Lack of price transparency in winegrape markets makes it difficult for growers to make informed decisions during the season. While winemakers are facing major issues such as China tariffs, COVID-19 and global shipping, growers are being hit with labour shortages, climate related challenges and downward pressure on winegrape pricing. In light of this uncertainty, it has never been more important for growers to understand the market.
Australian Grape & Wine, the Inland Wine Regions Alliance and Wine Australia recently formed a consortium to secure a $989,000 grant from the Australian Government to build an online winegrape price indicator platform that will provide winegrape growers access to timely and accurate pricing information. The project will facilitate the use of price indicator data by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) to publish independent winegrape price forecasts for commercial grapes. This information will fill a critical gap by assisting growers to understand the market and make informed business decisions earlier in the season. The funding was announced by the Minister for Agriculture and Northern Australia, Hon David Littleproud MP last week.
Improving market transparency was one of a number of recommendations put to the sector by the ACCC back in 2019 following on from their winegrape market study.
In response to that study, it has been encouraging that Australia’s five largest wineries and more than half of the top twenty wineries by grape intake have now all become signatories to the Code of Conduct. We estimate that this takes the percentage of Australian grapes crushed by signatories to approximately 70%. We would also like to acknowledge the work of the Australian Wine Research Institute developing endorsed procedures and guidelines aimed at improving the rigour and reliability around winegrape sampling and assessment. These procedures can be found on our code website under Supporting Information.
The ACCC recognised this positive progress in their follow up report released last year. However they noted the need to strengthen the Code by addressing lengthy payment terms. Their issue with payment terms is particularly pertinent to large wine producers where bargaining power imbalances are likely to exist. The ACCC stated that ‘instead of a mandatory code, Australian Grape & Wine and the Code Committee should continue to look for opportunities to increase the coverage and strength of the Code’. While it is very fortunate that the sector has retained its industry owned voluntary Code, addressing lengthy payment term is seen as a critical issue still to be resolved. We will continue to work with the sector towards this.