Reports paint bleak picture of wine sector

Two reports on the value of agriculture commodities, including winegrapes, have painted a bleak picture of the past and present state of the wine industry.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) released this week the Agriculture Commodities Report for the September quarter, delivering its forecasts on the sector over the next 12 months.  

The ABARES report says competition in export markets and the strength of the Australian dollar have slowed demand of Australian wine, and winegrape prices are unlikely to pick up in the near future.

Based on ABARES harvest estimates, which differ from other industry production estimates, it predicts winegrape production will rise to 1.65 million tonnes in 2011-2012 – a 10 per cent increase on this year’s tonnage estimate of 1.5 million tonnes.

At the same time, winegrape prices will earn an average of $410 per tonne in 2011-2012 – about 1% less compared with $413 in 2010-2011.

A rise in low-value bulk wine is also contributing to low winegrape prices: in 2010-2011, Australia shipped 47% of its total wine exports (by volume) in bulk, compared with 13% a decade earlier.

ABARES predicts Australian wine exports will fall by 1% to 750 million litres in 2011-2012. Export returns are forecast to fall by 2.5% to $1.9 billion.

More competition is also expected on the domestic front, with an estimated 2% rise in wine imports, to 68 million litres.

The Australian Bureau of Statistics (ABS) also released its report on the Value of Agricultural Commodities Produced in Australia, from 2009-2010.

According to the ABS report, grapes (including tablegrapes) recorded the lowest value of all commodities at just $1.1 billion in 2009-2010 – a drop of 8% on the previous year.

The figures put the value of winegrapes behind cattle ($7.3 billion, the highest value commodity), wheat ($4.8 billion), vegetables ($3 billion), fruit and nuts ($2.9 billion), sheep ($2.6 billion), poultry ($1.8 billion), barley ($1.4 billion), wool ($1.9 billion), hay ($1.6 billion) and nursery production ($1.3 billion).

In 2008, the ABS valued the grape industry (including tablegrapes) at almost $1.7 million, which ranked it above nursery production and poultry.