Wine Grape Council of SA
Newsletter
OCTOBER 2014
2014 vintage profitability analysis
In this issue
Saving money by removing vines
Snake bites: protect your workplace
Proposed amendments to the Wine Grapes
Industry Act
Profitability analysis 2014
ATO audits of WET rebate
WGCSA project updates
Average profit/loss for Shiraz and Chardonnay ‐ 2014
$3,000
Langhorne Creek
$2,000
Profit/loss per hectare in 2014
An analysis of the average yields and prices paid
for grapes across the major regions and varieties in
SA in 2014 has shown that winegrape production is
currently economically unsustainable for the majority
of varieties, with the exception of Shiraz.
WGCSA has analysed the figures in the 2014 SA
Winegrape Crush Survey published by the Phylloxera
Board to determine the return per hectare for each of the
major varieties by region in 2014, and compared these
average returns with the estimated cash cost of production
(i.e. excluding water, depreciation, interest and return
on investment). (See table on page 4 for details.) The
results showed that while Shiraz covered cash outlays
in all regions except the Adelaide Hills and Clare,
Chardonnay did not cover cash outlays in any region
except Wrattonbully. In fact it fell short by over $4,000
per hectare in the Barossa, Adelaide Hills, Coonawarra
and McLaren Vale (see chart).
Looking to the 2015 vintage, we estimated the price
required per tonne to cover cash outlays. Yields were
based on the five-year average and prices on the 2014
weighted district averages – i.e. assuming no increase in
prices in 2015. Based on these assumptions most major
varieties in Langhorne Creek, McLaren Vale, Padthaway,
Wrattonbully and the Riverland would at least cover
cash outlays. However, in Coonawarra only Shiraz, in
the Barossa Shiraz and Grenache and in the Adelaide
Hills only Sauvignon Blanc and Shiraz would cover cash
outlays. In terms of Chardonnay, only Padthaway and
Wrattonbully appear able to
WGCSA
cover cash costs.
VIticulture
WGCSA
Continued on page 5
Study
TourTour
Viticulture
Study
California
California
- Jan 2015
January
See page
7 for2015
details
$1,000
$0
Adelaide Hills
Barossa
Coonawarra
Clare
McLaren Vale
Wrattonbully
Riverland
Padthaway
‐$1,000
‐$2,000
Shiraz
Chardonnay
‐$3,000
‐$4,000
‐$5,000
Emergency Services
Levy increase: another
hit for grapegrowers
T
he removal of the general remission from the
Emergency Services Levy has seen many farmers
suddenly faced with a 200-300% increase in their
ESL this year. WGCSA believes this move will unfairly
hit vineyard owners who have seen 10 years of declining
farmgate values. We are further concerned at the impact
on the thousands of rural emergency services volunteers
who give their time to fight fires, attend road accidents etc
and will now have to pay more for the “privilege”.
The survey enclosed in this newsletter seeks to quantify
the impact to give WGCSA a basis for working with
other commodities to seek some common sense in this.
We are also seeking your assistance in gathering accurate
data on the state of the industry, the WET tax, fair trade
issues and amending the Wine Grapes Industry Act (see
page 3 for details). Please take
five minutes to fill in and return
the survey form - or fill it in
online at surveymonkey.com/s/
wgcsa2014 or on your mobile
device using the QR code reader
(right).
1
page 2
OCTOBER 2014
Saving money by
removing vines
Despite a decade of low grape prices and lack of profitability
and with no improvement in sight, vine removals have
been slow. Alan Hoey, former winemaker and current
industry consultant, has removed a block of Pinot Noir,
Merlot and Verdelho from his Adelaide Hills vineyard. His
reasons include low demand for the varieties, crop yield
variability, grape prices that resulted in a regular belowcost or marginal return and the need to focus a limited water
supply on a smaller area of vineyard. “Our business model
indicates that we need $14,000 to $15,000 gross return per
hectare to cover input costs depreciation and maintenance
and provide a small return on invested capital.”
The static to negative outlook for demand was the major
factor behind his decision. “We don’t see any change from
this status for many years to come. We have been through
some severe demand changes over the last 20 years but
in our very internationally-focussed and over-supplied
wine sales world, the boom demand cycles seem to have
disappeared.”
