With winegrape prices predicted to stagnate, irrigation water pricing remains the key to profitability for growers, providing them with "a source of income and opportunity."
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Riverina Winegrape Growers are encouraging growers to closely monitor their water budgets as dry conditions continue, to use the opportunity now to communicate with their buyers to lock-down grape prices for the 2020 Vintage.
Tools available to look at the input cost of water and balance these against the price offers of regional wineries, allowing growers to understand their profitability for each grape block ahead of the vintage.
Chief Executive Officer Brian Simpson, also a Griffith City Councilor, urged growers to contact their office to discuss the freely-available software.
"The water budgeting tools were developed during the millennium drought and are even more relevant today, particularly for those growers that need to purchase water," he said.
He said if winegrape prices are known, growers can see what the opportunity cost is of growing or reducing yields and trading water on the market.
Temporary water prices are again on the rise within the region as many general security irrigators struggle with low starting allocations.
We want to ensure growers do the sums and remain profitable, not just produce grapes and lose money.
- Brian Simpson
Riverina Winegrape Growers are concerned for the many winegrape producers who do not hold sufficient allocation to grow a viable crop.
Entering the water market to purchase their allocation just to bring a crop in means early knowledge will assist the industry come to terms with its profitability.
In the Riverina average water use in winegrapes is around 4.5 megalitres per hectare, one of the most efficient in inland regions.
"At a modest temporary purchase price of $500 per ML the cost per hectare of growing grapes for water alone is around $2,250 per hectare."
At a regional average yield for 14 tonnes per hectare, this equates to around $160 per tonne in water alone, plus costs of pumping water with the fixed and delivery charges - the cost could be over $200 per tonne.
"When you line that up against winegrape prices for some white varieties last season it is greater than half the value. We want to ensure growers do the sums and remain profitable, not just produce grapes and lose money."
RESPONDING TO ACCC FINAL REPORT
The Australian Competition and Consumer Commission (ACCC) has released its final report in a market study into the Australian winegrape industry.
The ACCC has found that bargaining power imbalances between growers and winemakers has resulted in growers agreeing to potentially unfair and uncertain contract terms.
Riverina Winegrape Growers supports the majority of recommendations of the report and looks forward to working through these with our industry grower and winery groups.
They are pleased the ACCC has focused on the industry with particular reference to the Riverina that has been subjected to questionable practices since the lapsing of state regulations previously managed by the Wine Grapes Marketing Board.
Also it is not surprising that a particular focus within the report has been toward the Riverina given the ongoing variations in payment terms to growers and a distinct lack of Code of Conduct signatories.
- Brian Simpson
Riverina Winegrape Growers note they do not infer any Riverina-based winery has acted improperly or illegally whatsoever.
The ACCC have raised many areas of concern in the business practices that are in operation within the Riverina and other regions across Australia and will now monitor the situation and the adoption of the recommendations from the market study.
Mr Simpson stated the report is the justification growers in the industry were needing.
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"Also it is not surprising that a particular focus within the report has been toward the Riverina given the ongoing variations in payment terms to growers and a distinct lack of Code of Conduct signatories.
"I now hope that Riverina wineries will engage positively and take on the recommendations or they may face regulation."
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