THE GOVERNMENT OF NEW SOUTH WALES REVIEW OF PROPOSED POWERS AND FUNCTIONS OF THE WINE GRAPES MARKETING BOARD FINAL REPORT OCTOBER 2001 Review of the Wine Grapes Marketing Board CONTENTS page EXECUTIVE SUMMARY ............................................................................................................................ ii 1. INTRODUCTION .................................................................................................................................. 1 THE MIA WINE GRAPE INDUSTRY AND THE WINE GRAPES MARKETING BOARD ........................................... THE COMPETITION PRINCIPLES AGREEMENT .............................................................................................. THE ‘FIRST ROUND’ COMPETITION POLICY REVIEW.................................................................................... THIS REVIEW ............................................................................................................................................. STRUCTURE OF THE REPORT ...................................................................................................................... 1 1 2 4 5 2. PROPOSED POWERS AND FUNCTIONS OF THE BOARD......................................................... 6 EXISTING POWERS OF THE WINE GRAPES MARKETING BOARD .................................................................... THE WINE GRAPES MARKETING BOARD PROPOSAL ..................................................................................... 6 7 3. OBJECTIVES OF THE PROPOSED LEGISLATION.................................................................... 10 COUNTERVAILING POWER ....................................................................................................................... 10 INDUSTRY SERVICE FUNCTIONS ............................................................................................................... 13 4. RESTRICTIONS ON COMPETITION............................................................................................. 15 TERMS AND CONDITIONS OF PAYMENT .................................................................................................... 16 INDICATIVE PRICES AND DISPLAY OF PRICES AT THE WEIGHBRIDGE ......................................................... 20 INDUSTRY REPRESENTATION ................................................................................................................... 25 REGIONAL INDUSTRY PROMOTION ........................................................................................................... 28 5. THE FUTURE POWERS AND FUNCTIONS OF THE BOARD................................................... 32 THE BOARD’S FUTURE ROLE: MARKETING OR FACILITATION?.................................................................. 32 LIST OF APPROVED FUNCTIONS ................................................................................................................ 33 LEGISLATIVE ARRANGEMENTS ................................................................................................................ 34 6. LIST OF RECOMMENDATIONS..................................................................................................... 35 APPENDIX A: TERMS OF REFERENCE ............................................................................................... 37 APPENDIX B: SUBMISSIONS TO THE REVIEW BY ORDER OF RECEIPT.................................. 39 APPENDIX C: SUBMITTERS TO THE REVIEW BY ALPHABETICAL ORDER ........................... 45 APPENDIX D: OVERVIEW OF THE MIA WINEGRAPE INDUSTRY .............................................. 51 NSW Government Review Group i Review of the Wine Grapes Marketing Board EXECUTIVE SUMMARY 1. Introduction 1. The Wine Grapes Marketing Board for the City of Griffith and the Shires of Leeton, Carrathool and Murrumbidgee (WGMB or ‘the Board’) is a statutory authority constituted under the Marketing of Primary Products Act 1983 (the MPP Act). There are over 500 independent wine grape growers within this area which, together with wineryowned vineyards, produce in excess of 150,000 tonnes of wine grapes annually. The Board presently undertakes or funds various service activities through a compulsory levy on wine grape growers, and has traditionally carried out representative activities on behalf of Riverina wine grape growers, including maintaining membership of numerous State and national industry bodies. A review of the Wine Grapes Marketing Board in accordance with the principles of the National Competition Policy was conducted in 1996. This ‘first-round’ review led to a NSW Government decision to extend, with certain constraints, the Board’s vesting power to 31 July 2000. With the Board’s vesting power on the verge of lapsing, on 20 March 2000 the Board submitted a detailed proposal to the NSW Government in relation to its powers and functions after July 2000. Assessment of whether the powers and activities contained in the Board’s proposal would create a net public benefit and achieve the desired objectives in a manner which least restricts competition, was the subject of this review (the Terms of Reference are at Appendix A). 2. 3. 4. 2. Proposed Powers and Functions of the Board 5. Despite the substantial reduction in the Board’s powers that occurred with the lapsing of vesting after 31 July 2000, the Board has retained the power to: • • • • direct payment and set the terms and conditions of payment; promote and encourage the use, sale or consumption of wine grapes; carry out research and development into producing, marketing and using wine grapes; and publish reports, information and advice concerning the producing, marketing or use of wine grapes. 6. The Board proposed that it retain its present functions, including industry representation, and be granted the following new or enhanced powers: • terms of payment enforcement, including a move towards greater enforcement powers, including the right to litigate on grower’s behalf, charge commercial interest on outstanding payments, disqualify wineries from accepting more fruit while still owing on previous supplies, petition for the winding-up of companies NSW Government Review Group ii Review of the Wine Grapes Marketing Board and bankruptcy of individuals, and force wineries to display their prices prior to and during harvest; and statutory annual production of indicative prices. • 7. The Review Group considered the 1996 Review finding that the Board’s information collection and dissemination and research, development and extension activities were in the public interest. It concurred with this finding early on in its deliberations and elected not to consider the issues further in the 2001 Review. 3. Objectives of the Proposed Legislation 8. 9. A requirement of the Competition Principles Agreement is that the objectives of any anti-competitive legislation be clearly defined. The MPP Act gives marketing boards vesting and price setting powers intended to provide primary producers with ‘countervailing power’ against the purchasers of their product. The Act also enables such boards to impose compulsory levies on growers to fund administration and industry service functions. 10. In considering the objectives, and benefits and costs of the legislation establishing the Board, the Review Group divided its analysis on the basis of the Board’s countervailing market powers and its industry service functions. Countervailing power 11. The majority of the 1996 Review Group concluded that continuation of the Board’s countervailing powers (vesting and price setting) could not be justified. However, the eventual decision by the NSW Government reflected a compromise involving a transitional period, during which a constrained form of vesting and an associated price setting power would operate. The Board also retained its power to direct and set terms and conditions of payment for wine grapes. 12. This transitional period terminated on 31 July 2000 and the Board has not proposed that its vesting and price setting powers be extended. The Board is, however, concerned that some measures remain in place to ameliorate the so-called ‘weak seller’ position of wine grape growers, and has consequentially sought the continuation of its statutory power to establish and enforce terms and conditions of payment. 13. The need for countervailing power was a common theme in the submissions received by the Review Group. Some submitters cited the relative market power of the small number of winemakers in the MIA and the possibility of collusion between them. Similarly, numerous wine grape growers asserted that collective representation was necessary to counter the market power of winemakers, often comparing the Board’s protection to that which a trade union provides for wage earners. 14. A related issue is that of anonymity. Many submitters expressed concern that any attempt on their part to address abuse of market power through the Trade Practices Act 1974 (Cth) would leave them vulnerable to retaliation by winemakers in following NSW Government Review Group iii Review of the Wine Grapes Marketing Board vintages. 15. The Review Group agreed that, both theoretically and in practice, Riverina wine grape growers have less market power than the buyers of their produce. The Review Group further agreed that the unique combination of many small-scale growers and the dominance of a few local wineries could result in the failure of generic trade practices legislation to protect growers from unconscionable conduct. 16. The Review Group concluded that the reform process launched in 1997 should continue, but because the development of private marketing arrangements by MIA wine grape growers remains at a formative stage, it would be appropriate to provide a further adjustment period during which the Board would have only the minimum countervailing power necessary to discourage market power abuse by winemakers. It was concluded that an appropriate continuing objective of the legislation would be to provide some level of countervailing power to wine grape growers in order to facilitate the further development of private marketing arrangements. Industry service functions 17. Many submitters expressed broad support for the Board’s other major role, the provision of industry services, particularly industry promotion, research and development, and information collection and dissemination. Few submitters, however, were explicit in their reasons for this support. 18. The ‘under-investment’ form of market failure is often cited as the major reason why some services must be supplied on a regional or industry-wide basis. Under-investment occurs if a person is unable to capture sufficient benefits to make an investment personally worthwhile. Instances of under-investment might include research, where the individual cannot establish property rights to the benefits, and pest control, where the benefits generated may be eroded by the activity (or inactivity) of others. Industry-wide initiatives, funded through a compulsory levy, may therefore reduce the underinvestment problem, leading to a more efficient level of investment and giving rise to public benefits in the form of increased economic efficiency and growth. 19. The 1996 Review found that the Board’s information collection and dissemination, and research, development and extension industry service functions could be justified on under-investment grounds. The second-round Review Group therefore concentrated on the other industry service functions for which the Board sought approval in 2000, namely, indicative prices, regional promotion and industry representation. The appropriateness of imposing a compulsory levy to fund these activities was also examined. 4. Restrictions on Competition 20. The Review Group was required to identify the nature and extent of any restrictions on competition arising from the proposed powers and functions of the Board, and to assess whether any such restrictions generate net public benefits in a manner which least restricts competition. NSW Government Review Group iv Review of the Wine Grapes Marketing Board 21. The Board’s proposal is to set the parameters of grower and winemaker behaviour in a number of ways, particularly by: • • • requiring standardised payment procedures across industry participants; standardising the way in which winemaker and grower price expectations are developed; and making it mandatory for growers to invest in certain industry services through a compulsory charge. 22. With respect to the last point, two general issues were considered. First, whether the funding of industry service functions by a compulsory levy would result in a form of cross-subsidisation between industry participants, where growers who would normally make their own service arrangements are effectively forced to subsidise those who would not. Second, as National Competition Policy is concerned with the overall benefit to Australia rather than to a particular state or region, statutory arrangements that benefit one region at the expense of another should be avoided. Terms and conditions of payment 23. The Board considered the introduction of statutory powers to establish and enforce terms and conditions of payment to wine grape growers to be the most crucial area of its submission. Terms and conditions of payment and the preservation of grower anonymity in any dispute were also the dominant issues raised in the submissions to the Review Group. The Review Group therefore considered the extent of payment default by wineries in the Riverina and whether this constitutes an ‘abuse’ of market power. 24. Many growers submitted that wineries would not make payments on time unless there was the threat of the Board taking action. Some included personal accounts of dealings with late-paying wineries. Reference was commonly made to adverse flowon effects for local business and employment arising from the removal of the Board’s statutory payment powers. Some submitters also expressed concern over the possibility of wineries accepting fruit when they are technically insolvent. 25. It was apparent to the Review Group that there was general support amongst both growers and winemakers for the continuation of Board powers to set terms and conditions of payment for wine grapes other than those sold under contracts entered into prior to harvest or that extended beyond one vintage. 26. The Review Group acknowledged that statutory terms and conditions of payment are a restriction on competition, but decided that they should be viewed in light of both grower and winemaker support for statutory terms and conditions of payment applying to spot sales, the existing rights of individual growers to pursue late payments, and the freedom of dissenting wineries to source grapes from elsewhere. Winemaker support for this approach was a key factor in the Review Group reaching this conclusion. 27. Given the evidence of net public benefits arising from a default set of statutory terms and conditions of payment, the Review Group made the following recommendations: NSW Government Review Group v Review of the Wine Grapes Marketing Board 28. Recommendation 1: It is recommended that the Board retain the power, after consultation with the Riverina Winemakers Association, to set and enforce terms and conditions of payment for wine grapes, including a default interest rate applying to late payments (see, however, Recommendation 3). Any default interest rate to be applied to late payments shall be no more than one percentage point above the overdraft default rate charged by a specified bank trading in Griffith and agreed upon by the Association and the Board. The default interest rate shall be applied only to that part of the payment that is in default. 29. Recommendation 2: It is recommended that the Board be allowed to disseminate to growers information and advice in relation to wineries that have defaulted on payments for wine grapes (acknowledging, however, that the Board would not be protected in the event of an injurious falsehood claim). 30. Recommendation 3: It is recommended that wine grapes which are the subject of written sale contracts that deal specifically with the both the price to be paid (including provisions relating to bonus and quality incentives) and the terms and conditions of payment, be exempt from the Board’s statutory terms and conditions of payment (see Recommendation 1). Sale contracts that cover one vintage only and that are not signed until after 15 January will only be exempt from the Board’s statutory terms and conditions of payment at the discretion of the Board. 31. The Review Group also felt that positive action could and should be taken to encourage the use of supply contracts between MIA wine grape growers and winemakers. 32. Recommendation 4: It is recommended that the Board, in consultation with winemakers, have the functions of: • • • developing a voluntary Code of Conduct for contract negotiations between wine grape growers and winemakers; developing voluntary draft contract provisions relating to price and terms and conditions of payment for wine grapes; and promoting the establishment of private contractual arrangements between wine grape growers and winemakers. Indicative prices and display of prices at the weighbridge 33. In its submission to the NSW Government the Board proposed that the annual production of indicator prices for the various wine grape varieties and grades be formally made a function of the Board. The proposal incorporated a six-stage information collection and negotiation process leading to the publication of indicator prices. 34. The Board’s statutory pricing powers were a major issue among submitters, with more than half of all submissions specifically addressing the issue. Many growers felt that published indicator prices were the minimum protection necessary to prevent exploitation of growers by wineries, as well as to allow accurate budgeting and investment planning. Other submitters claimed that the experiment with indicator NSW Government Review Group vi Review of the Wine Grapes Marketing Board pricing during vintage 2000 was evidence of the need for a return to minimum pricing. 35. The related Board proposal of forcing winemakers to display their prices throughout harvest was based on the presumption that growers are at an information disadvantage because price boards are not displayed. Many growers expressed concern that they were not informed of the price to be paid for grapes until well after delivery. 