Grapegrowers and wineries will be feeling the squeeze over the next few years if predictions by the Australian Bureau of Agriculture and Resource Economics (ABARE) prove correct.
The production of winegrapes is forecast to increase by 13 per cent to 1.1 million tonnes in 1999-2000.
Over the past five years, winegrape plantings have increased dramatically.
However, the gap between winery demand for winegrapes and the projected production in Australia is expected to narrow considerably in 1999-2000, causing prices to fall.
The forecasts outlined in the March quarter Australian Commodities — Forecasts and Issues indicates that the recent ‘honeymoon’ period for the industry may be over if current trends continue.
Domestic wine sales are not expected to increase at the same rate as the increase in production levels so most of the expected production increase will be directed toward exports. Wine exports are expected to increase by 32 per cent to 275 million litres in 1999-2000.
Winegrape prices in real terms are forecast to fall by 35 per cent for Chardonnay and 42 per cent for Cabernet Sauvignon by 2003-04.
As a result farms with high overhead costs and small bearing areas may no longer be viable.
