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Winegrape growers warned – check buyer’s credentials
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Growers receiving offers for the purchase of wine grapes are warned to check the details of buyers, said Mike Stone, CEO of Murray Valley Winegrowers’ Inc in a release today.
Brokers, acting for buyers, are currently sourcing fruit from growers in the Murray Valley, but little or no information is given on the background of the buyers; whether or not they are businesses of some substance.
Murray Valley Winegrowers’ CEO Mike Stone says growers should insist on details concerning the business transaction, for example: • What guarantee is there that growers will be paid on time and in full? • If payments are late or not honoured, who is the responsible party in the event that growers sue for losses? • Will directors of the supposed buyer provide personal guarantees of payment? • Did the brokers sourcing the fruit check the credentials of the business for which they’re acting and are they satisfied that all obligations will be met?
“The brokers currently operating in the Murray Valley are arranging purchases for businesses unknown to growers for as little as $135/tonne. From this, growers pay brokerage commission of 3%, harvest costs and freight to either the Riverland or Griffith. This deal would leave growers with between $20 and $50/tonne and massive losses.
“To makers matters worse, payments are spread over six months, the first being at the end of May and the last at the end of November.
“These terms take advantage of growers when they’re at their most vulnerable – fruit is ripening and will rot unless a buyer can be found quickly.
“The people responsible for these arrangements apparently believe there is a market for the wine, despite alleged wine surpluses of anything between 500 million litres and one billion litres.
“Growers must take steps to avoid situations that see them powerless in the event that payment terms are not met. Ask questions and demand answers that provide essential information on the ability of the business to pay as agreed.”