36. The Review Group regarded the feasibility of arbitrage between the various wine grape growing regions of south-east Australia to be an important factor when considering the Board’s future pricing powers. While it is possible to transport fresh MIA grapes to other wine making regions, the transit times involved may necessitate chemical treatment of the load to prevent oxidisation and discolouration. Long distance transportation of grapes also requires a high degree of coordination between grower and winemaker, so that the grapes arrive at a suitable temperature and are crushed immediately. The Review Group found that the small scale of many MIA vineyards is not conducive to developing inter-region supply arrangements with winemakers, and it appears the scope for significant arbitrage is limited in the short term. 37. With respect to price competition between wineries, the Review Group regarded the lack of price display by wineries to be an impediment to growers selling noncontracted fruit ‘shopping around’ for the best price before delivering their grapes to a winery. The Review Group considered that the consequent lack of price competition in the market may lead to inefficient resource allocation decisions. 38. With respect to the market failure arguments presented in favour of indicative prices, the Review Group agreed that the production of indicator prices, in concert with the display of prices at the weighbridge, would help to address any information imbalance, where growers are less well informed of market conditions than winemakers at the time of harvest and sale. Accordingly, the Review Group recommended: 39. Recommendation 5: It is recommended that the Board have the power to produce and publish indicator prices as an approved industry service function, and to have the right to consult winemakers, where the latter’s involvement is voluntary. 40. Recommendation 6: It is recommended that: • each winery accepting non-contract deliveries of wine grapes be required to furnish, on request, growers or the Board with a dated price schedule that outlines their minimum price offered for each variety being accepted as well as any discounts relating to baume, MOG and any other variable that is objectively measured at the weighbridge; wineries must give at least 24 hours notice of a change to their minimum price schedule; and delivery dockets are to state the variety, baume, clean weight, MOG and any other objectively measured characteristics of the load used to adjust the minimum price. • • NSW Government Review Group vii Review of the Wine Grapes Marketing Board Industry representation 41. The Review Group determined that a distinction needs to be drawn between industry representation activity in support of the Board’s approved functions and ‘broader’ industry representation activities, such as that which is associated with membership of industry associations. It was recognised in this regard that industry representation activity in support of approved functions is an inherent aspect of performing those functions, whereas membership of an association may involve the Board supporting (through its membership fees) functions and activities which fall outside of those approved by the NSW Government. 42. Numerous submissions received by the Review Group expressed support for the representative functions of the Board, including its membership of other industry bodies. A small number of submissions were received in relation to the Board performing its approved functions by proxy through contributing to activities conducted by other bodies. The Review Group was also aware that State and Commonwealth Governments have in the past encouraged peak industry bodies to become involved with certain industry organisations and that these governments often use these organisations to communicate their own policy decisions or extension messages to wine grape growers. 43. The use of compulsory charges to fund industry representation functions is a restriction on competition because it forces growers to pay for and be affiliated with the representations made by a particular organisation, which may or may not adequately reflect a particular grower’s views. A closely related issue is that statutory authorities may only expend funds on their approved functions and it is therefore inappropriate for them to make payments for undefined purposes (such as membership subscriptions). 44. It is acknowledged that industry bodies, such as local and national grower associations, may be in a position to provide market information and other approved services to statutory authorities on a purchaser-provider basis. In these circumstances, payment of a fee-for-service would be justified. 45. Recommendation 7: It is recommended that the Board not have a broad industry representation function but, rather, its industry representation activity be constrained to be only in relation to and in support of its approved functions. Regional industry promotion 46. Imposing a compulsory charge for regional industry promotion may allow a coordinated, industry-wide, approach to promotion, which expands market opportunities that would not otherwise be realised by individual growers. This is a variation of the under-investment problem. Mandatory contributions are, however, a restriction on competition and may involve costs to growers that they would not have otherwise faced. NSW Government Review Group viii Review of the Wine Grapes Marketing Board 47. Another consideration is the national rather than state or regional focus of Competition Policy. A particular concern with regionally-focused wine grape industry promotion initiatives is that the benefits they deliver to one industry in a particular region may come at the expense of other industries in the region or the wine grape industry in other regions. Conversely, there may be an argument in favour of regional promotion where under-investment at the national level means that collective promotional action within one region may serve to raise the profile of the entire wine industry and thereby generate spill-over benefits to other regions. The Review Group considered that this latter argument may be more applicable to the promotional functions of the Board, as there appears to be considerable potential for further growth in Australian wine exports. 48. A significant number of submissions to the Review Group cited regional promotion as being an important function of the Board. Most of these comments were based on a perception that the promotion of Riverina wine increased the prices received for wine grapes by local growers and/or the quantity sold. With respect to the issue of national versus regional benefits, some submitters claimed that continuing consumer perception problems regarding Riverina wines make the MIA a special case for intervention, where misconceptions could be overcome through consumer education and regional promotion, which would in turn have spill-over benefits for the wider community. 49. The Review Group accepted that the Board’s regional promotion activity is perceived by both wine grape growers and winemakers to be delivering net benefits, and concluded that, in this case, regional industry promotion most likely yields net benefits to the local region. The Review Group was satisfied that, in light of the consistent growth in Australian wine exports, the Board’s regional promotion activity would impose negligible, if any, costs on other regions. 50. Recommendation 8: It is recommended that regional industry promotion be included as an approved function of the Board, subject to the continuing support of wine grape growers. 5. The Future Powers and Functions of the Board The Board’s future role: marketing or facilitation 51. A key issue for the Review was whether the Board should continue in its traditional role of acting on behalf of growers in the marketing of their wine grapes, or whether it should now adopt a more facilitatory role to encourage greater use of comprehensive contracts between growers and winemakers. 52. The Review Group was concerned that the existence of the Board has encouraged growers to be dependent on its marketing services to the detriment of contractual marketing arrangements with wineries, although the past behaviour of a minority of wineries has also played a part in this dependence. Consequently, the Review Group decided that the Board should be obliged to foster more efficient grower-winery relationships through: NSW Government Review Group ix Review of the Wine Grapes Marketing Board • • developing a Code of Conduct for Contract Negotiations and draft provisions for contracts between wine grape growers and wineries (Recommendation 4); and exempting grapes sold under written contracts which specifically deal with both the price to be paid and the terms and conditions of payment and which extend beyond one vintage (Recommendation 3). 53. It is envisaged that both the Code and the contract provisions would explicitly address the issues of price determination and the terms and conditions of payment. Given that contracted fruit would be exempt from the Board’s enforcement powers, this strategy is intended to, over time, guide growers away from ‘spot’ marketing of wine grapes towards comprehensive contractual arrangements with built-in price, quality and payment provisions. Such arrangements would provide both growers and wineries with enhanced price and supply certainty, while covering the full range of risks faced by growers, such as buyer default. List of approved functions 54. In light of the evidence presented during this Review, the Review Group believed retention of a statutory authority, with the powers and functions listed in Recommendation 9, to be justified under Competition Policy principles. The Review Group also supported the continuation of compulsory levies to fund these powers and functions in order to avoid under-investment in the provision of certain industry services. 55. Recommendation 9: It is recommended that the legislation constituting the Board (or its successor) authorise the compulsory collection of levies from growers, and remittance to the Board by wineries, to fund the following powers and functions: (i) setting and enforcing terms and conditions of payment for wine grapes not subject to written contracts (see Recommendations 1 and 3); (ii) developing, in consultation with winemakers, a Code of Conduct for contract negotiations between wine grape growers and winemakers, and draft contract provisions relating to price and terms and conditions of payment for wine grapes; (iii) promoting the establishment of private contractual arrangements between wine grape growers and winemakers; (iv) collection and dissemination of market and industry information, including producing and publishing indicator prices for wine grapes grown in the Board’s area of operations; (v) research, development, plant health and extension, education and training relating to wine grape production and marketing; (vi) promoting the quality and consumption of wine grapes grown in the Board’s area of operations; and (vii) industry representation and as a point of access, but only in relation to and in support of the above powers and functions. 56. Nevertheless, as these findings in large part depend on current market conditions and the assessed need to provide temporary arrangements to facilitate the transition from NSW Government Review Group x Review of the Wine Grapes Marketing Board statutory to commercial marketing arrangements, it was considered appropriate that the arrangements sunset in 2007. 57. Recommendation 10: It is recommended that the regulatory intervention in the marketing of wine grapes grown in the MIA proposed by this Review continue until 30 June 2007, with any extension being subject to a further review at that time. Legislative arrangements 58. The Review Group gave consideration to which of the existing legislative instruments would be most appropriate for providing the Board with the types of functions recommended in this report. That is, whether the Board should remain a marketing authority under the Marketing of Primary Products Act 1983 (MPP Act), or be reconstituted either under the Agricultural Industry Services Act 1998 (AIS Act) as an industry service committee, or under its own Act. 59. Having noted that the AIS Act is a more modern and flexible piece of legislation than the MPP Act, and that its provisions better reflect contemporary government policy relating to the provision of compulsory charge powers to industry groups, it was considered most appropriate for the Board to become an industry services committee. It was not clear to the Review Group, however, that all of the agreed powers and functions of the continuing Board could be accommodated under the AIS Act. 60. Recommendation 11: It is recommended that the Wine Grapes Marketing Board (or its successor) be constituted under the legislative framework that is most appropriate for providing the powers and functions recommended in this Report. NSW Government Review Group xi Review of the Wine Grapes Marketing Board 1. INTRODUCTION THE MIA WINE GRAPE INDUSTRY AND THE WINE GRAPES MARKETING BOARD 1.1 The Wine Grapes Marketing Board for the City of Griffith and the Shires of Leeton, Carrathool and Murrumbidgee (WGMB or ‘the Board’) is a statutory authority constituted under the Marketing of Primary Products Act 1983 (the MPP Act). As indicated in its title, the Board’s area of jurisdiction consists of the City of Griffith and the Shires of Leeton, Carrathool and Murrumbidgee. There are over 500 independent wine grape growers within this area which, together with winery-owned vineyards, produce in excess of 150,000 tonnes of wine grapes annually. Detailed information on Australian and MIA wine grape production is provided in Appendix D. The Board presently undertakes or funds the following activities through a compulsory levy on wine grape growers: • • • • 1.2 1.3 setting the terms and conditions of payment for winegrapes; collection and dissemination of industry information; promotion of the use, consumption or sale of Riverina wine grapes; and research, development and extension relating to producing, marketing and using wine grapes. 1.4 The Board has also traditionally carried out representative activities on behalf of Riverina wine grape growers, including maintaining membership of numerous State and national industry bodies. THE COMPETITION PRINCIPLES AGREEMENT 1.5 The Competition Principles Agreement, endorsed by all members of the Council of Australian Governments (COAG) in April 1995, commits the NSW Government to undertake a review of, and where appropriate reform, all State legislation which restricts competition by the year 2000. This deadline has recently been extended to 30 June 2002. The Agreement requires that legislation should not restrict competition unless it can be demonstrated that the benefits to the community as a whole outweigh the costs, and that the objectives of the legislation require that competition be restricted. In endorsing the agreement, governments agreed that: • • • 1.6 1.7 the objectives of legislation would be clarified; the nature of the restriction/s would be identified; the likely effects of any restriction on competition and the economy generally would be analysed; NSW Government Review Group 1 Review of the Wine Grapes Marketing Board • • • • the costs and benefits of each restriction would be assessed and balanced; alternative means for achieving the same result should be considered; any anti-competitive legislation must conform to the net public benefit principle; and retained anti-competitive legislation must be reviewed at least once every ten years to determine if it is still required. 1.8 In assessing the costs and benefits of particular legislation, COAG agreed that the following matters, where relevant, would be taken into account: • • • • • • • government legislation and policies relating to ecologically sustainable development; social welfare and equity considerations, including community service obligations; government legislation and policies relating to matters such as occupational health and safety, industrial relations and access and equity; economic and regional development, including employment and investment growth; the interests of consumers generally; or of a class of consumers; the competitiveness of Australian business; and the efficient allocation of resources. 1.9 The review of the existing and proposed powers and functions of the Wine Grapes Marketing Board was undertaken in accordance with these principles. The process that was used for each of the major issues considered by the Review Group in relation to this review is illustrated in Figure 1 overleaf. THE ‘FIRST ROUND’ COMPETITION POLICY REVIEW 1.10 A review of the Wine Grapes Marketing Board in accordance with the principles of the National Competition Policy was conducted in 1996. This ‘first-round’ review considered, among other things: • • • clarification of the Government's objectives for the Board under the relevant legislation; identification of the nature, costs and benefits of any restriction on competition of the Board's activities, and alternative means for achieving the same result, including non-legislative approaches; and principles for and against empowering any organisation to levy a compulsory charge on producers and the application of such principles to the Board. 1.11 The 1996 Review Group, apart from the Board’s representative on the Group, found that some of the Board’s activities unnecessarily restricted competition, stating in its Final Report: “…the Review Group was unable to identify any public benefits from the Board’s vesting and price setting powers, and found that these powers … are likely to have resulted in public costs, albeit unquantifiable”. NSW Government Review Group 2 Review of the Wine Grapes Marketing Board Figure 1: Review Decision Framework Identification of the objectives of the legislation. Identification of restrictions on competition from the legislation. Assessment of the costs and benefits arising from the restrictions. Do the identified restrictions on competition relate to the objectives of the legislation and do they give rise to net public benefits? Yes Would alternative legislation which imposes less restrictions on competition result in higher net public benefits? Yes or Yes Would non-legislative action achieve the same or higher net benefits? No Recommend retaining the relevant legislative power. Of the alternative options available, choose the option which yields the highest net public benefits and recommend repeal of the relevant existing legislative power. No Recommend repeal of the relevant legislative power. 