Alan said that it was a difficult, expensive and emotional
decision to remove 18 year old quality vines. “We feel like
we have failed to put in the required effort, but it makes
no sense to keep on losing money. We have a simple rule:
after a number of years of persisting to look at methods to
be more productive and seek better grape prices, if the end
Alan Hoey with Simon Berrry (WGCSA Chair) in front of the Pinot
Noir vines he has removed
result is that we are not going to make a reasonable return,
then we stop farming that part of the vineyard.”
“One of the greatest challenges and dangers in grape
growing is to be forced into lower critical inputs (including
infrastructure maintenance) in the vineyard to reduce
costs; the result is often a fall in the actual vineyard market
value and diminishing crop yields and grape quality.”
WGCSA Chairman, Simon Berry, believes that all
growers in the industry need to address varieties that are
not in demand. “It costs around $3,200/ha for full removal
but second-hand posts sell for around $3.50 each. This
drops the cost to well below $2,000/ha net. In the current
climate that investment is likely to save money in the long
run.”
What to do in case of a snake bite
protect your workplace
S
pring signals the emergence of snakes from
hibernation and the risk of venomous bites and stings.
In Australia there are about 3,000 snake bites per year.
Deaths are rare but about half are due to brown snakes.
Areas covered by long grass, piles of objects (e.g. posts
and wire piles) and under water troughs should be cleared
and/or treated with the expectation of encountering a
snake or venomous spider.
Family members, employees and contractors should be
encouraged to wear appropriate clothing and footwear in
such areas.
Children are particularly at risk as are contract staff
especially those from overseas who may not be familiar
with Australian fauna. Prevention strategies take time but
2 could save lives in the long term.
• Immobilise and calm the victim to
prevent movement of the venom through the
lymphatic system.
• Call for immediate medical help. Do not allow
the victim to walk or transport them; wait for an
ambulance.
• Do NOT wash the area of the bite or try to suck out
the venom – it is extremely important to retain traces
of venom for venom identification kits.
• Use a splint and apply a pressure bandage to the whole
limb to immobilise it – ensure all first aid kits have at
least three 7cm wide crepe bandages.
• Watch the casualty’s consciousness level and
communicate and keep them calm until medical help
arrives.
St John information sheets on snake and spider bites are
available from the WGCSA website. We recommend
printing copies and placing in key locations.
page 3
OCTOBER 2014
Time to amend the Wine Grapes Industry Act?
S
ince 2011 WGCSA has received complaints from grape growers who have not been paid in full and in time for
their wine grapes. A 2012 survey found that 10% of respondents had experienced problems with late or incomplete
payments. On average the amount of reported outstanding debt was $20,000.
Through the survey that came with this newsletter, WGCSA is seeking your opinion on whether we should seek
amendments to the Wine Grapes Industry Act to provide greater commercial protection to independent wine grape
growers. Specifically the proposal is to:
• Increase from one to three years the time available to initiate a prosecution when a winery purchases grapes while
still owing money for grapes purchased in previous vintages
• Give PIRSA specific powers to investigate alleged breaches of the Act.
On the reverse of the survey you will find details of the proposed changes and the “yes” and “no” cases. Please contact
Peter Hackworth 8351 4378 to discuss or if you have any questions.
Please note the amendments will only be sought if a majority of growers agree and there is bipartisan support from
the SA Government and Opposition.
INVITATION
WGCSA AGM
South Australian grapegrowers
are invited to attend the
7th WGCSA Annual General Meeting
on Friday 31 October 2014
The purpose of the meeting is to elect half the
Councillors, receive reports (finance, achievements)
and debate issues that members might have. WGCSA
is also proposing to amend the rules to allow the
Chair to be held by one person for up to six years.
Location: Hackney Hotel, cnr Hackney Rd and
Richmond St, Hackney
Time: 9:30-10:30am
- followed by morning tea.
RSVP to 8351 4378 or [email protected].
Have you been paid
for your grapes?
I
n SA payments for grapes are prescribed by the SA
Wine Grapes Industry Act; i.e. three payments with
the last due by 30 September. Interest is required to
be paid on any late payments. This is a legal obligation,
not an option. The interest rate is equivalent to the
Commonwealth Bank overdraft rate (9.98% p.a. as of 27
August 2014) plus a premium of 1%, rising to a premium
of 5% for debts remaining after 31 December.
