapsed trellis they were in desperate need of information on post-hail recovery measures. They wanted to know if they should prune heavily, leave the vine to fend for itself and/ or whether to apply water and nutrition to encourage new growth. But information was hard to come by, particularly that which had been subjected to scientific assessment. However, David and Greg will soon be in a position to inform growers on the remedial methods that worked most effectively. Information will be produced to guide growers in their decision-making in relation to pruning, irrigation and nutrition after severe storm events. Trial work conducted by MVW with assistance from growers is being followed up to assess recovery in the areas of cane growth, bud fruitfulness and shoot lignification for the coming season. Photographs are taken regularly of a Gol Gol vineyard to asses the effectiveness of recovery techniques. Further information is available from MVW Industry Development Officer David Coombes on or Photos December 4, 2014, of hand-pruned vines. 13

14 Murray Valley Winegrowers Inc. MVW News & Views Photos December 8, 2014, hedged- pruned vines. Photos December 23, 2014, re-growth. Photos late January, 2015, showing crop development. 14

15 NOVEMBER 2015 Photos February, 2015, showing uneven ripening. Photos June, 2015, showing cane lignification, bunch mummification prior to pruning. Photos September, 2015, budburst. Photos courtesy of Greg Moulds, NSW Local Land Services Officer. 15

16 Murray Valley Winegrowers Inc. MVW News & Views A PROTRACTED process of finalising a new board for the Australian Grape and Wine Authority (AGWA) ended in September when Federal Agriculture Minister Barnaby Joyce announced four new appointments to take effect from October 1. David Dearie, former CEO of Treasury Wine Estates, Edouard Peter, Chairman of Duxton Capital Singapore, Mary Retallack, Managing Director of Retallack Viticulture and Keith Todd, General Manager Global Operations with Accolade Wines have been named as new directors. They join three re-appointed directors Eliza Brown, Brian Crosser and Kim Williams, and Chairman Brian Walsh. The new board will serve a three-year term. I want to thank outgoing directors John Casella, John Forrest, Ian Henderson and Janice McDonald for their work in establishing AGWA and providing strong leadership and clear strategic direction during the stand-up phase, Barnaby Joyce said. I am confident the blend of experience of the current directors and fresh perspectives of the new directors will ensure AGWA invests in research and development and marketing aimed at producing the best results for its levy payers. I look forward to working with the authority to deliver strong returns to growers and winemakers through the investments AGWA makes on their behalf. Agriculture Minister Barnaby Joyce 16 New faces Chairman s report MURRAY Valley Winegrowers held its Annual General Meeting for on October 15, followed by a general meeting. Following is the report that Chairman Brian Englefield delivered to the AGM: Volatile year In reporting on one of the most challenging years of the past decade, I m reminded again of the volatility of the Australian wine industry. On the verge of the 2015 vintage, a tornado tore a path of destruction through about 100 vineyards and orchards in the Wentworth Shire. The November 22 storm event was estimated to have caused crop losses of more than 15,000 tonnes and a damage bill in the millions, and was followed on December 3 by a fierce hailstorm in the Red Cliffs area, which wiped out an estimated 4,000 tonnes. Both the NSW and Victorian Governments were quick to invite growers to apply for low interest loans, but what growers really needed was immediate assistance with clean-up and repair operations. Murray Valley Winegrowers (MVW) added to the efforts being made to attract further assistance, and in February both state governments announced grants of up to $10,000 to help cover costs. The hail and gale-force wind shredded vines and collapsed trellis, and MVW was inundated with calls for advice on how to get vines back into shape and producing fruit for the coming vintage. Then Industry Development Officer Liz Singh did what she could, but was hampered by a lack of information on proven recovery techniques. This drove her to starting a trial project, which continues to be monitored, testing which recovery techniques were the most effective. This will give us useful information for production of a growers fact sheet. Less than two months later, the 2015 vintage commenced and the volatility continued, but it was price related and led to major red varieties falling below $300/ tonne for the first time in ten years. Vintage wrap The season opened with indicative prices mostly in line with last year s, which wasn t a good sign given that prices in 2014 were lower than anticipated and came as a shock following modest increases in 2012 and The 2015 Wine Grape Crush Survey report published by MVW revealed average prices for Cabernet Sauvignon of $295/tonne (- 10%), Merlot $293/tonne (- 5%) and Shiraz $289/tonne (- 8%). Of white varieties, Pinot Gris recorded a solid gain of 10% to $530/ tonne while Chardonnay nudged up 3% to $223/tonne and Sauvignon Blanc rose 2% to $319/tonne. Overall, production dropped 8% to 381,732 tonnes 285,402 tonnes attributed to independent growers and 96,330 tonnes harvested by wineries from their own vineyards. Winery-owned vineyards contributed 16% more fruit than in 2014 up 13,000 from 83,240 tonnes to 96,330 tonnes. The value of growers 285,402 tonnes was $82 million, down 15% on earnings last year. Across all varieties, growers received an average price of $288/tonne. Ten years ago when growers were paid $192 million for 399,000 tonnes, the average price was $481/tonne. There s no doubt that more growers have exited winegrape growing as a consequence of another season of prices that generally failed to cover production costs. Advocacy This has been a year of government inquiries, with MVW active in preparing submissions for an inquiry into the Australian Grape and Wine Industry by the Senate Rural and Regional Affairs and Transport References Committee, and for the Federal Government s Re: think Tax Discussion Paper. Both provided the opportunity for MVW to present information on the major issues confronting us, as did a so-called Wine Industry Roundtable discussion hosted by the National Small Business Commissioner. Senate inquiry: In March it was announced that a Senate committee would investigate why the Australian wine industry had fallen on hard

