OZ GRAPE PRICES' SICKENING SLUMP

Happier days on the weighbridge: Margaret with  Doug and Peter Lehmann, both now deceased ... photo Milton Wordley 

Wilful waste in Aussie vineyards:

most winegrapes sold at a loss -

it's time for a new business plan

by PHILIP WHITE

Wilful waste makes woeful want

And I may live to say

Oh how I wish I had that crust

Which once I threw away ... 

Peter Lehmann taught me this telling verse at his weighbridge at the peak of the mid-eighties SA government's Vine Pull Scheme. The Barossa sky was full of the smoke of endless windrows of bulldozed vines: a stink that triggered wretching and intense depression. Men who'd just destroyed their grandfathers' vine gardens in order to buy shoes for their kids wept in the pubs.

Generally, pushed by the biggest wine companies, who wanted viticultural  'rationalisation' and fewer peasant-scale growers to deal with, the stupid Labor government of the day paid to uproot the sorts of vines and varieties that the discerning gastronomic world now desires. We had more of those vineyards than anybody: priceless pre-phylloxera clones of grand old varieties the like of which the smartest growers are planting in the best places right now.

Peter's wry verse is even more pertinent now.

Forget the old nonsense about wine grape growers being born with silver spoons in their mouths. There may be some silver left in grandma's bottom  drawer, but the smartest ones aside, we now have a generation of grape growers more likely to be eating with plastic picnic forks from Woolies. 

Master Barossa Shiraz grower Neil Neldner stoically endured the destruction of the Vine Pull Scheme in early 'eighties and went on with his son Matthew to grow fruit which makes the Penfolds Grange cut, earning them considerably more money than Australia's current average wine grape price, a miserable $441 per tonne ... photo by Milton Wordley, from our multi-award-winning book, A year in the life of Grange 

But forget the cutlery, too. A bog through the new Wine Grape Purchases 2014 Price Dispersion Report will leave you thinking that most grapegrowers would be lucky if there was a crust to fight over. This document was compiled by the Australian Government and the new über bürokratie presumptuously called the Australian Grape and Wine Authority (AGWA).

While this report's presentation is confounding to say the least, with many layers of formidable gobbledegook and linguistic camo, it reaffirms my belief that through absolutely decrepit management, the currency of the Australian wine grape business is wilful waste, and has been for decades.

By waste, I mean wasted irrigation water, wasted family lives, wasted communities, wasted innovation, wasted environment, wasted public health (physical and mental), wasted effort, and countless wasted millions, many of them coming from the taxpayer.

By wilful, I refer to those who benefit from over-supply and the constant ambiguity over which varieties should be planted, and where. The mad, panicky scramble for 'the next Sauvignon blanc,' or 'the next variety that ends in O' ensures growers are always trapped in a treadmill: buying new cuttings of varieties not tried before and grafting them onto the roots of the last thing they tried, to no avail. In lieu of phylloxera spreading more quickly, vine nurseries make millions from this confusion.

Should phylloxera cross the border, they'll make more millions selling resistant rootstocks, which change the flavour of those old clones forever once the money's been paid and the grafting done.

Through the government's Minimal Grape Pricing Scheme, most growers were being paid $186 per tonne immediately prior to the Vine Pull. That was thirty years ago. They couldn't live on that, so many surrendered to the thirty pieces of silver the taxpayer coughed up to get them out of the business.

This new report shows that since average grape prices peaked at $717 per tonne in 2008, the figure has taken a sickening plunge south to $441 in the vintage just done.

Take a look at the biggest region, for tonnage and area: the Murray-Darling Basin. Lawrie Stanford, executive director of Wine Grape Growers Australia, is on the record suggesting that Basin growers need at least $342 per tonne to make a small margin from, say, wine selling at FOB $1 a litre in bulk containers.

This is the way most of those wines leave the country: giant bladder packs placed empty in shipping containers, then pumped full.

Tony Keys, author and publisher of The Key Report 

Using the analysis of Tony Keys' essential weekly wine business newsletter, The Key Report, of 20 varieties listed from the Murray-Darling-Swan Hill region, all slumped in price with various latest fad types falling up to 47 per cent. The old staples, Chardonnay and Shiraz, fell 27 and 22 per cent.

"There is no doubt the warm inland regions are doing it tough," Keys understates with his trademark pith.

"Sixteen varieties fetched less than $342 a tonne, with only Fiano, Pinot gris, Pinot noir, and Tempranillo breaking the $342 figure. The average for the region across all varieties was $298, down 17 per cent on last year."

The average price across the Riverina was $307 per tonne; South Australia's Riverland $297.

I quote Keys because his summary is infinitely more comprehensible than AGWA document.

AGWA says that across Australia, 27 per cent of the total crop sold at less than $250 per tonne; 11 per cent sold in the gap between $250 and $300, and 27 per cent slotted in between $300 and $350. While this indicates that 65 per cent of Australia's wine grapes are sold at a loss, Keys points out that it's the smaller blockies who lose the most: with their droll monoculture, the very big broadacre grapeyards can sometimes get their production costs down to $275.

This is the nether region where not a dollar is wasted on environment, mind you. But much is squandered on irrigation water that Australia simply cannot afford: if they were forced to pay a real cost for the water they suck from the big rivers, these opportunist ethanol peddlers would vanish.

While 57 per cent of all Australian red grapes sold at below $350 per tonne (and 74 per cent of all white grapes), 74 per cent of the warm climate red crop (and 83 per cent of the whites) fell below $350.

At the other end of the scale, pushed along by global warming, we saw the following leading averages from cooler parts:

•    Tasmania Pinot noir, $2672 a tonne

•    Tasmania Chardonnay, $2564 a tonne

•    Tasmania Sauvignon blanc, $2156 a tonne

•    Mornington Peninsula Pinot gris, $2139 a tonne

•    Adelaide Hills Shiraz, $2125 a tonne

•    Eden Valley Shiraz, $2095 a tonne

•    McLaren Vale Shiraz, $2095 a tonne

Last week, when I addressed the annual Christmas luncheon of the American Chamber of Commerce, I won few friends by wondering aloud about Australia's luny obsession with flooding the bottom-price shelves of the United Kingdom with the sorts of wine that comes from the big rivers in our hot hinterland.

I mused that in a day when more folks are increasingly interested in eating and drinking fresh local produce, it seems very strange that a desert country like ours should insist on claiming business success in constantly striving to nudge Europe aside in UK supermarkets.  Europe, of course, has plenty of rain, cooler climates, and a huge grape surplus. And oh yes. It just happens to start about 35 miles from Britain.

As I have written for decades, Australia has no single united wine industry, as bodies like the AGWA like to pretend.

We have a booming premium quality cooler area wine business whose suppliers seem to enjoy a modest but successful livelihood.

And then we have this leviathan designed to pump Australian ethanol into giant rubber bags for the Poms, or smaller plastic ones for the locals. As long as there are industry leaders who maintain the quality of this second, bottom half of our production is exceptional in a gastronomic sense, and genius politicians like Senator Bananaby Joyce (Federal Minister for Agriculture) who believe them, we shall continue this enexorable, incredibly extravagent wilful waste.

Now Darls, would you mind pulling those silver forks outa my back?