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McGuigan Simeon Wines denies price determination

McGuigan Simeon Wines (MSW) has not accepted the determination of an independent expert appointed to resolve a dispute over 2006 grape prices. This is despite a stipulation in the contract between growers and MSW that the determination shall be binding.

However, in a letter to growers (MSW) claims the expert, Charles Drew of Scholefield Robinson Horticultural Services, did not have the power to alter pricing structure.

Following a review of prices, Charles Drew prepared a report in which he determined a single price of $150/tonne for E grade fruit and $325/tonne for D grade fruit.

In his determination, Charles Drew determined the mid points of grades D ($325) and E ($150) to be reasonable. At the time, after seeking clarification from Charles Drew, both Murray Valley Winegrowers’ and Riverland Winegrape Growers’ Association interpreted the determination as meaning a single price of $325/tonne applied to Grade D and a single price of $150/tonne applied to Grade E. Charles Drew has since restated his agreement with this interpretation.

Mike Stone of Murray Valley Winegrowers’ says Charles Drew must issue a statement of clarification.

In the report of his determination, Charles Drew highlighted problems in the commercial relationship between growers and MSW that enabled the company to make changes that 'appear to be able to be made unilaterally'. An example, Drew reported, was the exclusion of any reference to varieties in the vintage price advice to growers, making it difficult for growers to compare prices with those of other companies.

Given that this was the third successive year that MSW prices had resulted in objections and the appointment of an independent expert to determine prices, there was an indication, reported Charles Drew, that prices in the vintage price advice might be seen by MSW as the starting point for negotiation rather than an offer conducive to a longer term commercial relationship.

The independent expert also questioned the absence of provisions that would 'provide a transparent and auditable statement connecting specific parcels of grapes with specific end-products'.

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