If you you haven’t been paid, you have options for
recovering late payments. The most important thing is to
act quickly.
Our website has a number of resources including our
free publication: “A guide to negotiating the sale of
winegrapes”, example letters of demand, a copy of the Act
and the Ministerial Order.
Worried that your buyer may not be able to pay?
Creditor Watch (creditorwatch.com.au) is an online
service where you can review a company’s credit file to
assess their credit risk.
VINE SIGHT
SERVICING THE SOUTH AUSTRALIAN WINE INDUSTRY LOCALLY FROM THE ADELAIDE HILLS
VINEYARD REMOVAL, RE-WORKING, RE-TRELLISING
TOM 0428 443 263
WWW.VINESIGHT.COM.AU 3
Regional profitability analysis 2014
Price
Av yield required to
Est profit/ Est profit/
per ha break even
loss $/t loss per ha
(past five based on
in 2014
in 2014
years)
average
yield
Av yield
t/ha
Est COP
$/Ha*
Est COP
$/t
for 2014
(cash costs
only)
4.5
4.1
6.9
$10,500
$10,500
$10,500
$2,327
$2,543
$1,523
$1,245
$1,505
$1,246
-$1,082
-$1,038
-$277
-$4,883
-$4,286
-$1,908
6.1
5.6
9.3
$1,723
$1,884
$1,128
-$478
-$379
$118
3.6
4.7
5.0
5.5
4.0
$6,750
$6,750
$6,750
$6,750
$6,750
$1,851
$1,427
$1,345
$1,222
$1,694
$1,504
$535
$1,301
$514
$1,849
-$347
-$893
-$44
-$708
$155
-$1,265
-$4,221
-$220
-$3,910
$616
4.5
5.8
6.1
6.8
4.9
$1,511
$1,165
$1,098
$998
$1,383
-$7
-$630
$203
-$484
$466
4.8
3.1
3.2
$6,750
$6,750
$6,750
$1,395
$2,177
$2,087
$1,010
$1,193
$1,310
-$385
-$984
-$777
-$1,862
-$3,050
-$2,512
5.1
3.2
3.4
$1,334
$2,081
$1,995
-$324
-$888
-$685
3.7
6.2
5.6
$8,250
$8,250
$8,250
$2,248
$1,335
$1,469
$1,594
$1,409
$719
-$654
$74
-$750
-$2,400
$458
-$4,210
4.8
8.2
7.4
$1,701
$1,011
$1,112
-$107
$398
-$393
9.0
8.6
8.6
12.5
$6,000
$6,000
$6,000
$6,000
$669
$695
$699
$480
$490
$767
$901
$665
-$180
$72
$202
$185
-$1,610
$624
$1,738
$2,310
8.4
8.1
8.1
11.7
$713
$740
$745
$512
-$223
$27
$156
$153
4.7
5.1
5.3
4.7
$6,750
$6,750
$6,750
$6,750
$1,443
$1,320
$1,276
$1,427
$559
$1,364
$1,659
$1,290
-$884
$44
$384
-$137
-$4,136
$225
$2,031
-$647
5.3
5.8
6.0
5.4
$1,266
$1,158
$1,119
$1,252
-$707
$206
$540
$38
9.6
4.9
7.4
$6,000
$6,000
$6,000
$623
$1,223
$816
$546
$876
$887
-$77
-$347
$71
-$741
-$1,701
$521
11.5
5.8
8.8
$523
$1,026
$685
$23
-$150
$202
22.6
26.8
19.8
20.8
$5,750
$5,750
$5,750
$5,750
$254
$215
$291
$277
$218
$281
$345
$341
-$36
$66
$54
$64
-$805
$1,769
$1,074
$1,328
20.0
23.6
17.4
18.3
$288
$244
$330
$314
-$70
$37
$15
$27
8.6
4.7
8.5
$6,000
$6,000
$6,000
$699
$1,272
$707
$757
$1,142
$992
$57
-$130
$284
$493
-$613
$2,410
9.4
5.2
9.3
$640
$1,165
$648
$117
-$23
$344
2014
average
price
Difference
between
2014 CAPV
and breakeven price
ADELAIDE HILLS
Chardonnay
Pinot Noir
Sauvignon Blanc
BAROSSA VALLEY
Cabernet Sauvignon
Chardonnay
Grenache
Semillon
Shiraz
CLARE VALLEY
Riesling
Cabernet Sauvignon
Shiraz
COONAWARRA
Cabernet Sauvignon
Shiraz
Chardonnay
LANGHORNE CK
Chardonnay
Cabernet Sauvignon
Shiraz
Merlot
McLAREN VALE
Chardonnay
Cabernet Sauvignon
Shiraz
Grenache
PADTHAWAY
Chardonnay
Cabernet Sauvignon
Shiraz
RIVERLAND
Chardonnay
Muscat Gordo Blanco
Cabernet Sauvignon
Shiraz
WRATTONBULLY
Chardonnay
Cabernet Sauvignon
Shiraz
See wgcsa.com.au for a more detailed analysis including other varieties..
