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27/03/2015

Another Senate probe into wine industry

Murray Valley winegrowers have welcomed the Senate’s inquiry into the wine industry, stating the issues affecting the industry a decade ago are still present.

The Senate’s Rural and Regional Affairs and Transport References Committee is expected to conduct a wide-ranging inquiry that tackles issues of 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.

“This will give grapegrowers another opportunity to alert the Australian community and parliamentary representatives to the issues that have seen hundreds battling to stay solvent. In the Murray-Darling and Swan Hill wine regions, around 500 growers have left the industry over the past 10 years,” Mike Stone, Murray Valley Winegrowers executive officer said.

Stone said the same Senate committee probed the wine industry in 2005, examining reasons for winegrape over supply, poor commercial relationships between growers and producers and the role of the Trade Practices Act.

“Sadly, many of the issues that led to the Senate inquiry 10 years ago are still with us,” Stone said. “While the 2005 inquiry had some influence on the Australian wine industry developing the voluntary code of conduct to help in setting minimum standards for contract arrangements between growers and wine grape buyers, and to provide a cost-effective dispute resolution mechanism, the uptake of the code has been disappointing.”

The motion to establish a committee of inquiry was moved by South Australian Senators Anne Ruston and Nick Xenophon, Victorian Senators John Madigan and Bridget McKenzie and Tasmanian Senator Peter Whish-Wilson.

When announcing the inquiry, Ruston acknowledged that grape prices were barely covering production costs and said the industry needed ‘a bit of a shake-up’.

“It wasn’t that long ago that Australian wine was taking world markets by storm as an aspirational product for discerning consumers,” Ruston said.

“More recently, this status has been somewhat diminished by competition from other countries with lower production costs, and also by what I would term an unhealthy focus on the domestic market. We’ve drifted towards a supply-driven market.”

Ruston said is the prices being received this year by wine grape growers are any indication, current strategies aren’t working very well, as many are below the cost of production.

“The industry has no future if grape producers’ profitability is not sustainable over the long term,” Ruston said.

“She’s right, and growers need to join their regional and national industry bodies in presenting evidence, ideas and information to the Senate committee,” Stone said. “MVW will keep growers informed of arrangements for submissions and committee hearings as soon as they become available.”

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