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11/02/2009

Extensive heat damage to bring supply sharply back into balance

The heatwave conditions experienced across south-eastern Australia in the last week of January and first week of February has caused significant crop reductions in South Australia, Victoria and southern New South Wales, Wine Grape Growers Australia (WGGA) has revealed.

WGGA executive director Mark McKenzie said early reports from South Australian regions indicated as much as 150,000t had been lost during the week-and-a-half-long heatwave, with many of the major regions reporting reductions of 20–30%, with heat-affected vines reported in all districts.

“In some regions, such as McLaren Vale, heat damage to vines is estimated to have reduced crop potential by as much as 50% and higher in some vineyards,” McKenzie said, adding the losses could go beyond that figure given that the heat damage to vine canopies and the limitations on irrigation water would reduce the likelihood of any recovery of heat-affected fruit.

In Victoria, a similar picture was evident, with early reports of a 20% loss in grape tonnages in the Murray Valley, which also experienced more than a week of high temperatures.

“Reports across central, western and southern Victoria, including the major production region of the Yarra Valley, indicate significant loss in crop potential from the effect of the heatwave on vines and from bushfire damage to some vineyards,” McKenzie said. “Initial estimates indicate a reduction in potential harvest tonnages of more than 80,000t across Victoria.”

In the Riverina region of southern NSW, crop losses from heat shrinkage and from two significant hail events had reduced vintage potential by an estimated 20%, or 60,000t.

“Combined with reports of a 30%, or a 20,000t, reduction in yield projections in Western Australia due to poor fruit set, WGGA estimates the national 2009 winegrape production will now be in the order of 1.5MT with the possibility of further downward revisions once a more accurate assessment of the full vintage potential for 2009 is made over coming weeks,” McKenzie said. “As the current level of export and domestic market sales require around 1.65MT for replacement of stocks sold in the last 12 months, winegrape supply and demand has been brought very sharply back into balance.”

McKenzie called on the major wineries to reassess their vintage prices in light of the expected reduction in the national harvest, saying companies had reduced their prices by 20–50% for 2009, ostensibly off the back of early estimates of the harvest at a potential 1.8MT and high wine stocks in hand from the 2008 vintage.

“The supply and stocks position within the industry is now fundamentally altered – and previous winery assumptions on the level of winegrape supply no longer apply,” he said.

McKenzie said that the combination of significant crop reductions and price reductions in 2009 would markedly increase the financial pressure on winegrape growers and negatively impact the sustainability of the entire winegrape sector. “An urgent upward revision of vintage 2009 winegrape prices by wineries is now required to avoid a lasting detrimental impact to sustainability of the Australian winegrape sector.”

He said the large scale of the reduction in 2009 harvest volumes and the re-balancing of supply with demand meant growers should not automatically accept low prices previously offered, particularly at spot market prices as low $150 per tonne for inland fruit, which was below half of growers’ costs of production.

“WGGA urges growers to re-check interest in purchase from the major and secondary wine companies before committing their fruit to other spot market purchasers, and to check the trading history and bona fides of purchasers. Previously uncontracted growers without an identified market should also recheck with wineries – as the demand position for their fruit may have altered,” McKenzie said.

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