2014 vintage analysis
Continued from page 1
The methodology used provides a generally accurate
picture of vineyard profitability. Naturally, using averages
means some vineyards will have achieved higher returns
in 2014 than the table shows, but conversely some will
have been even worse off. The individual performance of
each variety and region analysed can be found on page 4.
Growers are encouraged to use the table as a tool to work
out their individual profitability by substituting their own
figures for the average figures provided.
The 2014 SA vintage, at 706,000 tonnes, was the largest
crush since 2009. The average value of grapes across the
state hit a new low of $552 per tonne and only Barossa
and McLaren Vale Shiraz and Coonawarra Cab Sauvignon
had a higher average price in 2014 than in 2009.
The outlook for 2015 prices is that they are unlikely to rise
and, if another large vintage occurs, downward pressure is
likely. This further dampens the prospects for a profitable
grapegrowing season in 2015 for most growers. Given
the negative demand outlook, WGCSA advises growers
to analyse all varieties and consider removing from
production those in least demand and making the biggest
financial loss.
Please see our website for a more detailed analysis and
supporting references.
A new generation in harvesting
ATO targets WET
rebate claims
T
he ATO has been conducting a high number of
audits in the wine industry, including reportedly
of any business claiming over $100,000 in rebates
including the WET rebate. The ATO is reporting estimated
savings already of over $30 million in repaid claims and
fines.
What the ATO is looking at
Blended wine - the rebate that can be claimed has to be
reduced by any previous claims on the component wines
(to prevent double-dipping on the same wine)
Associated entities – if two businesses are found to be
associated, then they will be subject to one limit on rebate
claims of $500,000 between them
Genuine producers – producers have to meet the ATO
definition of a producer to qualify for the rebate. If
you supply all your grapes to one winery that contract
processes it for you and then buys the wine from you to
put into products with their own labels, you are unlikely
to meet the definition of a producer.
For more information and suggestions for preparing for
an audit, see our website.
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page 6
OCTOBER 2014
WGCSA Projects Update
Action on Grape Industry Transport Issues
WGCSA is working with Primary Producers SA to address
transport issues for vineyard operations, e.g. permits (e.g.
for moving harvesters), roadside vegetation, the lack of
transfer stations, ‘first and last mile’ B-Double access, etc.
The Premier has directed government departments to
work with industry through PPPSA and its Chair, Rob
Kerin, and report back within 90 days on how to reduce
unnecessary red tape.
Sami Gilligan, a McLaren Vale contractor, will represent
WGCSA on the steering group. If you have particular
issues you want addressed please contact Peter Hackworth
8351 4378 or [email protected]. Thanks to the
growers, transport operators and regional associations that
are assisting on this project. We hope that we will be able
to report some positive changes before the 2015 vintage
starts.
Spray Drift
Photo Peter Hackworth
Native Vegetation Regulations
WGCSA, as a coalition partner in Primary Producers SA,
has been consulted over planned changes to assessment
procedures for farmers applying to remove native
vegetation. WGCSA strongly rejected the revised financial
offsets because it would have made tree and scrub clearing
financially impossible. Ironically the proposal would also
discourage looking after existing vegetation. We will
continue to work for an equitable solution to this issue.
Unconventional Gas Extraction
Spray drift damage to young vines - photo courtesy of Kent Andrew
In August WGCSA circulated a reminder to broad acre
farmers through the media and Grains SA that August 31
is the last day for spraying broadleaf weeds with group one
herbicides (including high volatile ester forms of 2,4-D).
