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Prices per tonne too lightweight for Murray Valley growers

Murray Valley growers say they are stunned by only modest price increases for premium varieties, despite the threat of a collapse in production levels in warm climate regions.

Growers called for an early indication of prices as growers in the Murray Valley wrestle with decisions over whether to purchase water to produce a commercial crop.

Indications from the major wineries were met with disappointment from growers.

The Hardy Wine Company and Foster’s Group offered increases ranging from 15% to 30% for white varieties and 15% to 40% for red varieties.

Growers had called for premium prices to be lifted to about $1000/t but said the prices offered peaked at about $600/t.

They said the prices on offer did not provide growers with any confidence to buy additional water.

“None of the prices to date provide the confidence necessary for growers to make that investment,” Hardy grower liaison committee member Ian Roberts said.

“If water allocations reach only about 20% of normal, the winegrape harvest will drop to its lowest levels in more than 10 years,” he said.

Murray Valley Winegrowers chief executive Mike Stone said the wineries’ decision could prove to be disastrously short-sighted.

“Growers need to decide now on a course of action and wineries can’t afford not to be part of the decision making process,” he said.

“People paying $1000/ML might consider the grape prices don’t warrant spending the money. That could leave many crops in limbo, and wineries ultimately falling short of their requirements for 2008 and beyond.

“The value of the 2007 winegrape harvest in the Murray Valley was the lowest in nine years. The 1999 harvest of 316,000t had a value of $181 million; the 2007 harvest of 355,000t was worth $139 million.

“It’s little wonder that growers are fighting to stay afloat given that costs have risen but grape prices have plunged over the nine-year period. To match prices of nine seasons ago Chardonnay would have to increase 91%, Merlot 171%, Cabernet Sauvignon 184% and Shiraz 170%,” he said.

Stone appealed to wineries to re-think their pricing strategies.

“Prices in 2008 need to be set against a backdrop of regional industry survival, reduced yields, skyrocketing water costs and a looming national shortage of winegrapes,” he said.

“Wineries that talk of possible prices of $400 to $600/t for premium varieties are not realistic and growers must insist on far more.”

Growers are also watching carefully threats by some wineries to hold them to contract production levels if they choose to trade what little water they have.

A letter sent to some Foster’s Group growers early in the season told them they would not be protected by ‘Act of God’ provisions if they elected to trade their water.

Grower leaders say it is doubtful Foster’s or any other winery would attempt to enforce the provisions.

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