Reform proposed

By Country News

Harmful market practices are restricting competition in some Australian wine grape growing regions and limiting the potential for growth of Australia’s wine industry, according to an interim report released by the consumer watchdog.

The Australian Competition and Consumer Commission has proposed measures to address concerning practices it believes are common across high-production warm climate wine grape-growing regions.

ACCC deputy chair Mick Keogh said the report identified a lack of transparency and certainty over how grapes were priced and assessed for quality, as well as supply contracts that ran for multiple years but did not offer price certainty to growers.

The ACCC is also concerned about delayed payment terms for growers, which can sometimes stretch up to nine months after grapes have been delivered to a winery.

‘‘There are significant bargaining power imbalances between large winemakers and the small growers who supply them, a dynamic that is common between suppliers and processors across the agricultural sector,’’ Mr Keogh said.

‘‘This power imbalance is particularly evident in the bulk wine grapes industry.’’

The ACCC’s interim recommendations include requiring winemakers in warm climate regions to provide indicative and final grape prices to an independent third party for simultaneous public release, payment terms for wine grapes be shortened so growers are paid within 30 days of delivering grapes, objective standardised testing for wine grape quality assessments be developed, and the dispute resolution mechanisms in the Australian Wine Industry Code of Conduct be improved.

‘‘Increased transparency over indicative and final prices is likely to lead to greater competition between winemakers, and better outcomes for growers,’’ Mr Keogh said.

During the study, the ACCC closely examined the operation of the voluntary Australian Wine Industry Code of Conduct, in place since 2009.

The ACCC believes the code’s impact has been limited due to the low numbers of winemakers that have signed up.

‘‘The ACCC recommends that Australian winemakers with more than 10000 tonnes of processing capacity sign the code,’’ Mr Keogh said.

‘‘If more big winemakers don’t sign up, a mandatory code may be needed to bring about the required industry reforms.’’

The ACCC is seeking feedback on the interim report by June 28 and expects to release a final report in September.