Feb 14, 2011
New Zealand wine grape-growers may harvest as much as 300,000 tonnes of grapes this year but the bumper crop could harm profits.
Good growing conditions this season are underpinning good fruit yields and quality, economists at rural bank Rabobank said today.
"Early indications point to a larger New Zealand wine grape harvest in 2011 than the 266,000 tonne crop harvested in 2010," the bank said in its regular agribusiness report.
"Weak early price signals from wine companies confirm that price pressures will be muted by higher forecast production and strained wine company profitability."
New Zealand Winegrowers chief executive Philip Gregan told the Bloomberg news agency that a harvest as high as 300,000 tonnes was possible this vintage - 13 percent more than targeted.
A record 2009 harvest of 285,000 tonnes and a similar crop in 2008 left the industry with an oversupply of wine as the international economic crisis hit.
Last season the harvest volume was slashed 7 per cent to 266,000 tonnes after NZ Winegrowers recommended prices and volumes to its members.
The industry body said at the time it was allowed to do this because it was a professional body with more than 50 members, but the Commerce Commission later sent it a letter offering an amnesty for growers who admitted to colluding over grape prices and harvest yields.
The commission said it had received complaints about the way the group advised members to restrict harvests to meet 2010 production targets, and it told NZ Winegrowers that the industry grouping went beyond reasonable bounds by telling its members to limit the amount of grapes they harvested.
The commission said advice to growers had become progressively more "prescriptive" in recent years and that eight tonnes per hectare had been proposed as an overall target, with growers asked to reduce their output.
Industry leaders have said that the industry is threatened by falling profitability and that in 2011 and 2012 it must focus on "re-balancing and recovery", and after that future growth must target enhanced value ahead of production capacity.
Last year the average price paid for a tonne of grapes was only $NZ1293 ($A990.50), down from $NZ1629 in 2009, and $NZ2161 in the record vintage of 2008.
Wine exports grew 9 per cent to $NZ1.09 billion ($A834.99 million) in the year to last November, the average export value of a bottle of wine fell by 9.5 percent to $NZ8.59/litre as exporters were hit by drops in consumer spending in key markets, at the same time as the exchange rate for the NZ dollar reached 12-month highs against the US dollar, the British pound and the euro.
Though total wine shipments of 156.3 million litres in 2010 were up 19.7 per cent on the previous year, the volume of bottled wines shipped grew only 10.8 per cent to 107.5m litres, while bulk wine shipments soared 45.2 per cent to 48.8m litres.
Rabobank said today that bulk wine shipments in recent months had dropped about 17 per cent, compared with the same time in the previous year, but still remained at near-record levels
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