Long-awaited wine industry mandatory code of conduct too late for growers
Wine grape growers have been calling for a mandatory code of conduct for purchasing for the past 20 years. (ABC Riverland: Amelia Walters)
In short:
The federal government will introduce a mandatory code of conduct for wine grape purchases.
It is being implemented in response to a review by Craig Emerson this year.
What's next?
It will come into effect on January 1, 2027 and will be developed in consultation with wine grape growers and winemakers.
The federal government has announced a mandatory code of conduct will be introduced for Australia's wine industry to regulate wine grape purchases.
The decision is in response to an independent review of the sector by economist and former federal politician Craig Emerson, which was delivered in June and will take effect from January 1, 2027.
It will include earlier indicative pricing so growers can plan their harvest with full knowledge of the expected price for their grapes.
Growers across the country have been calling for a mandatory code for the past 20 years, saying there has been a long-standing power imbalance in the industry.
The government says it will continue to consider the remaining recommendations of Craig Emerson's review. (ABC Riverland: Shannon Pearce)
It was a key recommendation in a 2024 federal senate inquiry report, with two previous senate inquiries in 2005 and 2016 also recommending the implementation of a mandatory code.
However, while growers have been pleading with government, market conditions have made the industry almost untenable for even seasoned producers.
Too little, too late
Growers have been in crisis as a global oversupply of red wine grapes, drought conditions and changing consumer demands have persisted for a number of years, leading to record low grape price offerings.
For some red grape varieties, growers could lose up to $270 per tonne this vintage, according to Riverland Wine.
Families that have been in the business for generations are walking away from the industry because it has become nearly impossible to turn a profit.
Other grape varieties planted by Jim Giahgias to offset the red wine oversupply are facing steep falls in value. (ABC Riverland: Will Hunter)
Loveday grower Jim Giahgias, who is based in Australia's largest wine grape growing region, said the biggest benefit of the code would be mandated earlier indicative pricing.
"At least we know it's on the way, that's one good thing,"he said.
But while he welcomes the announcement, he said it would be too late for many growers who had already been pushed to their limit.
There is widespread concern a significant number of growers will leave the industry in the next few years. (ABC Riverland: Amelia Walters)
With a wait time of three years until the 2027-28 vintage for the code to be applicable, he said there might not be many growers left.
"This year is one of the worst years on record for grape growers," Mr Giahgias said.
"Growers have turned their water off, they've sprayed their grapes off, hoping for less effect on their bottom line.
"It's going to come to the stage where they will say 'enough is enough'.
"If growers do exit and the industry shrinks, will Australia have an affordable wine industry?"
Some wine grape producers have begun pulling out vines or turning their water off. (ABC Riverland: Shannon Pearce)
Catastrophic conditions
Australian Grape and Wine was heavily involved in the consultation process of Dr Emerson's report and supports the code.
However, chief executive Lee McLean said it needed to be shaped with strong industry input for it to be effective.
"For the sake of getting some certainty for the industry, it's an important day for the sector,"he said.
"There is a lot more work to be done in terms of government and industry working together to try to resolve what seems to be a fairly catastrophic set of conditions for many producers around the country."
Lee McLean says the mandatory code needs to be shaped with strong industry input. (ABC News: Luke Stephenson)
Winemakers Treasury Wine Estates (TWE) and Vinarchy said they welcomed the government's decision to mandate a code of conduct and would work closely with the government on its formulation.
Both are already signatories to a voluntary code.
TWE said it supported the strengthening of the code's framework and enforcement.
"We recognise these measures alone will not resolve all of the structural challenges facing the wine sector," chief supply officer Kerrin Petty said.
"However, the government's focus on the issue and its constructive engagement with industry are positive steps."
Consultation will continue
Federal Agriculture Minister Julie Collins said a working group would determine the final form of the code and the government would continue to consult with the industry on further recommendations.
"A lot of the grape growers and winemakers at the moment are already adhering to the voluntary code, so this is about strengthening that voluntary code and making it mandatory," she said.
Julie Collins says the federal government has invested $80 million in the wine industry since coming to office in 2022. (ABC News: Luke Bowden)
"It's also about making sure we level the playing field and make sure there's more fair trading in those discussions between the winemakers and the grape growers.
"We are going to take our time to get it right and work with industry."