Wine Glut

03 May 2012 questionsarchive

I seek leave to make a brief explanation before directing a question to the Minister for Agriculture, Food and Fisheries on the subject of the wine glut—

The Hon. J.M.A. LENSINK: —not to be confused with the wine gut. Lateyesterday, the owners of Jacob's Creek Orlando Wines announced it will cut 85 per cent of its workforce. Executives said the high Australian dollar was a primary cause for job losses, almost all of which will come from South Australia, but they are also keen to note that very little progress is being made in reducing the glut of grapes across the state. In fact, Wine Grape Growers Australia predicts 5 per cent growth in the number of vines in the next vintage. My questions for the minister are:

1. Has she sought advice as to how much the glut will cost the South Australian wine industry in the 2012 vintage?

2. Does the government have any strategy to reduce the number of vines?

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (14:37): I thank the honourable member for her interest in this very important area. Of course, our wine industry is very important to both the economic and social activity of South Australia. Like many areas of primary industry, it too is certainly feeling the impact of the high Australian dollar and it too is going through a downward turn in terms of oversupply of grapes in some areas.

It is only some areas. Our premium wines and premium grapes are still in very high demand, so I think it is really important that, when we talk about this issue, we do not talk down our wine industry. There are challenges in some areas, but they are certainly not across the board. In 2009, the Wine Restructuring Action Agenda (WRAA) was formed. It is a joint effort by Australia's peak national wine industry bodies to address the oversupply problem in Australia, because the trends obviously happening here in South Australia are part of a national trend. The WRAA acknowledged that the problem of the oversupply in the Australian wine industry was structural rather than seasonal, and it urged a cut in production of at least 20 per cent, which entails removal of approximately 20,000 hectares of Australia's 177,000 hectares of vineyards. The primary focus of the WRAA is on helping those within the industry assess their current and future position.

I am advised that in 2010 the Winemakers Federation of Australia conducted a number of briefings in regional centres to discuss regional data and issues and offer wine business stress testing. The South Australian government supported the WFA in its rollout of the WRAA by part funding the cost of the regional briefings, making available the services of the Rural Financial Counselling Service and also supporting a survey into the intentions of the industry participants to stay in or exit the industry.

Since the release of the WRAA, it is estimated that 557 hectares of vineyards have been removed across South Australia, out of a state vineyard estimate of just over 70,000 hectares, I have been advised. In 2011, there has been an increase in the Australian wine grape harvest of about 1 per cent (1.62 million tonnes) compared with the previous year. It is pleasing to see that our harvest is still of a reasonable yield and that it is clearly not continuing to escalate out of control, so it is obvious that these actions have had some impact on helping to manage the oversupply in those areas that have been identified.