1.12 Having examined the principles for and against compulsory producer levies, both generally and how they may apply to the Board, the 1996 Review Group found that: “…compulsory levies have the potential to correct a market failure whereby certain individuals free-ride on the benefits generated by others, typically those associated with research and development and promotion. The Review Group concluded that these functions undertaken by the Board generate a public benefit by overcoming under-investment in these activities”. 1.13 However, in relation to the Board’s use of its vesting power to compel all payments to be made through the Board, thus simplifying the collection of its levies, the 1996 Review Group made the following assessment: “…alternative legislative arrangements are available to enable the imposition of a compulsory levy on growers that are less restrictive on competition and therefore avoid the public costs associated with the Board using vesting for this purpose”. 1.14 As a consequence of these findings, the majority 1996 Review Group recommendations were: Recommendation 1: The NSW Government note the Review Group’s finding that the vesting and price setting powers of the Board create public costs in the form of reduced investment and innovation in the MIA wine industry, which are not exceeded NSW Government Review Group 3 Review of the Wine Grapes Marketing Board by the public benefits associated with the Board overcoming under-investment in activities such as research and promotion through the imposition of a compulsory levy. Recommendation 2: The Board’s vesting power not be continued beyond 30 November 1996. Recommendation 3: That the Board become an industry service organisation, using existing powers under the MPP Act, to fund services to growers such as negotiating indicative prices and terms and conditions of payment, and undertaking research and development and promotion. 1.15 The 1996 Review Final Report was submitted to the Minister for Agriculture in November 1996. The NSW Government subsequently made a decision to extend the Board’s vesting power to 31 July 2000, subject to three constraints that the industry proposed in the review process. Broadly, these constraints were that: (i) the Board negotiate the sale of the entire crop to third parties and not process the grapes itself or have them processed on its behalf, to ensure the Board set minimum prices which would clear the market; (ii) the Board maintain its policy of not equalising grape prices, either across growers or across wineries, to allow growers to retain the benefits of producing and delivering better quality grapes; and (iii) the Board allow growers to freely enter into long-term contracts with wineries, to foster longer term planning by wineries and grape growers. 1.16 To effect these changes, the Marketing of Primary Products Amendment (Wine Grapes Marketing Board) Act 1997 was passed. 1.17 With the Board’s vesting power on the verge of lapsing, the Board submitted a detailed proposal to the NSW Government on 20 March 2000 in relation to its powers and functions after July 2000. Assessment of whether the powers and activities contained in the Board’s proposal would create a net public benefit and achieve the desired objectives in a manner which least restricts competition, was the subject of this review. THIS REVIEW 1.18 The 2001 Review Group was chaired by NSW Agriculture (Mr Don Hayman) and comprised one representative nominated by: • • • • • the Wine Grapes Marketing Board (Mr Bruno Brombal); the MIA Winemakers’ Association (Mr David Hammond); The Cabinet Office (Mr David Bernauer/ Ms Shayleen Thompson); NSW Treasury (Mr Frank Jordan); and NSW Agriculture (Mr Scott Davenport). NSW Government Review Group 4 Review of the Wine Grapes Marketing Board 1.19 As part of the consultation process, the Review Group held meetings with the MIA Winemaker’s Association and the Board itself. A public presentation and discussion was also held in Griffith on 17 October 2000, which attracted around 300 people. 1.20 The closing date for submissions was 17 November 2000. A total of 300 submissions were received from growers, winemakers, local businesses and professionals. 1.21 The Review Group met on four occasions to consider the submissions and discuss its position on the major issues. This Report was finalised by the Review Group in October 2001 for submission to the Minister for Agriculture. STRUCTURE OF THE REPORT 1.22 This Report comprises chapters detailing the Board’s residual powers following the removal of vesting, the objectives of the Board’s proposal and any legislative provisions required to achieve them, whether such provisions might restrict competition, and a discussion of future legislative options. Where relevant, the major issues considered by the Review Group are identified along with their associated recommendations. 1.23 Throughout this Report, the previous Review and Review Group are referred to as the 1996 Review and 1996 Review Group, respectively. The ‘second-round’ Review Group is referred to as the 2001 Review or simply as the Review Group. NSW Government Review Group 5 Review of the Wine Grapes Marketing Board 2. PROPOSED POWERS AND FUNCTIONS OF THE BOARD EXISTING POWERS OF THE WINE GRAPES MARKETING BOARD 2.1 With the lapsing of vesting after 31 July 2000, the Wine Grapes Marketing Board’s powers were substantially reduced as many provisions of the Marketing of Primary Products Act, as amended, apply only to vested wine grapes1. Nevertheless, the Board has retained a number of powers and functions, as indicated in the following list: (a) the Board may direct payment and set the terms and conditions of payment, including requiring the purchaser to deduct Board charges (Schedule 5 Clause 25). This allows the Board to require payment for wine grapes to be made to itself or a nominee, and in a manner and time period specified by the Board, and to take legal proceedings to recover overdue payments; the Board must pass on to producers payments for wine grapes made to it by purchasers, less Board charges, within a reasonable time after payments for the wine grapes have been received by the Board from purchasers, and without discrimination as to time or manner of payment between producers (Schedule 5 Clause 26); the Board may employ such staff and engage such consultants as it thinks fit (Section 15); the Board may establish grades, classes or descriptions of the commodity (Section 47); the Board may deal in other primary products (Section 49); the Board may appoint any person to be an authorised agent to act as the Board's agent for the purpose of exercising specified functions of the Board (Section 50); the Board may act as agent for any person for the purpose of marketing any wine grapes which that person is entitled to sell, or (with the approval of the Minister) any other primary product which that person is entitled to sell (Section 52); the Board may, with the approval of the Minister, act as agent for any persons for the purpose of purchasing equipment, machinery, seed, fertiliser or any other article or thing for use in the production of wine grapes (Section 53); the Board may promote and encourage the use, sale or consumption of wine grapes or any other product with which the Board is associated (Section 54 (1c)); (b) (c) (d) (e) (f) (g) (h) (i) 1 The Governor retains the power to again declare wine grapes to be vested in the Board under the Act, although present Government policy makes this unlikely. NSW Government Review Group 6 Review of the Wine Grapes Marketing Board (j) the Board may carry out research and development into producing, marketing and using wine grapes (Section 54 (1d, e and f)); and the Board may publish reports, information and advice concerning the producing, marketing or use of wine grapes or any other product with which the Board is associated (Section 54 (1h)). (k) 2.2 When considering the above powers and functions, it should be noted that the Board is specifically prohibited from: • • • arranging with a producer for the delivery to it of any commodity or other primary product (Schedule 5 Clause 4); processing wine grapes or arranging for the processing of such grapes by any person on its behalf (Schedule 5 Clause 5); and fixing or negotiating a price for the sale of wine grapes (Schedule 5 Clause 6). THE WINE GRAPES MARKETING BOARD PROPOSAL 2.3 The Wine Grapes Marketing Board’s proposal lists the priorities of both growers and the MIA Winemakers Association (MIAWA), and has the support of the MIAWA. The issues in the proposal were identified and prioritised through consultative planning sessions with both winemakers and grower groups. Grower priorities include: • • • • • • • 2.4 income security; standardised fruit quality assessment procedures; increased education and training; representation of grower interests to government; promotion of the Riverina; increased research into grape growing in the Riverina; and ensuring sufficient investment in winery capacity. 2.5 Winemaker priorities cited include: • • • • • marketing orders to replace the vesting power of the Board; price negotiations based on production levels and conditions; increased fruit quality; better data to assist grower / winemaker planning; and marketing and promotion. 2.6 In its proposal, the Board stated that it was mindful of achieving a workable balance between these priorities when it developed its proposal. The Board proposed that it retain the following functions: • information collection and dissemination, including collecting and disseminating to growers production and other wine grape industry statistics, market intelligence, and weather/climate data; NSW Government Review Group 7 Review of the Wine Grapes Marketing Board • research, development and extension, including: identifying and coordinating research priorities for the MIA wine grape industry; funding, conducting and collaborating on research projects; coordinating and organising extension activities; and providing advice to growers on vineyard management and pest and disease control; industry representation, including membership or financial support of the Winegrape Growers’ Council of Australia and the NSW Wine Industry Association to represent the interests of western Riverina wine grape growers to government and contribute to these organisations’ training, research and development, information dissemination, and tourism/regional wine promotion activities; and promotion of the Riverina as a winemaking region, aimed at increasing the sales of Riverina wine. • • 2.7 Additionally, the Board proposed that it be granted the following new or enhanced powers: • terms of payment enforcement, including a move from the present ability to negotiate with late-paying winemakers on behalf of growers towards enforcement powers, including the right to litigate on grower’s behalf, charge commercial interest on outstanding payments, disqualify wineries from accepting more fruit while still owing on previous supplies, petition for the winding-up of companies and bankruptcy of individuals, and force wineries to display their prices prior to and during harvest; and statutory annual production of indicative prices, derived in conjunction with the MIAWA through a process of crop surveys, crop forecasting, public consultation and negotiation. • 2.8 The 1996 Review found the Board’s information collection and dissemination and research, development and extension activities to be in the public interest. Accordingly, the Review Group chose not to revisit those issues in this review, but rather to focus on the following major issues: • • • • industry representation; promotion of the Riverina as a winemaking region; terms of payment enforcement; and statutory annual production of indicative prices. 2.9 The Board has estimated the cost of its activities for 2000-01, as shown in Table 1. These estimates are based on a forecast tonnage (non-winery fruit) of 137,670 tonnes (obtained from the Riverina Utilisation and Pricing Survey). Forecast total income of $536,913 is based on a levy of $3.90 per tonne. NSW Government Review Group 8 Review of the Wine Grapes Marketing Board Table 1: Budget Forecast for the Proposed Functions of the Board, 2000-01 INDUSTRY FUNCTIONS Industry Information Collection, Dissemination and Communication Industry Research and Development Industry Representation Promotion Statutory Requirements Administration TOTAL BUDGET 99,000 77,000 75,000 90,000 30,000 165,913 536,913 $ $ $ $ $ $ $ NSW Government Review Group 9 Review of the Wine Grapes Marketing Board 3. OBJECTIVES OF THE PROPOSED LEGISLATION 3.1 A requirement of the Competition Principles Agreement is that the objectives of any anti-competitive legislation be clearly defined. The objectives of the legislation establishing the Wine Grapes Marketing Board were examined by the 1996 Review Group. The Board is established under the Marketing of Primary Products Act. Under this Act, marketing boards are provided with vesting and price setting powers intended to provide primary producers with ‘countervailing power’ against the purchasers of their product. The Act also contains provisions that enable compulsory levies to be imposed on growers to fund administration and industry service functions, such as promotion and research. In considering the objectives, and benefits and costs of the legislation establishing the Board, the 1996 Review Group divided its analysis on the basis of the Board’s countervailing market powers and its industry service functions. This approach was also adopted for this Review. 3.2 3.3 COUNTERVAILING POWER 3.4 The market for farm produce, like many markets, is characterised by businesses with varying degrees of market power. The provision of countervailing power to certain market participants who were perceived to be ‘weak sellers’ was in the past a traditional reaction by governments and industry to these market power differences. A more contemporary view, however, is that it is the possible abuse of market power which needs to be avoided, rather than attempting to equalise market power between market participants. In considering this issue in relation to the market for wine grapes under the Board’s jurisdiction, the majority of the 1996 Review Group concluded that continuation of the Board’s countervailing powers (vesting and price setting) could not be justified. It was thought to be more appropriate to address any abuse of market power through the Trade Practices Act 1974 (Cth) rather than through the provision of countervailing market power. It is apparent from the 1996 Review Report, that this was not a universally held view and the eventual decision by the NSW Government reflected a compromise position involving a transitional period, during which a constrained form of vesting and an associated price setting power would operate. As noted in Chapter 2, the Board also retained its power to direct and set terms and conditions of payment for wine grapes. This transitional period terminated on 31 July 2000 and the Board has not proposed that its vesting and price setting powers be extended. The Board is, however, concerned that some measures remain in place to ameliorate the so-called ‘weak seller’ position of wine grape growers. As summarised in the previous chapter, the principal countervailing measure sought by the Board in its proposal to the Government is continued statutory power to establish and enforce terms and conditions of payment. 3.5 3.6 3.7 NSW Government Review Group 10 Review of the Wine Grapes Marketing Board 3.8 The Review Group was therefore required to again determine whether the provision of countervailing power to growers via the Board is an appropriate objective of intervention by the NSW Government in the MIA wine grape industry. The need for countervailing power was a common theme in the submissions received by the Review Group. Some submitters cited the relative market power of the small number of winemakers in the MIA and the possibility of collusion between them. For instance, the Director of a local business consultancy stated: “It is essential that growers within the MIA have strong market power. Unlike in other regions, the Riverina has a few very large wineries that are able to exercise considerable market power against usually small producers.” 3.10 Similarly, numerous wine grape growers asserted that collective representation was necessary to counter the market power of winemakers, often comparing the Board’s protection to that which a trade union provides for wage earners. For example, one grower wrote: "Collectively, we have power - against the abuse of 'market powers'. This is why we need our WGMB. Individually, we stand alone, vulnerable to forces of 'big business' and industry corruption." 3.11 A related issue is that of anonymity. Many submitters expressed concern that any attempt on their part to address abuse of market power through the Trade Practices Act 1974 (Cth) would leave them vulnerable to retaliation by winemakers in following vintages. A member of the Board’s staff wrote: "I have spoken to growers who have complaints about their wineries but refuse to leave their name in case the winery finds out and won't take their grapes in the coming vintage. When the winery was informed of the complaint they asked who made the complaint because they might find it difficult to deliver their fruit in the coming vintage. Is it any wonder that growers are afraid to go directly to the winery? The Board is their answer. We go to the winery on behalf of the grower and raise their concerns for them and they can remain anonymous." 3.12 The Board’s solicitor also wrote: “In the last two vintages the growers exclusively had the right to take action [on defaulting wineries]. Yet to my knowledge no grower has availed themselves of this right. Growers who were aware of their rights to take direct action would refuse to do so for fear of future vintages being refused. Such fears were not unfounded as individual wineries had indicated privately to growers and to the Board that growers who did so would be looking at having to take their fruit elsewhere regardless of whether they had a long term contract or not. What was of more concern to growers was that even if the winery was forced to honour their contract the fruit would be rejected at the delivery time for capricious reasons which because of the nature of the produce would be difficult to disprove.” 