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Forget the top drop - the money's in the cask
3 Nov 2003
Farms growing grapes for the bulk-wine market earn more money than those producing grapes for premium wines, a new ABARE study shows. The study compared wine grape growers in the Mudgee region, makes up just 1 per cent of Australian wine production, with the Riverland along the Murray River in South Australia making up to 28 per cent of production.
The Mudgee region grape growers recorded an average rate of return on capital and management of 3.1 per cent in 2001-2002, compared with an average 8.5 per cent in the Riverland (excluding the appreciation of the farms' value). Average total cash receipts were about the same - $277,000 in Mudgee and $266,000 in Riverland, although the average price received by Mudgee growers was nearly double that in the Riverland, partly reflecting the higher grape quality. Cash costs in Mudgee, however, were about 18 per cent higher, and about 44 per cent of growers in Mudgee reported negative cash incomes.
ABARE said the results probably reflect the earlier stage of development of Mudgee vineyards, as well as the focus on high-quality grapes. ABARE's Dr Brian Fisher said a key difference in the regions' financial performance was the scale of farm operation. The Riverland's average vineyards sizes were about 16 ha, yielding nearly 22 tonnes per hectare. In the Mudgee region, average vineyards were about 26 ha, with a yield of only about eight tonnes per hectare.
The Age, 3/11/03.
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