17 NOVEMBER 2015 Chairman s report cont times and what could be done about it. It would be the second inquiry in 10 years by the same Senate committee. Its terms of reference were wide-ranging, investigating grower profitability, the impact on industry performance of the wine equalisation tax rebate scheme, the power and influence of wine retailers, and the effectiveness of market information and wine grape pricing. The MVW submission described the current operating environment for growers as intolerable. It highlighted the reluctance of the majority of wineries to sign-up to the Australian Wine Industry Code of Conduct, which left many growers exposed to commercial practises that were unfair, sometimes unscrupulous and often subjective. The MVW submission promoted the need for the wine industry, with government assistance, to vastly improve the standard of supply/demand data because, over the past six years the Australian wine industry has been functioning without crucial information on grape supply and market demand trends. The topic of tax also figured prominently in the MVW submission, warning the government not to change the method of taxing wine, but urging it to implement reforms of the Wine Equalisation Tax (WET) rebate system. A letter signed by more than 220 Murray- Darling/Swan Hill region growers was included in the MVW submission, declaring their support for the Senate committee holding a hearing in Mildura, and for Senators to back measures that would help the Australian wine industry take full advantage of free trade agreements and a more competitive Australian dollar. (Subsequent to the end of the financial year, the Senate inquiry held a hearing in Adelaide to which MVW provided evidence). Tax discussion paper In late March the Federal Government released its 200-page tax discussion paper and called for submissions. MVW responded by the deadline of June 1, focusing on the issues of Wine Equalisation Tax (WET) reform, and the damage inflicted upon the Murray-Darling and Swan Hill regions should the government move to adopt a volumetric tax for the wine industry (replacing the current method of taxing wine according to its value). Submissions to government also enabled MVW to provide background on the significant contribution of these two regions to the Australian wine industry. Through Wine Grape Growers Australia (WGGA), MVW has also provided input to policies and submissions prepared by the national body in relation to wine taxation matters. National Small Business Commissioner The Chairman and Executive Officer joined other industry bodies, winery and government representatives in a forum on May 5, hosted by the office of the National Small Business Commissioner (NSBC). This resulted from questions put to the NSBC on whether its charter extended to providing advice on improving business practices that have plagued the industry for years, such as subjective fruit grading, questionable contract provisions, poor code of conduct compliance, timing of price disclosure and price determination and timing. The NSBC wanted feedback from industry before preparing a submission for the Senate wine industry inquiry. The meeting reached qualified agreement on: Creating a new national entity, combining the operations of WGGA and WFA; The need for more training in the areas of contract understanding and business know-how; The need for improved vineyard and market data, and better market signals; Revising terms of payment to reflect changing industry dynamics; Objective instruments of trade; and Retention of Title amendments to provide growers protection when wineries liquidate. Code of Conduct MVW continues to play an active role in the management of the Australian Wine Industry Code of Conduct, having been involved in its development and implementation more than six years ago. The Code Management Committee, of which MVW is a member, met several times through the year to consider changes to the code to make it more user friendly. As reported in the January 2015 edition of MVW News & Views, a significant change introduced just before the 2015 vintage gave growers more time in which to resolve disputes on price matters. Previously, the process to resolve a prices dispute had to be completed within a two-week time frame extremely difficult in the middle of harvest. Now, the process can take up to 60 days from the time of dispute notification for the matter to be settled, provided the case is lodged before April 30. MVW also continues to press for changes in the code s indicative price provisions, believing that crucial supply/demand information and prices should be provided to growers much earlier than three weeks before harvest starts. In signing the code, grape buyers are committed to maintaining minimum standards for purchase agreements. They also commit to a dispute resolution process governing price, and fruit downgrades or rejection in the vineyard. Of the more than 40 wineries known to purchase wine grapes from the Murray-Darling and Swan Hill wine regions, seven are signatories to the Code of Conduct: Accolade, Brown Brothers, Dorrien Estate, Pernod-Ricard, Treasury Wine Estates, Trentham Estate and Yalumba. During , one additional winegrape purchaser signed up to the code, but the number of code signatories still fails to meet targets as at June 30, there were 41 signatories. Of these, 36 are top 100 companies. The code now applies to about 40% of total crush. Closer industry ties In October, MVW signed an agreement with the Australian Wine Research Institute (AWRI), Australian Grape and Wine Authority (AGWA), Wine Victoria Continued next page 17