Symptoms of 2,4-D contact in vines include
• young leaves folded in half lengthwise and drooping
petioles
• older leaves cupped downward and petioles twisting
and bent
With high rates, plants exhibit necrotic symptoms by two
weeks after exposure.
With low rates, new leaves have become fan-shaped and
are toothed from reduced lateral expansion.
If you suspect your vines have been damaged from offtarget sprays contact the Agricultural and Veterinary
6 Chemicals Misuse Hotline 1300 799 684.
Beach Energy has been drilling exploratory wells in
Penola and Coonawarra with a view to undertaking
unconventional gas extraction (fracking). WGCSA
is working with Coonawarra and Limestone Coast
associations and Primary Producers SA to protect ground
water supplies. WGCSA’s policy on mining is that it
should only proceed IF there are NO negative impacts on:
• the profitability and sustainability of winegrape
production and future capability;
• the wine industry’s reputation for producing high
quality wine;
• water quality or water quantity;
and that adequate ‘make good’ and compensation
provisions are included in the approvals and funds
reserved to ensure the provisions are met, including for
future generations.
Beach Energy drilling site
OCTOBER 2014
California vine study tour - January 2015
WGCSA is organising a 10-day study tour of California
in late January 2015 to coincide with the 2015 California
Unified Grape and Wine Symposium, held over three
days in Sacramento from January 29 and attended by over
13,000 grape growers and winemakers from around the
world. The symposium provides a unique opportunity to
see the latest in emerging vineyard technologies and to
gain a greater understanding of emerging global trends.
The tour includes visits to some key wine regions. In
Paso Robles the group will visit a vineyard and nursery
producing over 20 alternative varieties, e.g. Counoise,
Grenache Blanc, Picpoul, Tannat, Bourboulenc, Cinsaut,
Clairette Blanche, Picardan, Terret Noir, and Vaccarese. A
unique opportunity to see them in the ground, learn how
they are managed and taste the resulting wines.
page 7
In Modesto Dr Nick Dokoozlian of E&J Gallo Winery
will demonstrate work on developing technologies for
measuring vine balance and yield and for improving
productivity.
After the symposium the group will go to the Napa
Valley to see first-hand how the industry is managing the
impact of drought, the recent earthquake and vine disease
challenges. The tour finishes in San Francisco; people can
then fly home or extend their stay.
The tour package includes airfares, twin-share (single
supplement available) breakfasts, tipping, ground transport
and a three-day pass to the symposium. For details contact
Peter Hackworth, [email protected] or 8351 4378.
Photo courtesy of Unified Wine and Grape Symposium
Opportunity: represent grapegrowers nationally
W
GCSA is seeking nominations from SA wine grape
growers for the Board of Wine Grape Growers
Australia (WGGA), the national body representing the
majority of Australia’s wine grape growers. WGCSA
appoints two grower representatives to the Board and one
position will become vacant in November
WGGA has a key role in national industry biosecurity
arrangements, recommending research priorities for
growers, the Code of Conduct between growers and
wine companies, broader matters concerning commercial
practices in the industry and addressing issues such as
supply and demand balances, information available to
growers and wine taxation. The WGGA Board sits four
times per year and provides an opportunity to network with
growers from around the country and be at the forefront of
national initiatives.
For more information, visit the WGGA website:
wgga.com.au.
If you are interested in nominating, please contact Peter
Hackworth - [email protected] or 8351 4378.
Wine Grape Council SA
Unit 4, 780 South Road, Glandore 5037
Tel: (08) 8133-4403
Fax: (08) 8293 8886
Website: www.wgcsa.com.au
Chairman (Adelaide Hills): Simon Berry ([email protected]) Barossa: John Hahn ([email protected])
Clare Valley: Anna Baum ([email protected]) Coonawarra: Pete Balnaves ([email protected])
Langhorne Creek: Heather Webster ([email protected]) Limestone Coast: Vic Patrick ([email protected])
McLaren Vale: Derek Cameron ([email protected]) Riverland: Stuart Andrew ([email protected])
Executive Officer: Peter Hackworth: [email protected]
This publication has been prepared by the Wine Grape Council of South Australia. Before acting on any opinion or information contained in this
publication, you should obtain individual expert advice. No responsibility can be taken for any errors or omissions in this document.
7
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