3.9 NSW Government Review Group 11 Review of the Wine Grapes Marketing Board Discussion 3.13 The Review Group agreed that, both theoretically and in practice, Riverina wine grape growers have less market power than the buyers of their produce. The Review Group further agreed that the unique combination of many small-scale growers and the dominance of a few local wineries could result in the failure of generic trade practices legislation to protect growers from unconscionable conduct. 3.14 For more than 60 years, i.e., since the establishment of the Board in 1933 until the partial deregulation that occurred in 1997, wine grape growers in the MIA had been able to rely on the Board to market their product, to guarantee minimum prices and to seek surety of payment. It is understandable, therefore, that there was minimal development of private marketing arrangements. 3.15 The majority view of the 1996 Review Group was that a case could not be made that there was greater incidence of market power abuse by winemakers in the MIA relative to other sectors of the economy and that, therefore, countervailing power should not be provided to wine grape growers. The temporary, constrained vesting arrangements that were introduced in 1997 reflected this conclusion, but also the need for a transitional period to provide growers with some ‘breathing space’ while they developed independent marketing skills and arrangements. Exempting grapes sold under longterm contracts from the Board’s constrained vesting powers, which was meant to encourage increased use of such contracts, was an important element of the 1997 reforms. 3.16 There was no evidence presented to the 2001 Review to challenge the findings of the 1996 Review in relation to the need for the countervailing powers of vesting and price setting. It was hence concluded that the reform process launched in 1997 should continue. It was noted, however, that the development of private marketing arrangements by MIA wine grape growers remains at a formative stage. The Review Group considered, therefore, that it would be appropriate to provide a further adjustment period during which the Board would have only the minimum countervailing power necessary to discourage market power abuse by winemakers, but importantly, to provide it in a way that would further encourage a shift to contractual arrangements and encourage positive relationships between growers and winemakers. It was concluded that an appropriate continuing objective of the legislation would be to provide some level of countervailing power to wine grape growers as a measure to facilitate the further development of private marketing arrangements. 3.17 This approach is consistent with the public policy objectives underpinning the regulatory changes initiated as a consequence of the 1996 Review. 3.18 In this regard, it was acknowledged that the Board has not requested extension of vesting or price setting powers, the major forms of countervailing power it has traditionally had. This is despite the unopposed support expressed for a motion calling for the reinstatement of the Board’s former minimum pricing powers without vesting, at a meeting of around 300 growers on 17 October 2000. The Board has, however, requested retention of the remaining countervailing power, that being the right to set terms and conditions of payment for wine grapes. As discussed in Chapter 4, the NSW Government Review Group 12 Review of the Wine Grapes Marketing Board Review Group gave detailed consideration to whether or not this would be an appropriate power for the Board to retain. INDUSTRY SERVICE FUNCTIONS 3.19 The other broad role of the Board considered by the Review Group was the delivery of industry service functions. 3.20 Many submitters expressed broad support for the Board’s traditional industry service functions, particularly industry promotion, research and development, and information collection and dissemination, though few were explicit in providing reasons for such support. A specific reference to the value of information collection and dissemination was, however, given by the Director of a local business consultancy, who wrote: "It is the aim of governments to encourage efficient water use and grapes are often cited as a suitable high value crop for efficient water use. ... It is ... essential that there is a credible agency responsible for the collection of industry information and dissemination of research information." Discussion 3.21 If a person undertaking an activity is unable to capture sufficient benefits to make the investment personally worthwhile, it is to be expected that they will not invest in the activity even though its provision may benefit the industry as a whole. In these circumstances it could be said that the market ‘fails’ to deliver a socially optimal level of investment. That is, there is ‘under-investment’, and the industry and wider community would be better-off if a higher level of investment could be achieved. 3.22 For example, individuals may be unable to fully capture benefits from investments because: • • the benefits generated are of a ‘public good’ nature and the individual cannot establish property rights to them; or the benefits generated are eroded by the activity (or inactivity) of others. 3.23 The benefits from research can be an example of a public good, where establishing property rights to the information generated may be difficult and, therefore, in the absence of industry-wide approaches to funding certain research activities, underinvestment may occur. Similarly, while pest and disease control may have very large potential benefits, the benefit from individual investment in this activity may be eroded because of the risk of continual reinfestation from neighbouring properties. Industrywide initiatives, funded through a compulsory levy, may reduce the under-investment problem, leading to a more efficient level of investment and giving rise to public benefits in the form of increased economic efficiency and growth. 3.24 The 1996 Review found that the Board’s information collection and dissemination, and research, development and extension industry service functions could be justified on under-investment grounds. The second-round Review Group therefore concentrated on the other industry service functions for which the Board sought approval in 2000, namely, indicative prices, regional promotion and industry NSW Government Review Group 13 Review of the Wine Grapes Marketing Board representation. The appropriateness of imposing a compulsory levy to fund these activities was also examined. 3.25 The Review Group felt it to be appropriate that the merits of industry service functions funded by compulsory levies be assessed on a case-by-case basis. It would then automatically follow that functions approved under NCP principles could justifiably be funded through compulsory levies. These assessments are described in the next chapter. NSW Government Review Group 14 Review of the Wine Grapes Marketing Board 4. RESTRICTIONS ON COMPETITION 4.1 The Review Group was required to identify the nature and extent of any restrictions on competition arising from the proposed powers and functions of the Wine Grapes Marketing Board, and to assess whether any such restrictions generate net public benefits in a manner which least restricts competition. ‘Restriction on competition’ can mean obvious and major impositions on trade or where the effects of restrictions are more subtle. A simple definition is that a restriction on competition occurs when the behaviour of individuals or firms is changed from that which would occur in the absence of the legislation under consideration. The guiding principle of the Review was that competition should not be restricted unless it can be demonstrated: (a) (b) that the benefits of the restriction to the community as a whole outweigh the costs; and that the objectives of the legislation can only be achieved by restricting competition. 4.2 4.3 4.4 Under Competition Policy principles, where criterion (a) and (b) are met, competition restrictions in legislation may be retained. However, where competition restricting provisions of the Act are identified, and it is determined that either the provisions do not yield a net public benefit or that the same objective could be achieved without restricting (or by a lesser restriction on) competition, then it is necessary to recommend repeal of those provisions. The Review Group recognised that legislation which restricts competition in a particular market, but which effectively addresses instances of market failure, will result in positive outcomes for the community. Conversely, it is recognised that legislation can generate public costs where it: • • • 4.5 is ineffective or inefficient in addressing market failure problems; duplicates other legislation aimed at addressing the problem; or does not address a market failure at all. 4.6 The Board’s proposal is to set the parameters of grower and winemaker behaviour in a number of ways, particularly by: • • • requiring standardised payment procedures across industry participants; standardising the way in which winemaker and grower price expectations are developed; and making it mandatory for growers to invest in certain industry services through a compulsory charge. 4.7 With respect to the last point, two general issues were considered. First, would the funding of industry service functions by a compulsory levy result in a form of crosssubsidisation between industry participants? For example, large wine grape growers 15 NSW Government Review Group Review of the Wine Grapes Marketing Board may undertake their own market research and therefore may not require the same marketing information as small growers. If this was the case, the provision of market intelligence to all industry participants could be likened to a form of crosssubsidisation, where those growers who would have sought their own information in the absence of the levy subsidise those growers who would not. In effect, an area of competitive advantage among industry participants may be lost. 4.8 The second issue was the scale on which industry service functions are provided. As National Competition Policy is concerned with the overall benefit to Australia rather than to a particular state or region, statutory arrangements that benefit one region at the expense of another must be avoided. An issue in this regard would be whether regional industry promotion results in an overall increase in the demand for wine grapes, or whether it simply results in the winegrape industry in one region gaining market share at the expense of other industries or regions. The public benefits and costs associated with specific competition restricting Board functions are considered in the following sections. 4.9 TERMS AND CONDITIONS OF PAYMENT 4.10 The Board has requested the introduction of statutory powers to establish and enforce terms and conditions of payment to wine grape growers. The Board’s proposal, later clarified by a separate submission to the Review Group, suggested that the Board should have: • • • • • • the discretion to enforce, through litigation, terms of payment as if it were the principal creditor; the discretion to impose interest charges on late payments at one percentage point higher than the default interest rate charged by trading banks on unsecured overdraft accounts; the discretion to refuse the right of a winery to accept fruit unless payment has been made for all fruit supplied during the previous vintage; the right, on behalf of growers, to take security in the form of a floating charge over the business assets of the purchaser; the right, on behalf of growers, to petition for the winding up or liquidation of a company under the Corporations Law; and the right, on behalf of growers, to petition for the bankruptcy of individuals. 4.11 The importance of statutory terms and conditions of payment was highlighted by the Board’s submission to the Review Group: “This area stands as the most crucial of the entire submission. Growers and winemakers share the same concerns – there must be a mechanism that encourages all wineries to pay growers within a prescribed schedule, and ensures that wineries don’t enjoy a competitive advantage over others through abusing payment terms.” 4.12 The need for the Board to set terms and conditions of payment and the preservation of grower anonymity in any dispute were the dominant issues raised in the NSW Government Review Group 16 Review of the Wine Grapes Marketing Board submissions to the Review Group. Around 90 per cent of all submissions raised concern over the potential loss of statutory Board power over terms and conditions of payment. 4.13 The Review Group therefore considered the extent of payment default by wineries in the Riverina and whether this constitutes an ‘abuse’ of market power. The Board’s submission cited numerous recent instances of wineries varying the number of payments (despite the Board’s existing power in this regard), breaching payment terms and making late payments. These recent digressions from the Board’s stipulated terms and conditions of payment involved seven wineries. 4.14 Many growers submitted that wineries would not make payments on time unless there was the threat of the Board taking action. Some included personal accounts of dealings with late-paying wineries. For example, a grower wrote: “We have already seen wineries try to vary the current terms of payment, and without the Board growers would still be waiting for these grape payments. The Board has negotiated with these wineries to ensure that the payments are made when due, not at their discretion, something that an individual grower would have great difficulty doing, especially without running the risk of jeopardising future deliveries. If the Board was not there to act on our behalf who would stop the other wineries following suit when they see others getting away with it?” 4.15 Reference was also commonly made to adverse flow-on effects for local business and employment arising from the removal of the Board’s statutory payment powers. 4.16 Some submitters also expressed concern over the possibility of wineries accepting fruit when they are technically insolvent. Numerous references were made to the demise of Wilton Estate Wines and the consequent financial problems experienced by the growers who had supplied that winery. These concerns appeared to be at least partially responsible for the Board’s proposal to have power to take security over wineries’ assets on behalf of growers and to disallow wineries in default of payment from accepting more fruit. Discussion and Recommendations 4.17 It was apparent to the Review Group that there was general ‘in principle’ support amongst both growers and winemakers for continuation of the Board’s current powers to set terms and conditions of payment for wine grapes. However, while there was agreement across the industry for ‘default’ terms and conditions of payment, there was also support for growers and winemakers who would prefer a different set of payment terms and conditions to those set by the Board to be free to establish alternative arrangements. 4.18 The majority view of the 1996 Review Group, and the findings of a number of other Competition Policy reviews of agricultural legislation in NSW, have been to the effect that statutory terms and conditions of payment are not justified. Such a position has, however, related to the imposition of terms and conditions of payment on all sales, rather than just non-contract sales. NSW Government Review Group 17 Review of the Wine Grapes Marketing Board 4.19 Despite the prominence given to the issue in the second-round review, few submissions addressed why the Riverina was in need of statutory terms and conditions of payment when other regions appear to prosper without them. Some submissions argued broadly that growers in the Riverina needed countervailing power given the concentration of grape purchasing by just a small number of wineries operating in the region. As discussed in Chapter 3, statutory terms and conditions of payment and associated enforcement powers are countervailing powers. 4.20 Dr Bill Pritchard, in his commissioned appendix to the Board’s submission to the Review Group, asserted that the payment arrangements in other regions were not relevant for this review, and added: “The MIA has a different social history to other wine growing regions. It has developed mechanisms that suit its needs, and to which industry participants feel comfortable. These mechanisms may restrict competition, but net public benefits are generated from doing so. Statutory terms and conditions of payment represent a regionally specific articulation of grower-winery relationships that are distinctive, efficient, and equitable. As discussed earlier, in recent years social scientists from across many disciplines have taken closer notice of the role of social knowledge and regional cohesion as drivers of economic efficiency and development. It would be entirely inappropriate for the Review Team to dismiss the benefits of statutory provisions on terms and conditions of payment in the MIA, on the grounds that a different wine-growing region (with a different history) has a different set of institutional relationships.” 4.21 The Review Group acknowledged that statutory terms and conditions of payment are a restriction on competition, but decided that they should be viewed in light of the following: (a) both growers and wineries support the Board’s power to set and enforce terms and conditions of payment for the spot wine grape market and, therefore, any efficiency cost from the arrangement are perceived by those affected to be more than offset by benefits; the Board’s existing and proposed powers to pursue late payments are no greater than those available to individual growers alone, but the Board’s greater resources provide additional countervailing power to growers in their relationship with winemakers; and the potential efficiency costs are limited because the power of the Board to set payment terms and conditions that are advantageous to a particular section of the industry is constrained because if wineries are not happy with the arrangement, they are free to source grapes from their own vineyards and other regions. (b) (c) 4.22 Given the evidence presented to it, the Review Group found that establishment of a default set of statutory terms and conditions of payment would yield net public benefits. Winemaker support for this approach was a key factor in reaching this conclusion. The Review Group therefore makes the following recommendation: NSW Government Review Group 18 Review of the Wine Grapes Marketing Board 4.23 Recommendation 1: It is recommended that the Board retain the power, after consultation with the Riverina Winemakers Association, to set and enforce the terms and conditions of payment for wine grapes, including a default interest rate applying to late payments (see, however, Recommendation 3). Any default interest rate to be applied to late payments shall be no more than one percentage point above the overdraft default rate charged by a specified bank trading in Griffith and agreed upon by the Association and the Board. The default interest rate shall be applied only to that part of the payment that is in default. 