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Scuttled summit fails regional South Australia

The failure of last week’s wine industry summit to deliver any meaningful solutions to the industry’s over-supply and structural problems was predictable enough. Federal Agriculture Minister, Peter McGauran snuffed out any optimism that the Government might help when he told the meeting in Melbourne last week, “The industry as a whole – grapegrowers and winemakers – has enjoyed the success of the past decade or so. Now it must work together to turn things around. There is also a problem taking forward a large Government assistance package to cabinet when the industry in question has a strong history of growth”.

Small and medium wine enterprises and thousands of small business grapegrowers were well and truly rolled by big business and a Government not fully cognisant of the gravity and breadth of the wine industry crisis.

McGauran’s rationale was superficially correct. 80% of the wine business is done by less than 20 companies and most of them continue to grow and prosper – in fact collapsed grape prices are a positive for them. However, all that ignores the plight of hundreds of grapegrowers and small winemakers who will not be able to survive the inevitable shakeout which will occur in the wake of the do nothing option taken by the summit.

Clearly, the Government has failed to recognise the social and economic impacts the severe downturn will cause in numerous regional communities around Australia. The effect of the crisis will not only be the grapegrowers going broke and small wineries closing their doors, it will also impact on the entire community – it will affect other businesses and the general well being of thousands of people not directly connected with the wine industry.

Grapegrowers were poorly represented at the summit and they have only their own apathy to blame. Wine Grape Growers Australia (WGGA) went to the summit divided – its executive officer declaring before the summit that it did not support a Riverland compensation proposal. Disgracefully, there was no representation at all by growers from key SA regions such as Barossa, Clare, Coonawarra and McLaren Vale – the very regions which are now being told, will bear the brunt of the industry’s pain in the years ahead.

There is no doubt that the industry’s peak organisations (grapegrowers and winemakers) should have come together months before the summit to discuss and debate the over-supply and structural issues, which have caused the crisis. There needed to be a whole of industry consensus on the detail and depth of the problems and an agreed package of solution options developed as a joint effort by both sides of the industry, for tabling at the summit. This was not possible because the WGGA is not yet properly formed and is bedevilled by leadership issues.

How bad is the crisis? Industry data can be extrapolated to show that at least 500,000 tonnes of grapes are being grown which are not required. This is the equivalent of five Barossa Valleys – the equivalent of two Barossa Valleys was left hanging on the vine this vintage. It is a massive over supply, which should have been enough to disturb the Government.

South Australia will be walloped harder than any State as this downturn unravels and the do nothing decision of the summit should not be allowed to rest. It is past time that growers in this State did something about their abysmal representation in industry forums. The misapprehensions in Government, that industry is just a handful of big businesses, which do pretty well, must also be corrected.

The thousands of small businesses people – growers and wine producers – who have the only capital they own invested in their enterprises, and the regional communities in which they live, should not have been abandoned to the ravages of market forces as they were so dismissively in Melbourne last Friday.

Doing nothing should not have been an option.

By Paul Clancy, in The Independent Weekly, 17 June 2006.

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