AUSTRALIA'S vineyards sector lost the equivalent of 1½ Barossa Valleys between the 2012 and 2015 harvests, according to new figures released by the Australian Bureau of Statistics.
Lower profitability, due to higher water prices and lower fruit prices, drove down land values in big wine-producing regions like the Riverland and Riverina, forcing landowners to pull out vines and replace them with higher-yielding horticultural crops like almonds and stonefruit - or abandon growing altogether.
According to the ABS, the total area of planted vineyards fell from 148,500 hectares in 2011-12 to 135,000 in 2014-15, a decline of nearly 10 per cent, almost double the rate of vineyard shrinkage in the prior three-year period.
In Australia's premier wine-growing region, the Barossa Valley, planted vineyard fell from just under 13,000 hectares to 9300 hectares, with 5748 hectares planted in its famous shiraz grapes, a decline of about 1000 hectares.
South Australian vineyards accounted for nearly half of the 1.6 million -tonne 2015 grape harvest, with 49,500 hectares of red wine grape vines and 17,300 hectares of white grape vines. In NSW, the area of planted vines shrank from 39,000 to 34,000 hectares and in Victoria, from 25,000 to 23,000 hectares.
"The wine industry has become a survival of the fittest," said Nick Cranna, associate director of agribusiness and rural valuations at Colliers International.
In big wine-producing regions like the Riverland in South Australia, and the Riverina in NSW (38,000 hectares combined), Mr Cranna said vineyard values had tumbled from between $25,000 and $35,000 per hectare five or six years ago to between $10,000 and $20,000 a hectare now.
By contrast, vineyard values in wine regions that produce premium A and B grade fruit were between $80,000 and $100,000 per hectare of vines, he said.
Giving an indication of what has driven these disparate values, the average price of shiraz grapes from the 2015 harvest was $314 a tonne in the Riverland, while in the Barossa, they hit a record of $2137 a tonne, according to the 2015 SA Wine Grape Crush Survey.
The higher cost of water and greater need for irrigation in warm-climate wine regions has eaten away at profits.
The latest ABS figures show that water use increased 18 per cent from 373,000 to 440,000 megalitres between the 2012 and 2015 harvests.
"Water costs rising to about $300 a megalitre have become very prohibitive for some growers and will likely result in a further wave of vineyard withdrawals," Mr Cranna said.
He said in areas like the Riverland, the cost of irrigation could be over $2000 a hectare (given irrigation requirements of about 7 million litres per hectare) making it very hard for growers to generate a profit and forcing the moth balling of vineyards.
But, he said, regions like the Barossa remained the "engine room" of profitability for the industry. The Mornington Peninsula has grown to 792 hectares of vines and 95 wineries.Along the gourmet wine trail in NSW, Orange and Mudgee have grown to more than 2100 hectares of vines and 95 wineries, the survey found.