4.24 The Review Group was not prepared to recommend that the Board be given the power to disqualify wineries from accepting fruit or the right to take security over the business assets of wineries (as described in paragraph 4.10). However, the Review Group did find that information relating to a winery’s reliability of payment would aid growers’ supply decisions. 4.25 Recommendation 2: It is recommended that the Board be allowed to disseminate to growers information and advice in relation to wineries that have defaulted on payments for wine grapes (acknowledging, however, that the Board would not be protected in the event of an injurious falsehood claim). 4.26 With respect to exemptions from the Board’s terms and conditions of payment for wine grapes, the Review Group unanimously agreed that wine grapes subject to a written contract that explicitly addresses price and terms and conditions of payment, should be exempt. It was further agreed, however, that to deter the potential for short-term abuse of market power in the use of contracts, sale contracts that cover one vintage only and that are not signed before harvest, will not be exempt, except at the discretion of the Board. The agreed date for signature of contracts was 15 January. 4.27 Recommendation 3: It is recommended that wine grapes that are the subject of written sale contracts that deal specifically with the both the price to be paid (including provisions relating to bonus and quality incentives) and the terms and conditions of payment, be exempt from the Board’s statutory terms and conditions of payment (see Recommendation 1). Sale contracts that cover one vintage only and that are not signed until after 15 January will only be exempt from the Board’s statutory terms and conditions of payment at the discretion of the Board. 4.28 The Review Group also felt that positive action could and should be taken to encourage the use of written contracts between MIA wine grape growers and winemakers. It was considered in this regard that appropriate functions of the Board would be to, in consultation with winemakers: • • • develop a Code of Conduct for Contract Negotiations; develop draft contract provisions relating to price and terms and conditions of payment; and promote the establishment of private contractual arrangements between wine grape growers and winemakers. 4.29 Recommendation 4: It is recommended that the Board, in consultation with winemakers, have the functions of: NSW Government Review Group 19 Review of the Wine Grapes Marketing Board • • • developing a voluntary Code of Conduct for contract negotiations between wine grape growers and winemakers; developing voluntary draft contract provisions relating to price and terms and conditions of payment for wine grapes; and promoting the establishment of private contractual arrangements between wine grape growers and winemakers. INDICATIVE PRICES AND DISPLAY OF PRICES AT THE WEIGHBRIDGE 4.30 Prior to the lapsing of vesting in July 2000, the Board moved away from setting minimum prices and introduced a system of indicator prices for vintage 2000. In its submission to the NSW Government the Board proposed that the annual production of indicator prices for the various wine grape varieties and grades be formally made a function of the Board. 4.31 The proposal incorporates a six stage negotiation process leading to the publication of indicator prices as follows: collection of the Riverina Winegrape Prices and Utilisation Survey (existing) to determine the quantity and prices paid by wineries within the Board’s jurisdiction during the last harvest and elicit winery projections of likely regional supply and demand over the next four years; (ii) attendance at the National Winegrape Outlook Conference (existing) to obtain national supply and demand projections, particularly for the Riverina, Riverland (SA) and the Murray Valley (Vic/NSW); (iii) forecasting of the coming vintage by an external organisation; (iv) public presentation of the information gathered in stages one to three in early January each year by the Board and the MIA Winemakers Association; (v) negotiation between the Board and the MIA Winemakers Association under an independent Chairman to determine indicative prices. An arbitration mechanism could apply in case of dispute; and (vi) public presentation of recommended indicative prices by the Board and the MIA Winemakers Association in mid January each year, followed by publication of indicative prices. 4.32 The Board’s statutory pricing powers were a major issue among submitters, with more than half of all submissions specifically addressing the issue. Many growers felt that published indicator prices were the minimum necessary protection required to prevent exploitation of growers by wineries, as well as to allow accurate budgeting and investment planning. For example, three growers wrote: “[Indicator pricing] is needed as a basis to commence negotiation with the winery. Otherwise they will use their market power to dictate the price I will receive for my grapes. Minimum prices would be good, but I would like the winery to reward me for the effort I put into the growing of my grapes and reward justly for the quality. Why is it that other regions similar to this one are receiving prices higher than us?” (i) NSW Government Review Group 20 Review of the Wine Grapes Marketing Board “I believe that the wineries this vintage colluded in their pricing after the Board set indicator prices. We need a minimum price so that I can get a just price for my product.” “Although indicator pricing provides some protection for farmers, I would like to see the Board given back its powers of setting minimum prices. This is important for farmers as it allows us to budget income levels so that we know how much we can apply to investment, to achieve more efficient practices.” 4.33 The price exploitation issue received winemaker support from the Managing Director of a local grower/winemaker, who submitted: “The bulk market has been corrupted by the undercutting of several of the larger winemakers in this region. This activity erodes the market price paid to growers and creates a problem in the selling of wine into the metropolitan markets. The Board should be able to undertake some price setting activity to prevent the winemakers from pulling down the market which ultimately degrades this region and the value of wine made in this region.” 4.34 Other submitters claimed that the experiment with indicator pricing during vintage 2000 was evidence of the need for a return to minimum pricing. For example, a grower Board member, wrote: “The WGMB's historical role in setting 'market prices' and more recently 'minimum prices' has not been a totally effective tool in addressing market failure in the MIA. The 2000 crop prices however, are a good indication of what happens in this area when minimal influences or constraints are withdrawn. The WGMB's experiment of 'Indicator Prices' for the 2000 crop allowed a few of the larger winemakers to flex their muscle and the smaller leaderless winemakers towed the line with the result that red grape prices were between $200-$300 per tonne cheaper in this area than those in the comparable irrigated areas." 4.35 Similarly, another grower wrote: "I want the Board to retain the ability to fix prices. The wineries have always paid above the price set by the Board and now that the Board changed and went to an indicator price the wineries pulled the prices down too low. The wineries used the baume to change the way prices were set this vintage." 4.36 On the issue of whether the production of indicator prices should be funded through compulsory levies rather than by a voluntary industry association, the Board submitted: “The only impediment to an industry association being responsible for indicator prices is funding. The whole process involves expenditure of about $20,000 annually. But provision of the service every year could not be guaranteed under a system of voluntary funding. Not because the service is not wanted, but because in some years (the buoyant years) growers may be apathetic about such issues. If in just one year the system collapsed through NSW Government Review Group 21 Review of the Wine Grapes Marketing Board lack of funding, the continuity of data would be broken and recovery of the process difficult to achieve. Besides, as demonstrated at numerous grower and winemaker forums, growers and winemakers want a prices system.” 4.37 The related Board proposal of forcing winemakers to display their prices throughout harvest is also based on the presumption that growers will be at an information disadvantage if price boards are not displayed. The Board submitted: “The Board contends that the public display of prices would enhance competition between winemakers. Growers would have the option of taking their fruit elsewhere if, on arriving at the winery, the displayed price was thought to be unsuitable. The situation as it exists has growers arriving at the winery, not being informed of the price, but delivering their load anyway because going to another winery would be pointless as it, too, would not be disclosing prices. Petrol stations are forced to display prices so that motorists can elect to choose. Why should wineries be any different? The Review Group may point to contracts as a means of solving the problem. The low rate of contracts in the Riverina has already been canvassed, as has the paucity of price information in the contracts that do exist.” 4.38 Many growers also expressed concern that they were not informed of the price to be paid for grapes until well after delivery. The Review Group found that the issue of displaying prices at the weighbridge was often linked in submissions to the issue of indicator prices. For example, when referring to indicator prices, a wine grape grower wrote: “Where pricing is not set, as seen last year, farmers must supply their fruit to wineries without knowing the value of their produce. This I believe leads to anti-competitive behaviour, as wineries are no longer required to compete with each other by way of prices with farmers, as the farmers fruit is already delivered before prices are set.” 4.39 This link was also made by the Chief Executive Officer of Murrumbidgee Irrigation: “We are aware that there are instances where growers are forced to deliver their produce to wineries with no agreement on price, and no price advertised, at the time of delivery. This appears to be an unreasonable use of market power on the part of any wineries that have this practice. If indicator prices help in this respect, then unless there is some way the apparently unreasonable practice can be made to stop, the indicator prices or some similar alternative should continue.” 4.40 Similarly, a wine grape grower wrote: “Indicative pricing should be [a] power of the Board as long as wineries are forced to display their prices well in advance of vintage harvest.” NSW Government Review Group 22 Review of the Wine Grapes Marketing Board 4.41 The possibility of the negative implications of such anti-competitive behaviour affecting the wider community and other wine grape growing regions was also raised by another wine grape grower, who wrote that following the Board’s decision to move to indicator prices in 2000: “ ... almost all local winemakers immediately established the indicator prices as the maximum prices, and ... paid local growers up to $300 per tonne below prices paid for grapes in the Murray region.” “ The price differences to growers amounted to approximately $15M being lost to [the] local economy and the obvious flow-on effects throughout the community. My concern is that already we are hearing how winemakers in the Murray regions are telling growers they cannot pay significantly higher prices for grapes than their competition in the MIA and to expect the coming season’s prices to be more in line with the MIA.” Discussion and Recommendations 4.42 The Review Group regarded the feasibility of arbitrage between the various wine grape growing regions of south-east Australia to be an important factor when considering the Board’s future pricing powers. It would be expected that, should sufficient arbitrage opportunities exist, inter-regional price differences for a given grape variety and grade would be closely related to the cost of transporting grapes from one region to another. Evidence was received, however, of considerable interregional price discrepancies. 4.43 While it is possible to transport fresh MIA grapes to other wine making regions, the transit times involved may necessitate chemical treatment of the load to prevent oxidisation and discolouration. Long distance transportation of grapes also requires a high degree of coordination between grower and winemaker, so that the grapes arrive at a suitable temperature and are crushed immediately. The Review Group found that the small scale of many MIA vineyards is not conducive to developing inter-region supply arrangements with winemakers, and it appears the scope for significant arbitrage is limited in the short term. 4.44 The Board asserted during the Review that loyalty of growers to specific wineries is the principal reason that large scale arbitrage does not occur. The Board also cited higher negotiation requirements, the risk of growers losing the ability to deliver locally in the future, and the existing contracted supply of must by Riverina wineries to inter-regional wineries, as additional factors limiting arbitrage. 4.45 With respect to price competition between wineries, the Review Group regarded the lack of price display by wineries to be an impediment to growers of non-contracted fruit ‘shopping around’ for the best price before delivering their grapes to a winery. The Review Group considered that the consequent lack of price competition in the market may lead to inefficient resource allocation decisions. NSW Government Review Group 23 Review of the Wine Grapes Marketing Board 4.46 It was concluded, therefore, that the making available of the prices offered by wineries, either in the form of ‘price boards’ or price sheets available on request, while imposing some costs on wineries, had the potential to substantially improve the functioning of the market. The Review Group noted that the majority of MIA winemakers had indicated their support for this proposal. 4.47 The Review Group agreed to recommend the mandatory display of price boards or the supply of price sheets on request by wineries in the MIA, containing information on the prices offered for each variety accepted, along with the corresponding quality grade and ‘matter other than grapes’ (MOG) discounts. It was thought that the regulations relating to price boards at petrol stations might provide a relevant model for implementing this requirement. 4.48 The Board expressed a desire to go further than this but stopped short of putting forward a minority recommendation. The Board’s preferred model would require all wineries purchasing non-contracted grapes to display their prices for all varieties sought seven days prior to the commencement of harvest, with failure to comply punishable by fines. The Board felt that such a requirement would open up competition in the wine grape market and enable the Board to produce a comparative analysis of the prices offered by Riverina wineries for use by growers. 4.49 The Review Group also gave close consideration to whether the production of indicator prices as proposed by the Board would be in conflict with the Trade Practices Act 1974. Consideration of this issue was broken into two parts - the publication of indicative prices and the process by which the indicative prices are generated. 4.50 On the matter of publishing and otherwise disseminating indicative prices (or, more generically, market outlook information), it is understood that the Australian Competition and Consumer Commission (ACCC) is generally supportive of such activity. It is clearly an important means of reducing any imbalance in the level of market information held by buyers and sellers and thereby improving competition and the efficiency of markets. 4.51 With respect to the market failure arguments presented in favour of indicative prices, the Review Group agreed that the production of indicator prices, in concert with the display of prices at the weighbridge, would help to address any information imbalance, where growers are less well informed of market conditions than winemakers at the time of harvest and sale. 4.52 A subsequent question that arises under Competition Policy is whether the production of indicative prices should be funded through a compulsory charge or on a user pays basis. Given the relatively small level of funding required to undertake the activity, and the strong support from growers, the Review Group considered that the production of indicative prices should be an approved function of the Board, funded by a compulsory charge on wine grape growers. 4.53 The process proposed by the Board for generating indicative prices through a meeting of representatives of buyers and sellers, raised the question of legality from a trade practices and fair trading perspective. It could not be conclusively determined NSW Government Review Group 24 Review of the Wine Grapes Marketing Board whether the proposed process would of itself breach the Trade Practices Act 1974. Discussions between NSW Agriculture and the ACCC on this issue indicated, however, that there was a risk that subsequent market behaviour by any combination of growers and/or winemakers might be attributed to a collusive contract, agreement or understanding which developed in the course of the meeting. 