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News Analysis |
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Australia has always been a dry country, prone to periodic disastrous droughts. The eastern half of the country, taking in 95% of the country's vineyards, has thus been heavily dependent on the Murray Darling Basin water provided by the Darling, Murrumbidgee and Murray Rivers. This dependence holds true for around 40% of the nation's supply of fruit and vegetables.
Poor planning controls, profligate use of water via overhead sprinklers or surface flooding, planting of water hungry crops such as rice and cotton, and recently tree plantations for woodchips (with ridiculous tax incentives) placed the entire system under extreme stress. Salinity levels rose dramatically, ecologically valuable wetlands dried up, taking 1000-year-old river red gums with them, and water flows shrunk to record lows. Now the entire system is at the point of collapse.
River water dependence is absolute for agriculture and horticulture; the irrigation systems installed at the turn of the 19th century turned red desert sand into oases stretching unbroken for hundreds of kilometres along either side of the Murray and Murrumbidgee Rivers.At the headwaters of the Darling River in Southern Queensland, cotton farmer Cubby Station had dams which stored as much water as Sydney Harbour. They are now empty, and no cotton will be planted for an unknowable number of years.
Another indicator is the country's 87m sheep population, at its lowest level since 1925, and half of the 1990 figure of 174m. Failed wheat crops have sent the prices of grain soaring with knock-on consequences such as pig abattoirs being closed, and bread prices rising.
What has this got to do with the Australian wine industry? Unfortunately, everything. It is nigh on certain to cause a rapid and highly traumatic change in the entire structure of the industry, and to its place in the export markets of the world. Two-thirds of Australia's crush of around 1.8 million tonnes in 2006 came from the Riverina (on the Murrumbidgee) Sunraysia, Riverland and Langhorne Creek regions (on the Murray). Average water inflow into the Murray Darling system over the past five years has been the lowest ever recorded, less than half of normal, and as the drought persists, the situation gets worse day by day.
At best, the Riverland, Sunraysia and Langhorne Creek regions will produce 30% of their normal harvest in 2008. But this will be very unevenly distributed; only those who have bought additional pumping rights will be producing commercial harvests this year; those who have sold those rights will see their fruit trees and vines die, for the sandy soils have no soil moisture retention, and direct rainfall is so small as to be irrelevant.
The carryover damage from widespread frosts prior to the 2007 vintage has already (at the time of writing in mid October) been augmented by frosts this year, with worse in store. Drought means clear skies at night and bone dry soil, a sure recipe for frost. (A few days before filing |
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News Analysis |
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Page 2 of 2 |
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this story, 100 helicopters were hovering over New Zealand's Marlborough region, desperately endeavouring to disperse frigid air threatening the entire Sauvignon Blanc crop.) All this points to the conjunction of drought and climate change, the consequences impacting on all of Australia's 60-plus grape growing regions.
The outlook from the Bureau of Meteorology is for a decrease in rainfall of between 15% and 30% in the years ahead, and for higher temperatures leading to greater evaporation. If rainfall were to return to normal and there was no increase in evaporation, it would take the Murray Darling Basin four to five years to recharge its system.
In the meantime, the irrigation regions of the Murray Darling will have to find ways to survive the 2009 vintage with even less water than in 2008, perhaps much less. If there is no miracle, Australia will see its long term production levelling out at the bottom end of the range of 800,000 to 1.3m tonnes forecast for 2008 by the Winemaker's Federation of Australia – and which has already been discounted to one million tonnes by the major companies.
The net result is that there may well be insufficient water to buy at any price for the 2009 vintage, and that 40% of Australia's overall fruit and vegetable production may die in the red sands of the desert which was the Riverland before the Chaffey brothers' arrival from California in the 1890s brought the magic of irrigation. Grape prices from the lowest rung up are certain to more than double for 2008, and be higher still for 2009. The big companies' wineries here will be increasingly under-utilised, exacerbating cost rises. Adding in the impact of the strong dollar (which recently hit a 27-year high against the US dollar of over 90 cents), it is clear the days of mega sales of yellowtail and all the 'little critter' look-alikes are over.
At this price level, Australia will become a net importer from Chile, Argentina and South Africa. Australia's major players will have to – but at what cost? - go global, building on the Lindemans pattern of South African Chardonnay and Chilean Cabernet Sauvignon. Moreover, they will have to make agonising choices between partially abandoning their traditional two big markets in the United Kingdom and North America, and turning their attention to the soaring thirst of the Chinese for red wine at prices offering some prospect of profit. After mopping up the surplus of a year ago with bulk imports at low prices, the Chinese - without missing a beat – are now taking bottled red wine at sufficiently high prices to take China into the highest value destination in Asia, but without the stability of long-term prior consumption.
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