18 Murray Valley Winegrowers Inc. MVW News & Views Chairman s report cont and Victorian Department of Economic Development, Jobs, Transport & Resources to cooperate on the delivery of extension services across Victoria. The agreement involves a commitment to share information between the parties, to avoid duplication and to work cooperatively to improve the standard of services that are provided to growers. Through Industry Development Officer David Coombes, MVW provides viticultural extension services to winegrape growers in the Murray-Darling and Swan Hill regions. He is now formally plugged into a statewide network that he s able to utilise to add value to his program of grower engagement. MVW has also remained an active participant in national industry affairs through its involvement with Wine Grape Growers Australia. Through the year, MVW has served on the board of WGGA, contributing to the development of policy in relation to national biosecurity arrangements, vineyard agrichemicals, code of conduct, wine taxation and national industry representation arrangements. Funded projects MVW delivered 14 projects throughout under programs funded by grower levies administered by the Murray Valley Wine Grape Industry Development Committee (IDC). Projects included: Salary Industry Development Officer and associated expenses Grower communications Economic benchmarking Information collection and communication Grower forums and consultation in August 2014 and June 2015 Weather station management Input to state and national biosecurity programs Production of the Murray-Valley/Swan Hill Wine Grape Crush Survey report Production of spray diaries for growers IDC funding for the year totalled $416,000. At the same time, MVW had responsibility for preparing project applications for funding under the regional program conducted by the Australian Grape and Wine Authority (AGWA). Nine projects were delivered at a cost of $146,000, and included trials, extension programs, fact sheets and forums in the areas of advanced viticulture, spray technology, climate change trends, oxygenation of irrigation water, rootstock and clonal material and top-working. Regional profile Ongoing management throughout the year of the growers database maintained by MVW revealed a further decline in grower numbers and area planted to wine grapes. A comprehensive survey to record changes from the previous year was conducted over three months in Known information was mailed to all growers, who were asked to advise MVW of any changes. This was followed by a telephone campaign to make contact with growers who hadn t responded. These efforts informed MVW of net vineyard removals of 770 hectares and the departure from the industry of another 55 growers. (The same exercise subsequent to the end of has revealed net vineyard removals of another 736 hectares and exit from the industry of a further 50 growers). MVW also continued its support for SunRISE Mapping, which conducts aerial mapping and imagery on behalf of horticulture industries, government and resource authorities, contributing $3000 as part of a regional fundraising effort to ensure its financial viability. This enabled SunRISE to conduct a flyover early this year, a full report of which is expected to be available in December. Outlook A 2015 post-vintage survey conducted by the Winemakers Federation of Australia (WFA) again showed that the majority of growers around Australia were not profitable. According to this report, only 12% of growers in the Murray-Darling and Swan Hill regions broke even or were profitable. The situation for growers in the Riverina and Riverland was even worse, with only 3% of Riverina growers and 8% of Riverland growers in the category of breakeven or profitable. Clearly, the future of many winegrape regions throughout Australia is precarious. After being in the doldrums for much of the past decade, grape prices must rise to avoid further industry decline. However, there are grounds for some optimism in the future. These include the prospect of export wine sales increasing in the wake of free trade agreements that Australia has signed with Japan, South Korea and China. Agreement on a Trans Pacific Trade Agreement also has the potential to boost Australian wine exports, albeit over a longer time frame. The declining value of the A$ against the US$ has reignited Australia s marketing efforts in the all-important North American market, laying the groundwork for increasing Australia s share of the wine market in that part of the world. Staff and board changes After almost 10 years in the position, Industry Development Officer Liz Singh left MVW in February. Her replacement, former Grower Liaison Officer with Pernod Ricard, David Coombes, started in April. It is MVWs expectation that David will become more involved with on-the-ground viticultural issues, such as assisting growers in their understanding of weather station monitoring, pest and disease management and nutrition management. Mike Stone returned to MVW in 2014 as Executive Officer, while Office Manager Helen Hynes has notched up 14 years service. No board changes have occurred through the year, and I thank all directors for their ongoing support and commitment to advancing the interests of our fellow growers. Brian Englefield Chairman 18

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