4.54 Even though the NSW Government might legislate an exemption from the Trade Practices Act 1974 for the proposed indicative price discovery process, the Commonwealth Government would have the power to override the State’s action. 4.55 Notwithstanding these comments, the Review Group was of the view that any activity that brings together winemakers and/or growers in significant numbers to consider price-related issues, is a matter on which the Board should obtain its own legal advice.2 4.56 With respect to the proposal to require the Board and the MIA Winemakers' Association to hold formal price negotiations prior to harvest, the Review Group found that such a requirement would restrict competition to the extent that both growers and winemakers would be forced to participate in such a process. 4.57 Recommendation 5: It is recommended that the Board have the power to produce and publish indicator prices as an approved industry service function, and to have the right to consult winemakers, where the latter’s involvement is voluntary. 4.58 Recommendation 6: It is recommended that: • each winery accepting non-contract deliveries of wine grapes be required to furnish, on request, growers or the Board with a dated price schedule that outlines their minimum price offered for each variety being accepted as well as any discounts relating to baume, MOG and any other variable that is objectively measured at the weighbridge; wineries must give at least 24 hours notice of a change to their minimum price schedule; and delivery dockets are to state the variety, baume, clean weight, MOG and any other objectively measured characteristics of the load, used to adjust the minimum price. • • INDUSTRY REPRESENTATION 4.59 In considering the issue of industry representation, the Review Group determined that a distinction needs to be drawn between industry representation activity in support of the Board’s approved functions and ‘broader’ industry representation activities, such as that which is associated with membership of industry associations. It was recognised in this regard that industry representation activity in support of approved functions is an inherent aspect of performing those functions, whereas 2 The Review Group noted that, in the latter part of 2000, the Victorian Government amended its Agricultural Industry Development Act 1990 by deleting all reference to negotiating committees, of which the former Murray Valley Wine Grape Industry Negotiating Committee had been an example. It is understood that possible breach of the Trade Practices Act 1974 underpinned this action. NSW Government Review Group 25 Review of the Wine Grapes Marketing Board membership of an association may involve the Board supporting (through its membership fees) functions and activities which fall outside of those approved by the NSW Government. 4.60 Numerous submissions received by the Review Group expressed support for the representative functions of the Board, including its membership of other industry bodies. Most of these claimed that the Board was the ‘voice’ of growers in the MIA, but did not explicitly state whether they supported the Board’s membership of other industry bodies as an extension of the Board’s own approved functions or industry representation in some broader sense. 4.61 A small number of submissions were received in relation to the Board performing its approved functions by proxy through contributing to activities conducted by other bodies. A Board staff member wrote: “I currently am the secretary to the R&D sub-committee of the NSW Wine Industry Association and can see huge benefits that the growers receive from this body. ... If the Board was unable to continue to be a vital part of such committees due to not being able to collect a compulsory levy it would mean the growers in this region would not be represented and possibly risk the chance of not having a voice in such important issues such as phylloxera.” 4.62 The Review Group was also aware that State and Commonwealth Governments have in the past encouraged peak industry bodies to become involved with certain industry organisations, such as Plant Health Australia and the National Vine Health Steering Committee, and that these governments often use these organisations to communicate their own policy decisions or extension messages to wine grape growers. 4.63 A wine grape grower highlighted this fact when he submitted: “Although in theory it is easy to argue for voluntary levies, in reality governments and wineries need to know that when they are discussing issues concerning the industry, they are receiving true representation. Not a small minority group within the industry.” 4.64 There was also support for broader representation from another grower: “Having all growers contribute [levies] also gives the Board confidence in representing the views of all growers in many forums, giving growers a strong, united voice when debating many issues of importance to the industry and thus their livelihoods. It therefore follows that we have no objection to these levies being used by the Board to become members of industry representative organisations like the MIA Council of Horticultural Associations and the Winegrape Growers Council of Australia. Grower’s views and input are always sought and the Board’s representation of MIA growers on these and other organisations, as well as to government, are always accurate and popularly supported by growers. This representative function of the Board on behalf of growers is NSW Government Review Group 26 Review of the Wine Grapes Marketing Board much appreciated, as it is important work growers do not have the time (or indeed the skills) to perform themselves to the same standard. Growers are concerned with the successful running of their businesses and rely on the Board to undertake the lobbying work necessary to shape and secure the future of their industry.” 4.65 In its own submission to the Review Group, the Board wrote: “The Board vehemently rejects any suggestion that it wittingly would become involved in political activity, nor does it believe that organisations to which it provides financial and policy support are linked with any political activity.” 4.66 The Board’s submission contained a list of functions performed by the Winegrape Growers’ Council of Australia and the NSW Wine Industry Association - the two major recipients of financial support from the Board. The list is reproduced below: • • • • • • • • R&D extension; Education and training; Vine health, vine quality; Pest and disease management; Data Collection and collation; Natural resource management; Coordinating industry involvement in statutory bodies; and Tourism promotion and development. 4.67 The Board added: “The Board submits that most, if not all, the activities undertaken by both the WGCA and NSWWIA would be at risk of under-investment if the Board were prevented from diverting a portion of levies income to their operation.” 4.68 The Board completed the section of its submission dealing with industry representation with: “It is clear that the Review Group cannot take an all-inclusive approach to industry representation and dismiss it as a restriction on competition. There are too many elements and the real issue is: which of those can be included as Board Approved Functions? The Board contends that all qualify, but that activities and guidelines should be defined.” Discussion and Recommendations 4.69 The use of compulsory charges to fund industry representation functions is a restriction on competition because it forces growers to pay for and be affiliated with the representations made by a particular organisation, which may or may not adequately reflect a particular grower’s views. 4.70 While the 1996 Review did not give specific consideration to the appropriateness of the industry representation activities of the Board, this Review Group was aware that Competition Policy reviews of similar arrangements in other industries since that NSW Government Review Group 27 Review of the Wine Grapes Marketing Board time have been consistent in rejecting broad industry representation, as might be done by a grower association, as a function of statutory bodies. The primary issue in this regard is statutory authorities have a clearly defined and limited set of functions, whereas industry associations are not constrained in the activities they may undertake. Thus, for example, an industry body may undertake political activity, whereas most enabling legislation expressly prohibits statutory authorities from doing so. 4.71 A closely related issue is that statutory authorities may only expend funds on their approved functions and it is therefore inappropriate for them to make payments for undefined purposes (such as membership subscriptions). It is appreciated, however, that there may be circumstances where payment of a ‘token’ membership fee (eg., associate membership) would give the authority a voice and an ear at key industry forums and thereby enhance the performance of the authority. In these circumstances, payment of a small amount for membership of an industry body may be justified. 4.72 It is also acknowledged that industry bodies, such as local and national grower associations, may be in a position to provide market information and other services to statutory authorities. Where this is the case, it may be entirely appropriate for a statutory authority to purchase these services, i.e., provide funds to the industry body on a fee-for-service basis. 4.73 The Review Group was aware that these principles have already been applied by the NSW Government to the MIA Citrus Fruit Promotion Marketing Committee and the Murray Valley (NSW) Wine Grape Industry Development Committee, and are currently being implemented in relation to the Murray Valley Citrus Marketing Board. It was considered therefore that the regulatory underpinning and functions of the Wine Grapes Marketing Board should also be required to reflect these principles and, hence, the recommendations of the Review Group were developed in that context. 4.74 Recommendation 7: It is recommended that the Board not have a broad industry representation function but, rather, its industry representation activity be constrained to be only in relation to and in support of its approved functions. 4.75 The recommended list of approved functions is provided in Recommendation 9 at paragraph 5.10. Giving such a list statutory status would assist the Board in determining whether potential projects fall within an approved function area and growers in proposing or challenging activities of the Board. REGIONAL INDUSTRY PROMOTION 4.76 Imposing a compulsory charge for regional industry promotion may allow a coordinated, industry-wide, approach to promotion, which expands market opportunities that would not otherwise be realised by individual growers. This is a variation of the under-investment problem. 4.77 Mandatory contributions are, however, a restriction on competition and may involve costs to growers that they would not have otherwise faced. For example, a grower NSW Government Review Group 28 Review of the Wine Grapes Marketing Board may prefer resources to be devoted to private marketing campaigns, or may feel that they receive little benefit from the Board’s regional promotion activity. Moreover, forcing growers to contribute to the Board’s industry promotion activities raises the growers’ production costs and may therefore limit their capacity to undertake other activities. 4.78 Another consideration in relation to regional promotion is the nature of the public interest test for Competition Policy purposes, which has a national rather than state or regional focus. A particular concern with regionally-focused wine grape industry promotion initiatives is that the benefits they deliver to one industry in a particular region may come at the expense of other industries in the region or the wine grape industry in other regions. 4.79 Conversely, there may be an argument in favour of regional promotion where there is under-investment at the national level. For instance, collective promotional action within one region may serve to raise the profile of the entire wine industry and thereby generate spill-over benefits to other regions. This would be particularly the case in an under-supplied market, where all regions can expand production rather than simply competing for shares of a static or declining national or international market. 4.80 The Review group considered that this latter argument may be more applicable to the promotional functions of the Board, as there appears to be considerable potential for further growth in Australian wine exports. 4.81 A significant number of submissions to the Review Group cited regional promotion as being an important function of the Board. Most of these comments were based on a perception that the promotion of Riverina wine increased the prices received for wine grapes by local growers and/or the quantity sold. For example, one wine grape grower wrote: “I want the Board to fund promotion of this region so that we can get more money for our grapes.” 4.82 In its submission to the Review Group, the Board pointed out that no grower dissatisfaction with its funding of regional promotion has been recorded, despite numerous recent opportunities for growers to do so, and claimed that this implies growers are happy for these activities to continue. 4.83 With respect to the issue of national versus regional benefits, some submitters claimed that continuing consumer perception problems with wines originating in the Riverina make a special case for intervention. For instance, a wine grape grower submitted: “Our wine goes to many other regions to be relabelled; it is because this region is not promoted well enough that our winemakers send the grape away.” 4.84 The synergy between tourism and consumer perceptions of wine quality was cited by numerous submitters, where wine industries based in high profile regions like the NSW Government Review Group 29 Review of the Wine Grapes Marketing Board Hunter Valley also benefit from closer geographic proximity to large cities, and consequently, a stronger tourism sector. It was asserted that consumer misconceptions of MIA wine quality could be overcome through consumer education and regional promotion, which would have spill-over benefits for the wider community. For example, one grower wrote: “The Riverina is an isolated region from all major capital cities; without a strong promotional drive using compulsory levies, the awareness of this area would be compromised. We need the growing demand of our products for the growth of the area, which in turn provides employment growth and a strong viable winegrowing industry.” 4.85 Similarly, another grower submitted: “We have had an image problem in the past, but due to a concerted effort by the WGMB, we have promoted ourselves as a genuine wine district. I support this issue strongly and actually urge the effort to be expanded – not reduced. Promotion is the key to success and this in turn will help other industries as well.” 4.86 In supporting its promotion activity, the Board wrote: “The Board’s main promotions thrust comes from its association with the Winemakers’ of the Riverina Promotions Committee (WRPC). The Board assists with its funding, and provides a delegate to all meetings of the group. The WRPC hosts visits to the region of wine and food journalists, coordinates a regional presence at Wine Australia (the largest wine exhibition in the Southern Hemisphere), has devised and implemented marketing and promotions strategy for botrytis and Semillon wines, and participates in regional tourism promotions such as Taste of the Riverina. 4.87 In response to the possibility that other industries or regions might suffer as a result of compulsorily funded promotion of the Riverina wine industry, the Board submitted: “First, the Board cannot perceive there ever being an instance where other industries in the Riverina may be disadvantaged through the Board supporting wine industry promotion. The reverse would be the case. ... Regarding the winegrape industry in other regions and the impact of the Board contributing to regional promotion: the Riverina region, located seven hours from Sydney and five hours from Melbourne, has to work harder to raise profile. Nor does the Riverina benefit from government-funded tourism promotions, such as those highlighted in Appendix B [print promotions featuring the Canberra and Yarra Valley wine industries run by public tourism agencies]. It could be argued that the Riverina is placed at a competitive disadvantage by such promotions. It is highly unlikely that any government-funded tourism NSW Government Review Group 30 Review of the Wine Grapes Marketing Board advertising will feature the Riverina wine industry in the same way as these advertisements, because of the region’s remoteness from major population centres. ... The conclusion is that the Riverina has to devote more time, effort and money to promoting its wine industry. Any success it has adds to the popularity of Riverina wine, which results in additional sales and more income for local wineries. They, in turn, have greater capacity to expand and employ more people. The flow-on benefits are obvious, and surely satisfy the Net Public Benefits requirement of National Competition Policy.” Discussion and Recommendations 4.88 In light of the evidence, the Review Group accepted that the Board’s regional promotion activity is widely supported by wine grape growers, and is thus perceived by them to be delivering net benefits. Given that winemakers also support the Board’s continued involvement in these activities, it was concluded that, in this case, regional industry promotion most likely yields net benefits to the local region. 4.89 Less clear was whether such promotion yields a net public benefit nationally. Given, however, the consistent growth in Australian wine exports, the Review Group was satisfied that the Board’s regional promotion activity would impose negligible, if any, costs on other regions. It follows that, in the view of the Review Group, under current market conditions, regional industry promotion by the Board has the potential to deliver net benefits not only to the local economy, but also nationally. 