"Riverina Clean" Viticulture

I have been invited to present a case study on the opportunities clean agriculture presents to the wine industry in the Riverina, and how marketeers can assist farmers to adopt conservation/organic farming practices.

According to the letter I received, the Conference today has been convened to try to identify the common ground and the boundaries between the philosophies of conservation and organic farming, and identify the opportunities available for "clean agriculture".

While there may be some differences in philosophy between the two movements, both are seeking ways to encourage farmers to better plan and manage their businesses so as to preserve the asset for future generations. In the absence of regulatory measures, it will be the farmer's need to remain economically viable that will determine the extent to which clean agricultural practices are adopted.

If we are to see the widespread adoption of conservation/organic farming techniques, the role of marketeers will be critical in persuading consumers to make the "right" purchasing decisions and to pay whatever premium is required to encourage conversion from conventional to conservation to organic.

The topic of the seminar, "Organic and Conservation Farming - Bridging the Gap", relates directly to work currently being undertaken by the Wine Grapes Marketing Board to encourage the production of grapes using minimal chemical inputs, and which also has a parallel in the national grape and wine industry's philosophy of minimal inputs.

The World Scene

Few would argue that the world is becoming increasingly concerned over excessive reliance upon the use of chemicals in the food production chain. While some of the concern is based on real health and environmental issues, much of the debate is less objective.

There is little doubt that the widespread adoption of agricultural pest and disease management methods using manufactured products has greatly contributed to the high standard of living we enjoy today, and most people would endorse that view.

However, as population pressures increase, there is valid concern that if we are to be able to support increasing population levels in the future, we must increasingly adopt agricultural, manufacturing and demographic processes which are sustainable from a resource, economic and environmental point of view.

Why is this important to the Riverina wine grapegrower and how can we benefit from the marketing opportunities that now present themselves?

The Australian Wine Industry

Table 1 shows the significance of the Riverina wine industry in the context of the national industry.

Table 1. The Australian Wine Industry

	Riverina	Australia
Gross Production, 1991	80,000 tonnes	520,000 tonnes
Beverage wine produced (ml)	63,673	345,841
Bottles equivalent (million)	84,897,332	461,121,320
Per capita consumption (bottles)	4.9	26.8
Domestic sales (1992 est) - ml	NA	315
Value of domestic sales ($m)		1300?
Volume of exports (1992 est) - ml	NA	67
Value of exports ($m)	NA	207

The Australian wine industry has a history of instability, with rapid rises in sales being matched by often more spectacular fall. This was particularly so in the past 10 years which saw a steady increase in sales up to 1988 then a dramatic fall in 1989 and 1990. This is illustrated in Figure 1.

By 1989 wine sales had peaked and grape prices reached extraordinary levels. The effect of record grape prices, coupled with the fall in the price of beer following the Federal Government's alteration of the tax regime, saw domestic sales fall, leading in turn to an oversupply of grapes and a sharp fall in grower returns.

The reining in of grape prices in 1990 and 1991, along with a recession-driven shift back to lower priced wine products such as casks, has seen a turnaround in domestic sales, although nowhere near the levels prevailing in 1988.

What has become important in the Australian wine industry is exports (Figure 2). In 1986 these represented 3% of total sales while in 1992 they are estimated to be 18%. Figure 2 shows the pattern of exports since 1979. So confident is the industry's current mood that it has recently set itself the goal of achieving exports of $1 billion by the turn of the century.

Part of the reason for Australia's success overseas has been the growing concern of consumers, particularly in Europe, regarding pollution and purity of the European product. The Chernobyl nuclear disaster has been widely acknowledged as having provided the springboard for export growth with Australian marketeers stressing Australia's reputation as a "clean agricultural nation".

While exports were initially seen as an outlet for the wine surpluses of the mid-1980s, the industry has now firmly embraced an "export first" policy, recognising the need to protect hard won markets overseas. To do this the industry is placing increased emphasis on programs which promote and protect overseas markets, including the need to enhance what is seen to be our greatest asset, our image of "cleanliness" from an agricultural point of view.

More importantly, having taken the running on the clean image, we cannot afford a scandal which could destroy our reputation overnight. The challenge the wine industry now faces is to protect our image and maintain our advantage in the market place.

"Clean Viticulture"

A key element of the industry's program to promote the purity, integrity, quality and economy of Australian wine is the aim to reduce chemical usage within grape and wine production.

With the assistance of $12.42 million in Federal government funding for a Cooperative Research Centre, the Australian wine industry has recently embarked on a seven-year program with the overall aim of the efficient production of high quality grapes with minimum residues of agricultural chemicals. The first of the research programs being funded under the CRC commenced this year.

It is worth remarking that the programs being funded are production oriented with no marketing focus. The industry consensus is that low residue wines have a high level of market acceptance.

The Wine Grapes Marketing Board's Low Chemical Policy

What opportunities does this policy present to Riverina wine grape growers?

In volume terms currently around 55% of Australia's wine production is sold in casks, 30% in bottles and 15% is exported. However, on a value basis, a much different picture emerges as Table 2 illustrates.

Table 2. Wine Consumption by Packaging Type

Product/Package Type	Litres	Volume	W/sale	Value %
	m	%	$m
Casks, flagons, bulk wine	208	57	208	26
Fortified and bulk sparkling	43	12	118	15
Bottled table	117	32	474	59
TOTAL:	368	100%	$800	100%

Source: Brian Croser, "The Australian Wine Industry and Beyond". Wine Industry Journal, August 1988.

As a producer of low cost, high yielding grapes, Riverina grapegrowers and winemakers have been locked into the lowest profit segment of the market. The Wine Grapes Marketing Board sees the rising demand for minimal residue products as providing the path to, firstly, increasing the proportion of production sold in bottles and, secondly, increasing the "bottle to cask" ratio.

