Drought puts Aussie growers in dire straits

While much of the U.S. wine grape-growing areas are reporting moderate (California) to spectacular (New York's Finger Lakes) crops this year, much of Europe and Australia are quite the opposite.

Record bad weather across much of Europe either ruined crops or caused them to ripen early and with decreased tonnage.

Now, Australian growers hit by lengthy drought conditions are sounding the alarm with a harvest expected to fall well below average. Industry experts are saying that may cause some growers to go out of business.

Past vintages have averaged about 1.9 million tons, but because of the drought the 2008 vintage was unlikely to reach 1.3 million tons, according to Mark McKenzie, executive director of the Wine Grape Growers Council of Australia.

McKenzie told reporters the drought could force as many as 1,000 of Australia's 7,500 wine grape growers to exit the industry. Many are awaiting the election result before deciding their future, he said

"We have no reason to believe that (1,000) is not the figure," McKenzie said. "I'm not surprised that we haven't seen a lot of people necessarily avail themselves of an exit package yet, and one of the major reasons is because they are waiting to see what the incoming federal government's attitude might be to entering the water market.

"If some of these growers are to exit, a major part of their financial plan is going to be what they can expect to get in terms of retiring their water rights, and secondly, what the taxation treatment of that might be. People will see what, if anything, they can get in terms of revenue, where they stand in a financial sense at the end of vintage ... because quite clearly, people are sailing close to the breeze."

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