4.90 Recommendation 8: It is recommended that regional industry promotion be included as an approved function of the Board, subject to the continuing support of wine grape growers. NSW Government Review Group 31 Review of the Wine Grapes Marketing Board 5. THE FUTURE POWERS AND FUNCTIONS OF THE BOARD THE BOARD’S FUTURE ROLE: MARKETING OR FACILITATION? 5.1 A key issue for the Review was whether the Board should continue in its traditional role of acting on behalf of growers in the marketing of their wine grapes, or whether it should now adopt a more facilitatory role to encourage greater use of comprehensive contracts between growers and winemakers. As noted in Chapter 3, the Review Group was concerned that the existence of the Board has encouraged growers to be dependent on its marketing services and enforcement powers to the detriment of the development of innovative and efficient direct marketing arrangements with wineries. However, the Review Group considered that the past behaviour of a minority of wineries has also played a part in this dependence. Consequently, the Review Group’s recommendations relating to the future powers and functions of the Board have been made with a view to enabling the Board to encourage growers to progressively enter into soundly based commercial arrangements with wineries. This approach is consistent with the thrust of the policy decisions implemented in the Marketing of Primary Products Amendment (Wine Grapes Marketing Board) Act 1997. To this end, the Review Group decided that the Board should be obliged to foster more efficient grower-winery relationships through: • 5.2 5.3 5.4 • developing a Code of Conduct for Contract Negotiations and draft provisions for contracts between wine grape growers and wineries (Recommendation 4); and exempting grapes sold under written contracts which extend for more than one vintage specifically deal with both the price to be paid and the terms and conditions of payment (Recommendation 3). 5.5 It is envisaged that both the Code and the contract provisions would explicitly address the issues of price determination and the terms and conditions of payment. Given that contracted fruit would be exempt from the Board’s enforcement powers, this strategy is intended to, over time, guide growers away from ‘spot’ marketing of wine grapes towards comprehensive contractual arrangements with built-in price, quality and payment provisions. The Review Group deemed the Board to have sufficient standing in the community to persuade growers to gradually embrace more efficient marketing arrangements for their produce and thereby reduce growers’ reliance on statutory intervention. Such arrangements would provide both growers and wineries with price and supply certainty, while covering the full range of risks faced by growers, such as buyer default. 5.6 NSW Government Review Group 32 Review of the Wine Grapes Marketing Board LIST OF APPROVED FUNCTIONS 5.7 The following functions were deemed to satisfy Competition Policy principles in the 1996 Review of the Board and, therefore, were a priori accepted by this Review as functions that should continue to be provided and funded through compulsory grower levies: (i) (ii) 5.8 information collection and dissemination; and research, development and extension. In light of the evidence presented during this Review, the Review Group believed retention of a statutory authority, with the following powers and functions, would be justified under Competition Policy principles: Countervailing Powers (i) Setting and enforcing terms and conditions of payment for wine grapes not subject to written contracts. Industry Service Functions (ii) Collection and dissemination of market and industry information, including reviewing contemporary contract provisions and the production and publishing of indicator prices for wine grapes grown in the Board’s area of operations. (iii) Research, development, extension, education and training relating to wine grape production, plant health and marketing. (iv) Promoting the quality and consumption of wine grapes grown in the Board’s area of operations. (v) Developing, in consultation with winemakers, a Code of Conduct for contract negotiations between wine grape growers and winemakers, and draft contract provisions relating to price and terms and conditions of payment for wine grapes. (vi) Promoting the establishment of private contractual arrangements between wine grape growers and winemakers. 5.9 It should be noted that the Board’s power to collect compulsory levies to fund its approved functions was supported during the 1996 Review. That Review concluded that there was a risk that individuals may be able to “free ride” on the positive spillovers associated with the Board’s activities in the absence of a compulsory levy. Accordingly, the present Review Group supports the continuation of compulsory levies to fund the powers and functions listed in Recommendation 9. 5.10 Recommendation 9: It is recommended that the legislation constituting the Board (or its successor) authorise the compulsory collection of levies from growers, and remittance to the Board by wineries, to fund the following powers and functions: (i) (ii) setting and enforcing terms and conditions of payment for wine grapes not subject to written contracts (see Recommendations 1 and 3); developing, in consultation with winemakers, a Code of Conduct for contract negotiations between wine grape growers and winemakers, and NSW Government Review Group 33 Review of the Wine Grapes Marketing Board draft contract provisions relating to price and terms and conditions of payment for wine grapes; promoting the establishment of private contractual arrangements between wine grape growers and winemakers; collection and dissemination of market and industry information, including producing and publishing indicator prices for wine grapes grown in the Board’s area of operations; research, development, extension, education and training relating to wine grape production, plant health and marketing; promoting the quality and consumption of wine grapes grown in the Board’s area of operations; and industry representation and as a point of access, but only in relation to and in support of the above powers and functions. (iii) (iv) (v) (vi) (vii) 5.11 Nevertheless, the findings of the Review Group in large part depended on current market conditions and the assessed need to provide temporary arrangements to facilitate the transition from statutory to commercial marketing arrangements. It was considered appropriate, therefore, that continuation of the recommended regulation for more than six harvests be subject to a further review. 5.12 Recommendation 10: It is recommended that the recommended regulatory intervention in the marketing of wine grapes grown in the MIA continue until 30 June 2007, with any extension being subject to a further review at that time. LEGISLATIVE ARRANGEMENTS 5.13 The existing legislative instruments in NSW that provide for the types of functions recommended for the Board in this report include the Marketing of Primary Products Act 1983 (the MPP Act), under which the Board is currently constituted, and the Agricultural Industry Services Act 1998 (the AIS Act). 5.14 The Review Group therefore gave consideration to whether the Board should remain a marketing authority under the MPP Act, or be reconstituted either under the AIS Act as an industry service committee or under its own Act. 5.15 It was noted, in this regard, that the AIS Act is a much more modern and flexible piece of legislation than the MPP Act and that its provisions better reflect contemporary government policy relating to the provision of compulsory charge powers to industry groups. It was concluded, therefore, that provided the recommended powers and functions of the Board could be provided under the AIS Act, the preferred option would be to constitute under that legislation. The Review Group was not certain, however, that the recommended powers and functions of the Board could be accommodated under the AIS Act. 5.16 Recommendation 11: It is recommended that the Wine Grapes Marketing Board (or its successor) be constituted under the legislative framework that is most appropriate for providing the powers and functions recommended in this Report. NSW Government Review Group 34 Review of the Wine Grapes Marketing Board 6. LIST OF RECOMMENDATIONS Recommendation 1: It is recommended that the Board retain the power, after consultation with the Riverina Winemakers Association, to set and enforce terms and conditions of payment for wine grapes, including a default interest rate applying to late payments (see, however, Recommendation 3). Any default interest rate to be applied to late payments shall be no more than one percentage point above the overdraft default rate charged by a specified bank trading in Griffith and agreed upon by the Association and the Board. The default interest rate shall be applied only to that part of the payment that is in default. Recommendation 2: It is recommended that the Board be allowed to disseminate to growers information and advice in relation to wineries that have defaulted on payments for wine grapes (acknowledging, however, that the Board would not be protected in the event of an injurious falsehood claim). Recommendation 3: It is recommended that wine grapes which are the subject of written sale contracts that deal specifically with the both the price to be paid (including provisions relating to bonus and quality incentives) and the terms and conditions of payment (see Recommendation 1), be exempt from the Board’s statutory terms and conditions of payment. Sale contracts that cover one vintage only and that are not signed until after 15 January will only be exempt from the Board’s statutory terms and conditions of payment at the discretion of the Board. Recommendation 4: It is recommended that the Board, in consultation with winemakers, have the functions of: • developing a voluntary Code of Conduct for contract negotiations between wine grape growers and winemakers; • developing voluntary draft contract provisions relating to price and terms and conditions of payment for wine grapes; and • promoting the establishment of private contractual arrangements between wine grape growers and winemakers. Recommendation 5: It is recommended that the Board have the power to produce and publish indicator prices as an approved industry service function, and to have the right to consult winemakers, where the latter’s involvement is voluntary. Recommendation 6: It is recommended that: • each winery accepting non-contract deliveries of wine grapes be required to furnish, on request, growers or the Board with a dated price schedule that outlines their minimum price offered for each variety being accepted as well as any discounts relating to baume, MOG and any other variable that is objectively measured at the weighbridge; • wineries must give at least 24 hours notice of a change to their minimum price schedule; and • delivery dockets are to state the variety, baume, clean weight, MOG and any other objectively measured characteristics of the load used to adjust the minimum price. NSW Government Review Group 35 Review of the Wine Grapes Marketing Board Recommendation 7: It is recommended that the Board not have a broad industry representation function but, rather, its industry representation activity be constrained to be only in relation to and in support of its approved functions. Recommendation 8: It is recommended that regional industry promotion be included as an approved function of the Board, subject to the continuing support of wine grape growers. Recommendation 9: It is recommended that the legislation constituting the Board (or its successor) authorise the compulsory collection of levies from growers, and remittance to the Board by wineries, to fund the following powers and functions: (i) setting and enforcing terms and conditions of payment for wine grapes not subject to written contracts (see Recommendations 1 and 3); (ii) developing, in consultation with winemakers, a Code of Conduct for contract negotiations between wine grape growers and winemakers, and draft contract provisions relating to price and terms and conditions of payment for wine grapes; (iii) promoting the establishment of private contractual arrangements between wine grape growers and winemakers; (iv) collection and dissemination of market and industry information, including producing and publishing indicator prices for wine grapes grown in the Board’s area of operations; (v) research, development, plant health and extension, education and training relating to wine grape production and marketing; (vi) promoting the quality and consumption of wine grapes grown in the Board’s area of operations; and (vii) industry representation and as a point of access, but only in relation to and in support of the above powers and functions. Recommendation 10: It is recommended that the regulatory intervention in the marketing of wine grapes grown in the MIA proposed by this Review continue until 30 June 2007, with any extension being subject to a further review at that time. Recommendation 11: It is recommended that the Wine Grapes Marketing Board (or its successor) be constituted under the legislative framework that is most appropriate for providing the powers and functions recommended in this Report. NSW Government Review Group 36 Review of the Wine Grapes Marketing Board APPENDIX A: TERMS OF REFERENCE 1. The MIA Wine Grapes Marketing Board has submitted to the NSW Government a detailed proposal (dated March 2000) as to its powers and functions post-31 July 2000, when its vesting power lapses. A review of the proposed powers and functions of the Board shall be conducted in accordance with the principles for legislation reviews set out in the Competition Principles Agreement. The guiding principle of the review is that the proposed legislation should not restrict competition unless it can be demonstrated that: (a) the benefits of the restriction to the community as a whole outweigh the costs; and (b) the objectives of the legislation can only be achieved by restricting competition. 3. The review shall assess the proposal submitted by the Board in the light of the findings of the 1996 review of the Board in relation to: (a) the objectives of the legislation as identified and clarified by that review; and (b) those elements of the proposal identified as restrictions on competition. 4. The review shall identify which elements of the Board’s proposal clearly satisfy the net public benefit test (and which can therefore a priori be justified under Competition Policy) and shall assess the remaining elements of the proposal in accordance with standard Competition Policy review provisions. That is, in respect of these elements of the proposal the review is to: (a) analyse the likely effect of any identified restriction on competition on the economy generally; (b) assess and balance the costs and benefits of the restrictions identified; and (c) consider alternative means for achieving the same result, including nonlegislative approaches. 5. When considering the matters in (4), the review should also: (a) identify any issues of market failure which need to be, or will be addressed by the proposed legislation; and (b) consider whether the effects of the proposed legislation would contravene the competitive conduct rules in Part IV of the Trade Practices Act 1974 (Cth) and/or the NSW Competition Code. 6. The review shall consider and take account of relevant regulatory schemes in other Australian jurisdictions and any recent reforms or reform proposals, including those relating to Competition Policy in those jurisdictions. The review shall consult with and take submissions from winegrape growers, winegrape processors, winemakers and other interested parties. 37 2. 7. NSW Government Review Group Review of the Wine Grapes Marketing Board 8. The Review Group shall report to the Minister for Agriculture. NSW Government Review Group 38 Review of the Wine Grapes Marketing Board APPENDIX B: SUBMISSIONS TO THE REVIEW BY ORDER OF RECEIPT No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 First Name Melissa Gavin Tom Sebastian G. Bryan K. Leo Sid Raymond George John Dale Gaetano Frances F&P Dennis Tim Sam G.R. L&B Frank Aldo Christopher Raymond Peter Anthony L&A D&A Maria John Vince Lou Adrian Antonio Joe Mick Guiseppa RJB&G Glen GN & LM Michael Frank Vince Barbara Michael Sam Antonetta Paul Harpreet Surname Mezzomo Raccanello Harmer Raciti Damini Clark Altin De Paoli Gugliemio Cucinotta Aloisi Strano McCleary Previtera Pietroboni Cirillo Ryan Doyle Alampi Peruch Gullotta Franco Saraceno Pastro Zahra Baratto Gulloni Pellizzer Surian Previtera Schirrpa Schirrpa Dal Nevo Raccanello Pastro Zucco Calabria Strano De Paoli Bavaresco De Paoli Scali Scali Iannelli Gullotta Ciccia Ciccia Ciccia Morrison Singh Position Wine grape grower Director, Josant Pty Ltd Managing Director, Yenda Producers’ Cooperative Society Wine grape grower Wine grape grower Director, Kealey Clark Pty Ltd Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Manager, Yenda Diggers Club Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Managing Director, Baratto Wines Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, D Schirrpa Pty Ltd Director, D Schirrpa Pty Ltd Director, V & LF Dal Nevo Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Town Griffith NSW Yenda NSW Yenda NSW Yoogali NSW Griffith NSW Griffith NSW Hanwood NSW Hanwood NSW Yoogali NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Hanwood NSW Yenda NSW Yenda NSW Leeton NSW Yenda NSW Leeton NSW Leeton NSW Yoogali NSW Yenda NSW Yenda NSW Hanwood NSW Griffith NSW Griffith NSW Bilbul NSW Yenda NSW Hanwood NSW Hanwood NSW Hanwood NSW Yenda NSW Yenda NSW Leeton NSW Griffith NSW Yenda NSW Yanco NSW Griffith NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW NSW Government Review Group 39 Review of the Wine Grapes Marketing Board Nat Dominic Trevor Ralph Victor Orazio George Agostino Frank Sam John Serge Gloria Peter Louis Adrian Pat Mario Giulio Robert Angelo Frank Paul Tony, Michael & Joe 75 Tony 76 Rosie 77 Brian 78 Allen 79 Ron 80 Dennis 81 Lance 82 Steven 83 Francis & Nerril 84 Joe 85 Peter 86 Wally 87 C&M 88 Tony 89 V 90 Erildo 91 Pat 92 Lui 93 Dennis 94 Joe 95 Joe 96 Peter 97 Dino 98 Anthony 99 James 100 Leno 101 Gabriele 102 J&H 103 David 104 L&GG 105 Peter 106 Bruno 107 Paul 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 Nardi Vecchie Protheroe Mallamace Nardi Cocco Nardi Cristofaro Nardi D'Ambrosio Zandona Busnello Brombal Raccanello Raccanello Zandona Sergi Cremasco Toscan Gulloni Monteleone Sergi Romeo Mandaglio