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25/03/2009

Foster’s urged to sell

Foster’s should sell its two large company-owned vineyards in the Murray Valley to the Federal Government to help reduce Australia's winegrape oversupply and return much-needed water back to the Murray-Darling system, Murray Valley Winegrowers (MVW) has suggested.

Following a review of its global wine business, Foster's announced in February that it would sell 36 non-core vineyards in Australia and California. Properties near Pomona, in south-west New South Wales, and Cullulleraine, in north-west Victoria, both with significant water rights, are included in the proposed sale.

MVW chief executive Mike Stone said these vineyards were thought to occupy at least 600ha, with water entitlements of more than 5000ML.

“Selling the vineyards to the Federal Government as part of its water buyback program would help reduce the over-supply of winegrapes, particularly Chardonnay, and relieve pressure on the over-used Murray-Darling river system.

“There’s precedence for such action. Last year the Australian Government purchased Toorale Station, in NSW, for $23.75m. Announcing the deal, Minister for Water Penny Wong said diverting irrigation from Toorale to the Darling River would deliver significant environmental flows,” Stone said.

He said the Winemakers Federation of Australia, of which Foster’s was a member, had suggested that winegrape production in Australia needed to decrease by up to 20% for the industry to return to a viable supply/demand ratio. In January, WFA chief executive Stephen Strachan told the ABC: "Quite simply we need to see less vineyards and quite probably also less brands in the marketplace competing for the same shelf space. We're competing with ourselves and because of that we're seeing margins decline and really the only way to see margins get back to a sustainable level is to see some of our vineyard area removed".

Mike Stone said the chairman of the Foster’s growers' liaison committee in the Murray Valley, Dennis Mills, had reported that many independent winegrape growers were expected to apply for the Australian Government’s Small Block Irrigators Exit Grant, a major condition of which was the sale of permanent water rights to the Government and destruction of irrigation infrastructure.

“The majority of the growers who do this have little choice; years of declining grape prices and cuts in water allocations have made their situation untenable, and action by Foster’s to also cut grape production and water use would be applauded as responsible and appropriate,” Stone said.

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