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Australian Grape Glut Dries Up as Drought Bites

A year ago, Australia was awash in wine. But thanks to the worst drought in a century, the 2007 vintage will be one of the leanest in years and the grape glut is drying up fast.

For winemakers like Terry Dolle, who has a small vineyard near the cool-climate town of Orange west of Sydney, the past year has been a "series of disasters".

"We got a really big frost in November. Then it was so dry we couldn't keep any moisture on the vines. Then, because there was not a blade of grass anywhere, the kangaroos came. Then we couldn't keep the birds off them.

"We are down 100 percent. We've got nothing," he told AFP.

Fellow vigneron Justin Jarrett has a similar story; in some parts of his Orange property the ground is so dry it would be useless to plant vines while in others the drought has left plants stunted and fruitless.

"If the drought just continues as is, we are going to see vines that are struggling to produce fruit at all," he told AFP.

He too has been hit by capricious weather. "In February we had 80 millimetres (3.2 inches) of rain and we lost 100,000 dollars (84,000 US) worth of crop because it came with a hail storm," he shrugs.

Orange, with an average annual rainfall of more than 800 millimetres, is always one of the last places in Australia to be hit by drought and one of the first to recover.

But the prolonged dry has slashed rainfall and wine production in the pretty township this year will be down by about half.

-- Vineyards in drought's grip --

It is a story replicated in vineyards around the country, most of which remain in the grip of the six-year drought.

In Australia's agricultural heartland further south, the Murray-Darling River region which is home to about 65 percent of the country's viticulture, grape growers labour under severe water restrictions.

"Even if we have got rain, produc tion in the Murray Darling Basin is going to be down," said Stephen Strachan, of the Winemakers' Federation of Australia.

And while recent soaking rains have delighted wineries in the Hunter Valley north of Sydney, most of the country's other vineyards are parched.

Strachan said 2007 has been a horror year for the country's 2,000 grape growers who have had to discount heavily because of the estimated 500 million-litre (110 million-gallon) wine glut.

They are now faced with drastic cuts to production due to the drought while a soaring Australian currency is hurting export earnings.

"They have had low prices and low yields -- it's plenty tough," said Strachan, conceding conditions will force some wineries out of business.

Strachan said national production will be down about 25 percent to 1.42 million tonnes in 2007 due to drought and frost -- the lowest yielding vintage for more than a decade.

The Australian Wine and Brandy Corporation has forecast the drought, coupled with rising export demand, will bring the national wine supply back into balance by 2008-2009, two years earlier than originally expected.

-- Cold climate some comfort --

While Strachan can content himself with the knowledge that a reduction in the wine glut will raise prices, the winemakers of Orange take comfort in thinking they may be the future of an industry worth 4.8 billion dollars in annual sales.

Orange, near Mount Canobolas some 200 kilometres (124 miles) northwest of Sydney, does not have the viticulture history of the Hunter Valley, South Australia's Barossa Valley or the Margaret River in Western Australia.

But farmers here believe its reputation as a premium wine producing region will build as grape growers take advantage of heavier rainfall and cooler climate amid the threat of climate change.

Jarrett said there were many unknowns when it came to the impact of global warming on the region which only began seriously producing wine in the late 1980s.

"But what we do know is that by 2030-2050 we will be six degrees warmer than it is. If we go up by six degrees, your vines are going to need more water.

"What's going to happen in time is that vines are going to have to go further up the hill."

Dolle believes Orange's cool climate, soil and altitude make it a good place to produce wines, particularly whites.

"If there is a lack of water around Australia and an abundance of water here from rainfall, then theoretically we should benefit from that," he said.

Peter Robson, who runs Ross Hill, one of Orange's pioneering vineyards, said rising global temperatures could hurt wine production in warmer parts of the country.

"If these trends continue, the hot areas are not going to be able to grow white grapes," he said. "They are going to be buttery rubbish. Some of the reds are going to be iffy (questionable)."

But Strachan is circumspect, saying assessing the impact of climate change is a major priority for the industry but one which will only be done once a comprehensive research programme has been completed.

"Climate change is going to have a profound impact on our industry but just because you're in a hot region doesn't mean you won't be able to produce grapes."


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