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Wine grapegrowers call for cessation of investment plantings
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Wine Grape Growers Australia (WGGA), the new national growers’ body, has called on the investment sector to cease further vine plantings in the face of a significant oversupply of wine grapes.
WGGA Executive Director, Mark McKenzie, said the organization was seriously alarmed at continuing reports of wine grape plantings being promoted by investment agencies, despite overwhelming evidence that the Australian wine industry has a significant oversupply of grapes and is suffering a collapse in grape prices that is threatening the future viability of large numbers of wine grapegrowers.
“It beggars belief that some investment promoters are continuing to push large new vineyard plantings when the industry is struggling to digest current levels of production. Investors need to be aware that the wine grape sector is in the middle of a very serious viability crisis and that they will simply be adding to the downturn in wine grape returns if they persist in vineyard investments that are speculative and often based on wildly optimistic financial returns. New large-scale investor plantings will only extend the wine grape oversupply and increase the tonnage of grapes being sold off at well below the cost of production. As well as continuing to undermine wine grape prices this will also mean that the land value of vineyards will continue to decline – making it more difficult for growers to borrow against their assets to see them through this crisis. ”
Mr McKenzie said that the Australian investment community needed to take a responsible stand against reckless vineyard investment schemes that are being promoted with overly optimistic outcomes for investors and less than truthful assessments of whether there are viable markets for the grapes.