Development Of "Riverina Clean"

In 1991 an article in the Australian Farm Journal (May) entitled "Clean Profit", claimed that organically grown food will account for 5% of Australia's food market by the end of the decade. The article went on to say that demand for "clean" (i.e. chemical free) products had reached the stage where supply was struggling to keep up.

The article formed the basis of my final year project for the Roseworthy Wine Marketing course, entitled "A Clean Food Certification System for Riverina Wine Grapes".

The aims of this project were twofold:

(1) to develop a minimal chemical ("clean") regime and certification mechanism for MIA wine grapes, and

(2) to provide growers with a pathway from their current viticultural practices towards the production of organic grapes and wine.

Because there was no agreed definition of "clean food", the one developed was very largely based on the principles of organic/biodynamic agriculture, but differed from those systems by permitting the use of manufactured, but naturally occurring, products such as by-product gypsum, as well as non-residual herbicides.

The impetus for this project has come from mounting grower concerns for the sustainability of the wine grape industry in the Murrumbidgee Irrigation Area (MIA) of the Riverina. Salinity, rising water tables, and the quality of drainage effluent are all current concerns to which growers must devise solutions while at the same time staying in business.

The Wine Grapes Marketing Board has taken up the challenge of developing production and marketing strategies which could provide alternatives to current markets while at the same time promoting better farming practices.

As mentioned above, with Australia's increasing penetration of overseas markets and the importance many countries place on minimising or eliminating toxic residues in foodstuffs, the time is ripe for Riverina grapegrowers and winemakers to take the opportunity to meet the needs of consumers through the production and marketing of wines with minimal or zero chemical residues.

At a seminar on the subject held last year in Griffith, a clear message emerged that there was an inverse relationship between market access and chemical use.

To that end, the Board, in cooperation with NSW Agriculture, has developed a program of viticultural certification and winemaking accreditation for the production and marketing of low chemical residue wine. The accreditation will say "this wine is technically sound, and made with grapes grown under a publicly stated low chemical input" regime. It is expected that the program will be endorsed by the NSW Government, and this will form part of the promotion strategy.

Certification will imply:

• good overall quality

• low chemical use in vineyard ("Riverina Clean" accredited)

The program has the support of the two largest wine producers in the region, and the aim is to undertake trial marketing of "Riverina Clean" products in 1993. This will allow the winemakers to judge the level of interest, particularly overseas, and to assess the feasibility of the viticultural regimes being trialed with selected growers.

While the program is still in the developmental stages, we are confident we will succeed. It is now very much a case of

"WATCH THIS SPACE"

Conclusion

The importance of the work being done in the Riverina wine industry cannot be over-estimated.

Already research funded through the Cooperative Research Centre's program has commenced in Griffith which aims to determine methods growers can follow to reduce or eliminate the use of certain treatments, and improve the efficiency of application of others. This is consistent with NSW Agriculture philosophy of an overall reduction in chemical use and better targeting of use, and is a departure from the emphasis on yields and production.

Importantly, the program is aimed at the mass market, not a market niche, and if successful will provide a model for producer, processor and government cooperation in tackling economic and environmental problems on a large scale.

As we have noted, the Riverina is capable of providing one out of every six bottles of wine produced in Australia, and while this may take many years to achieve, there is no reason why it cannot. Success in marketing is the key.

As a region we enjoy natural advantage in the area of low chemical viticulture:

• a warm, dry climate with little summer rainfall in most years;

• no botrytis (unless it is wanted!)

• low incidence of downy mildew, and rarely any powdery mildew;

• few insect pests of the vine;

• isolation from major pollution sources;

• low salinity, pure clean water

• long standing research projects aimed at reduction of pesticides and fungicides;

• appropriate grape varieties, especially Semillon;

• geographic concentration;

• organisational resources to attempt the low chemical proposition (i.e. the Wine Grapes Marketing Board).

The Riverina is an ideal place to develop a low chemical viticultural and wine making regime on a large scale, and it seems to have started the development of the low chemical proposition ahead of many parts of the world.

The work of the next few years will be vital if the proposition is to succeed.

Appendix: Notes On The Market For Organic/Low Chemical Wine

There are considerable differences between countries and within retail sectors over how important low chemical or organic wine production is. There are also considerable differences in emphasis on what is important. In an article in The Sydney Morning Herald (30 May 1991), Mr David McCaughan of McCann-Erickson pointed out that consumers remain wary of "eco-friendly" products, and the time had come for the establishment of guidelines and regulations governing these products so that consumers could be confident that they are making the "right" purchase decision for their family's future.

For many years Germany has had organic or preservative free grape growing and wine making. Germany's awareness stems from widespread nitrate poisoning of the water table stemming from excessive use of nitrogen fertilisers during the 1950s and 1960s. The Dutch are also very aware of food purity, perhaps because of the high density of population in their country.

In the United Kingdom there is a growing interest in organic or low chemical wines. The reasons behind this are complex but the British legal system demands "due diligence be shown in all areas of commerce". To British supermarkets this means testing for residues of up to 10 common fungicides and pesticides. The leaders in this market have been supermarkets, in particular the Safeway supermarket chain, which will purchase organic products providing they are of equal price and equal quality to non-organic products. They have reported strong growth in this sector in particular in the 4 sterling area (around $35 per case to Australian exporters).

Market researchers in England have suggested there are 18 million consumers for organic products. It is uncertain how many of these will drink an organic wine, but it is interesting to note that in the UK the assumption is that all products contain "chemicals" unless they are stated not to. This is an important difference to the way Australians think, where we would be less inclined to consider the presence of "chemicals" in food. This attitude is changing.