Sergi Galluzzo Foggiato Zalunardo Calabria Forner Hicken Barbon Smith Borgese Cirillo Quarisa Guadagnini Galluzzo Monteleone Berton Sergi Piromalli Mengon D'Aquino Sergi Royal Ceccato Pastro Foscarini Foscarini Armanini Joeky Busnello Forner Cremasco Raccanello Belfiore Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Manager, P&S Bartter Vineyard Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Leeton NSW Leeton NSW Leeton NSW Leeton NSW Leeton NSW Yenda NSW Leeton NSW Leeton NSW Leeton NSW Yenda NSW Yenda NSW Yenda NSW Hanwood NSW Yenda NSW Yenda NSW Yenda NSW Tharbogang NSW Yoogali NSW Griffith NSW Hanwood NSW Hanwood NSW Tharbogang NSW Griffith NSW Leeton NSW Hanwood NSW Beelbangera NSW Griffith NSW Hanwood NSW Griffith NSW Griffith NSW Hanwood NSW Hanwood NSW Leeton NSW Merungle Hill NSW Leeton NSW Griffith NSW Griffith NSW Beelbangera NSW Hanwood NSW Griffith NSW Hanwood NSW Warburn NSW Griffith NSW Griffith NSW Hanwood NSW Griffith NSW Hanwood NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW NSW Government Review Group 40 Review of the Wine Grapes Marketing Board 108 Dominic 109 Frank 110 Peter 111 Pat 112 Dino 113 Joe 114 Roy 115 Tony 116 Julie 117 G, A&R 118 Patrick 119 Gary 120 John 121 Pascal 122 Mario 123 MC&MJ 124 Alfio 125 Jeremy 126 Reno 127 Gus 128 Gavan Augustus 129 Tony 130 Phillip 131 Dino 132 Manminder 133 Kevin 134 Robert 135 Mick 136 Silvano 137 Elizabeth 138 Michael 139 A&V 140 Sam 141 Tony 142 LF&RA 143 Ross 144 David 145 Mick 146 Gloris 147 Bob 148 John 149 John 150 Renzo 151 Parmjit 152 Don 153 Satvir 154 Surinder 155 Jagraj 156 Gurnam 157 Sukhjit 158 Giuliano 159 Amarjit 160 Shirley 161 Dom 162 Jasbir Singh 163 Raymond 164 PJ&V 165 Joe Executive Officer, MIA Citrus Fruit Promotion Marketing Committee Calabria Wine grape grower Tavella Wine grape grower Calabria Wine grape grower Zalunardo Wine grape grower Raccanello Wine grape grower Calabria Wine grape grower Agresta Wine grape grower Franco Wine grape grower Valeri Wine grape grower Gullotta Wine grape grower Davidson Wine grape grower D'Ambrosio Wine grape grower Guertin Wine grape grower Fattore Wine grape grower Bianchini Wine grape grower Battiato Wine grape grower Cass Manager, MIA Vine Improvement Society Mezzomo Wine grape grower Tomasella Wine grape grower Jongebloed Wine grape grower Cristofaro Wine grape grower Pietroboni Wine grape grower Salvestrin Wine grape grower Singh Wine grape grower Vitucci Wine grape grower Vitucci Wine grape grower Colpo Wine grape grower Salvestro Wine grape grower Cremasco Wine grape grower Careri Wine grape grower Belfiore Wine grape grower Agresta Wine grape grower Coslovich Farm worker Butcher Wine grape grower Vecchio Wine grape grower Vitucci Wine grape grower Careri Wine grape grower Manente Wine grape grower Henderson Wine grape grower Andriolo Farm hand Bisetto Wine grape grower Manente Wine grape grower Kaur Wine grape grower Vitucci Wine grape grower Singh Wine grape grower Kaur Wine grape grower Singh Wine grape grower Singh Wine grape grower Singh Wine grape grower Gatti Wine grape grower Singh Wine grape grower Calabria Wine grape grower Calabria Wine grape grower Kalkat Wine grape grower Bagatella Wine grape grower Conlon Wine grape grower Bagiante Wine grape grower Nardi Griffith NSW Griffith NSW Leeton NSW Hanwood NSW Yoogali NSW Yenda NSW Hanwood NSW Griffith NSW Leeton NSW Lake Wyangan NSW Leeton NSW Leeton NSW Yenda NSW Bilbul NSW Hanwood NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Leeton NSW Wamoon NSW Yenda NSW Griffith NSW Yenda NSW Yoogali NSW Hanwood NSW Hanwood NSW Hanwood NSW Yenda NSW Hanwood NSW Griffith NSW Griffith NSW Tharbogang NSW Hanwood NSW Hanwood NSW Hanwood NSW Hanwood NSW Yoogali NSW Griffith NSW Griffith NSW Lake Wyangan NSW Yoogali NSW Hanwood NSW Yoogali NSW Yenda NSW Hanwood NSW Hillston NSW Griffith NSW Hanwood NSW Griffith NSW Hanwood NSW Hanwood NSW Hanwood NSW Yoogali NSW Yenda NSW Hanwood NSW Griffith NSW NSW Government Review Group 41 Review of the Wine Grapes Marketing Board 166 Kuldip 167 S&A 168 L&S 169 Susan 170 G&S 171 Lenny 172 Marhese 173 Ron 174 Sam 175 Shane 176 Neville 177 Andy 178 Nancy 179 Miriam 180 Adrian 181 Rosanna 182 Pasqualie & Anna 183 Rudolf 184 Elio 185 Sharon 186 Michael 187 Roy E 188 Joe 189 Steven 190 Jack 191 Mick 192 Pierina 193 Roger 194 Peter 195 Giovanni 196 Giorado 197 Bruno 198 Rob 199 Perry & Rosie 200 Steven 201 David 202 Mario 203 Jasminder 204 Linda 205 Ignazio & Maria 206 Pierina 207 Peter 208 Maurice & Elda 209 Cedric & R 210 Louis 211 P & CJ 212 David 213 Lewis 214 Steven 215 John 216 Rodney 217 Maria 218 Joe 219 Nicky 220 Garry 221 John & Sharon Singh Vasta Vasta Raccanello Zordon Panarello Rosa Santalucia Panarello Piva Twigg Wood Wood Rossetto Ceccato Ceccato Bugge Panazzolo Farranato Maugeri Nehme Sainty Del Gigante Torresan Torresan Catanzariti Lazzaratto Lazzaratto Norbiato Zandona Bienzobas Reginato Berry Alpen Torresan Torresan Torresan Kaur Panazzolo Zappacosta Raccanello Raccanello Cappello Hoare Cadorin Poscoliero Fattore Quarisa Canzian Rossetto Zuccato Agresta Agresta Agresta Cimador Barzan & Kelly Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Managing Director, Yenda Fruit & Case Supply Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Chairman, Yenda Grape Growers Association Inc. Wine grape grower Wine grape grower Director, Codemo Machinery Services Wine grape grower Wine grape grower Electrician Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Bilbul NSW Beelbangera NSW Beelbangera NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Yoogali NSW Yoogali NSW Yenda NSW Yenda NSW Bilbul NSW Hanwood NSW Yenda NSW Hanwood NSW Griffith NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Bilbul NSW Yenda NSW Bilbul NSW Hillston NSW Yenda NSW Yoogali NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Yenda NSW Hanwood NSW Yenda NSW Griffith NSW Hanwood NSW Griffith NSW Yoogali NSW Yoogali NSW Hanwood NSW Hanwood NSW NSW Government Review Group 42 Review of the Wine Grapes Marketing Board 222 Livio 223 Bernard 224 Leo L 225 Mary L 226 Maryann 227 Frank 228 D & E 229 T & E 230 Dario 231 Dario 232 Dario 233 Phillip 234 Ivo & Wanda 235 Phillip 236 Cedric 237 RP & PM 238 Kerry 239 Jorge 240 Frank 241 Barbara 242 Joe 243 RJ & NC 244 Ian 245 246 Lou 247 Steven 248 Brian 249 WT, EJ & PW 250 Garry 251 Evan J 252 Dick & Etta 253 Fay 254 Brian & Anne 255 Bruce G 256 Frank 257 Albert & Tony 258 Damien 259 Giovanni 260 Frank 261 John 262 Deanne 263 Rodney 264 Catherine 265 Bruno 266 Singh 267 RF & V 268 Lance 269 Roger 270 Bruce 271 Winsome 272 Myrtle 273 Angelo 274 Virginia 275 Livio 276 P & E 277 V & G Mazzon Connellan Zandona Zandona Battistel Battistel Galluzzo Bavaresco Serafin Serafin Serafin Johns Brighenti Alvaro Hoare Director. Mazzon Systems Engineering Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Manager, Serafin Vineyards Manager, Serafin Harvesting Wine grape grower Wine grape grower Wine grape grower Solicitor Chief Executive Officer, Murrumbidgee Irrigation Dickie Wine grape grower DeGaris Industry Development Officer, WGMB Wood Wine grape grower Sergi Wine grape grower Sergi Wine grape grower Sergi Wine grape grower Snaidero Wine grape grower Oag Wine grape grower Wine Grapes Marketing Board Cremasco Wine grape grower Cremasco Wine grape grower Simpson Board employee (executive officer) Carver Wine grape grower Bugno Wine grape grower Conner Wine grape grower Busnelle Wine grape grower Maccagnan Wine grape grower Bortolin Wine grape grower Conner Wine grape grower De Rossi Wine grape grower Scarfone Wine grape grower Cerrito Wine grape grower Zirilli Wine grape grower Zirilli Wine grape grower Vitucci Wine grape grower Raccanello Wine grape grower Maguire Wine grape grower Semmler Board employee (technical assistant) Holzapfel Senior Research Viticulturalist, NSW Agriculture Bains Wine grape grower Bellato Wine grape grower Hicken Chairman, Hanwood Grapegrowers Association McGann Wine grape grower McGann Wine grape grower McGann Wine grape grower Hicken Wine grape grower Cirrillo Wine grape grower Cirrillo Wine grape grower Andrighetto Wine grape grower Zirrilli Wine grape grower Febo Wine grape grower Griffith NSW Coleambally NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Beelbangera NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Griffith NSW Leeton NSW Yenda NSW Beelbangera NSW Yenda NSW Griffith NSW Widgelli NSW Griffith NSW Whitton NSW Yanco NSW Griffith NSW Griffith NSW Yenda NSW Hanwood NSW Coleambally NSW Yenda NSW Lake Wyangan NSW Coleambally NSW Bilbul NSW Griffith NSW Griffith NSW Tharbogang NSW Tharbogang NSW Lake Wyangan NSW Yenda NSW Hanwood NSW Griffith NSW Wagga Wagga NSW Beelbangera NSW Griffith NSW Hanwood NSW Hanwood NSW Hanwood NSW Hanwood NSW Hanwood NSW Hanwood NSW Hanwood NSW Griffith NSW Griffith NSW Griffith NSW NSW Government Review Group 43 Review of the Wine Grapes Marketing Board 278 Orizio 279 John 280 Catherine 281 Laurence 282 Joseph 283 A & P 284 Florence 285 Peter 286 Luciano & Diane 287 George & Antonietta 288 Harley 289 Harley 290 Allan & Denise 291 John P 292 Len 293 Ellis 294 Julian 295 Rhett 296 Domenico 297 Alessio 298 R A 299 Rick 300 P & G Vecchio Zirrilli Merrylees Tovo Nehme Baggio Roberts Vitucci Zanotto Nardi Delves Delves Bennett Dal Broi Bertoldo Colpo Raccanello Marlowe Fattore Martinello Rombola Ceccatto Cornale Wine grape grower Wine grape grower Board employee (office manager) Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Chairman, MIA Council of Horticultural Associations Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Chief Executive Officer, Winegrape Growers Council of Australia Wine grape grower Wine grape grower Perosin & Sergi Pty Ltd (accountants) Wine grape grower Wine grape grower Griffith NSW Tharbogang NSW Carrathool NSW Griffith NSW Yenda NSW Griffith NSW Yenda NSW Griffith NSW Yoogali NSW Wamoon Via Leeton NSW Hanwood NSW Griffith NSW Griffith NSW Hanwood NSW Griffith NSW Griffith NSW Griffith NSW Beelbangera NSW Griffith NSW Griffith NSW Yoogali NSW Bilbul NSW NSW Government Review Group 44 Review of the Wine Grapes Marketing Board APPENDIX C: SUBMITTERS ALPHABETICAL ORDER No. First Name 218 Joe 217 Maria 219 Nicky 140 Sam 115 Tony 19 Sam 11 George 199 Perry & Rosie 7 K. 235 Phillip 275 Livio 148 John 101 Gabriele 163 Raymond 283 A & P 165 Joe 266 Singh 26 Peter 82 Steven 221 John & Sharon Surname Agresta Agresta Agresta Agresta Agresta Alampi Aloisi Alpen Altin Alvaro Andrighetto Andriolo Armanini Bagatella Baggio Bagiante Bains Baratto Barbon Barzan & Kelly 124 Alfio Battiato 227 Frank Battistel 226 Maryann Battistel 40 Glen Bavaresco 229 T & E Bavaresco 139 A&V Belfiore 107 Paul Belfiore 267 RF & V Bellato 290 Allan & Denise Bennett 198 Rob Berry 292 Len Bertoldo 90 Erildo Berton 123 MC&MJ Bianchini 196 Giorado Bienzobas 149 John Bisetto 84 Joe Borgese 254 Brian & Anne Bortolin 234 Ivo & Wanda Brighenti 63 Gloria Brombal 182 Pasqualie & Anna Bugge 250 Garry Bugno 252 Dick & Etta Busnelle 103 David Busnello 62 Serge Busnello 142 LF&RA Butcher 210 Louis Cadorin 161 Dom Calabria 109 Frank Calabria 37 Mick Calabria 111 Pat Calabria TO THE REVIEW BY Position Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Solicitor Wine grape grower Farm hand Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Managing Director, Baratto Wines Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, Codemo Machinery Services Wine grape grower Wine grape grower Wine grape grower Wine grape grower Town Yoogali NSW Griffith NSW Yoogali NSW Griffith NSW Griffith NSW Leeton NSW Griffith NSW Yenda NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Beelbangera NSW Hanwood NSW Hanwood NSW Hanwood NSW Yenda NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Griffith NSW Griffith NSW Yenda NSW Yenda NSW Lake Wyangan NSW Merungle Hill NSW Lake Wyangan NSW Griffith NSW Hanwood NSW Yenda NSW Hanwood NSW Yenda NSW Yenda NSW Hanwood NSW Griffith NSW Hanwood NSW Griffith NSW Griffith NSW Hanwood NSW NSW Government Review Group 45 Review of the Wine Grapes Marketing Board 79 Ron 114 Roy 160 Shirley 214 Steven 208 Maurice & Elda 138 Michael 145 Mick 249 WT, EJ & PW 125 Jeremy 191 Mick 180 Adrian 97 Dino 181 Rosanna 299 Rick 258 Damien 48 Antonetta 46 Michael 47 Sam 220 Garry 16 F & P 85 Peter 273 Angelo 274 Virginia 6 Bryan 56 Orazio 293 Ellis 135 Mick 164 PJ&V 223 Bernard 255 Bruce G 251 Evan J 300 P & G 141 Tony 137 Elizabeth 246 Lou 68 Mario 105 Peter 247 Steven 58 Agostino 129 Tony 10 Raymond 291 John P 33 Lou 120 John 60 Sam 5 G. 94 Joe 119 Gary 41 GN & LM 8 Leo 39 R J B & G 256 Frank 238 Kerry 188 Joe 288 Harley 289 Harley 237 RP & PM 18 Tim Calabria Calabria Calabria Canzian Cappello Careri Careri Carver Cass Catanzariti Ceccato Ceccato Ceccato Ceccatto Cerrito Ciccia Ciccia Ciccia Cimador Cirillo Cirillo Cirrillo Cirrillo Clark Cocco Colpo Colpo Conlon Connellan Conner Conner Cornale Coslovich Cremasco Cremasco Cremasco Cremasco Cremasco Cristofaro Cristofaro Cucinotta Dal Broi Dal Nevo D'Ambrosio D'Ambrosio Damini D'Aquino Davidson De Paoli De Paoli De Paoli De Rossi DeGaris Del Gigante Delves Delves Dickie Doyle Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Manager, MIA Vine Improvement Society Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, Kealey Clark Pty Ltd Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Farm worker Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, V & LF Dal Nevo Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Industry Development Officer, WGMB Wine grape grower Wine grape grower Chairman, MIA Council of Horticultural Associations Wine grape grower Manager, Yenda Diggers Club Griffith NSW Hanwood NSW Hanwood NSW Yenda NSW Griffith NSW Hanwood NSW Hanwood NSW Yenda NSW Yenda NSW Griffith NSW Yoogali NSW Hanwood NSW Yoogali NSW Yoogali NSW Griffith NSW Leeton NSW Leeton NSW Leeton NSW Hanwood NSW Hanwood NSW Leeton NSW Hanwood NSW Hanwood NSW Griffith NSW Yenda NSW Griffith NSW Hanwood NSW Hanwood NSW Coleambally NSW Coleambally NSW Coleambally NSW Bilbul NSW Tharbogang NSW Yenda NSW Yoogali NSW Yenda NSW Leeton NSW Wamoon NSW Yoogali NSW Hanwood NSW Hanwood NSW Yenda NSW Yenda NSW Yoogali NSW Griffith NSW Leeton NSW Leeton NSW Hanwood NSW Yanco NSW Bilbul NSW Beelbangera NSW Griffith NSW Hanwood NSW Griffith NSW Yenda NSW Yenda NSW NSW Government Review Group 46 Review of the Wine Grapes Marketing Board 184 Elio 212 David 296 Domenico 122 Mario 277 V & G 77 Brian 80 Dennis 104 L&GG 99 James 100 Leno 22 Frank 116 Julie 228 D & E 76 Rosie 88 Tony 158 Giuliano 87 C&M 121 Pascal 9 Sid 27 Anthony 70 Robert 45 Barbara 21 L & B 118 Patrick 3 Tom 147 Bob 81 Lance 268 Lance 272 Myrtle 236 Cedric 209 Cedric & R 265 Bruno 44 Vince 102 J&H 233 Phillip 128 Gavan Augustus 162 Jasbir Singh 203 Jasminder 151 Parmjit 154 Surinder 192 Pierina 193 Roger 253 Fay 263 Rodney 54 Ralph 74 Tony, Michael & Joe 146 Gloris 150 Renzo 295 Rhett 297 185 222 13 Alessio Sharon Livio Dale Farranato Fattore Fattore Fattore Febo Foggiato Forner Forner Foscarini Foscarini Franco Franco Galluzzo Galluzzo Galluzzo Gatti Guadagnini Guertin Gugliemio Gulloni Gulloni Gullotta Gullotta Gullotta Harmer Henderson Hicken Hicken Hicken Hoare Hoare Holzapfel Iannelli Joeky Johns Jongebloed Kalkat Kaur Kaur Kaur Lazzaratto Lazzaratto Maccagnan Maguire Mallamace Mandaglio Manente Manente Marlowe Martinello Maugeri Mazzon McCleary Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Managing Director, Yenda Producers’ Cooperative Society Wine grape grower Wine grape grower Chairman, Hanwood Grapegrowers Association Wine grape grower Chief Executive Officer, Murrumbidgee Irrigation Wine grape grower Senior Research Viticulturalist, NSW Agriculture Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Chief Executive Officer, Winegrape Growers Council of Australia Wine grape grower Wine grape grower Director. Mazzon Systems Engineering Wine grape grower Bilbul NSW Yenda NSW Beelbangera NSW Hanwood NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Leeton NSW Leeton NSW Beelbangera NSW Beelbangera NSW Beelbangera NSW Griffith NSW Griffith NSW Bilbul NSW Hanwood NSW Griffith NSW Hanwood NSW Leeton NSW Leeton NSW Leeton NSW Yenda NSW Griffith NSW Hanwood NSW Hanwood NSW Hanwood NSW Leeton NSW Griffith NSW Wagga Wagga NSW Leeton NSW Yenda NSW Griffith NSW Leeton NSW Yoogali NSW Hillston NSW Hanwood NSW Hanwood NSW Griffith NSW Griffith NSW Yenda NSW Hanwood NSW Leeton NSW Leeton NSW Yoogali NSW Yoogali NSW Griffith NSW Hanwood NSW Griffith NSW Yenda NSW NSW Government Review Group 47 Review of the Wine Grapes Marketing Board 270 269 271 93 280 1 126 71 89 49 108 Bruce Roger Winsome Dennis Catherine Melissa Reno Angelo V Paul Dominic McGann McGann McGann Mengon Merrylees Mezzomo Mezzomo Monteleone Monteleone Morrison Nardi Nardi Nardi Nardi Nardi Nardi Nehme Nehme Norbiato Oag Panarello Panarello Panazzolo Panazzolo Pastro Pastro Pastro Pellizzer Peruch Pietroboni Pietroboni Piromalli Piva Poscoliero Previtera Previtera Protheroe Quarisa Quarisa Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raccanello Raciti Reginato Roberts Rombola Romeo Wine grape grower Wine grape grower Wine grape grower Wine grape grower Board employee (office manager) Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Executive Officer, MIA Citrus Fruit Promotion Marketing Committee Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Managing Director, Yenda Fruit & Case Supply Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Electrician Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, Josant Pty Ltd Wine grape grower Wine grape grower Wine grape grower Wine grape grower Chairman, Yenda Grape Growers Association Inc. Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Perosin & Sergi Pty Ltd (accountants) Wine grape grower Hanwood NSW Hanwood NSW Hanwood NSW Griffith NSW Carrathool NSW Griffith NSW Griffith NSW Hanwood NSW Hanwood NSW Leeton NSW Griffith NSW Leeton NSW Leeton NSW Wamoon Via Leeton NSW Leeton NSW Leeton NSW Yenda NSW Yenda NSW Yenda NSW Yanco NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Warburn NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Leeton NSW Hanwood NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW 59 Frank 57 George 287 George & Antonietta 51 Nat 55 Victor 282 Joseph 186 Michael 194 Peter 244 Ian 171 Lenny 174 Sam 204 Linda 183 Rudolf 98 Anthony 35 Antonio 24 Christopher 28 L & A 20 G.R. 15 Frances 130 Phillip 92 Lui 175 Shane 211 P & CJ 14 Gaetano 30 Maria 53 Trevor 213 Lewis 86 Wally 34 Adrian 106 Bruno 262 Deanne 2 Gavin 113 Joe 294 Julian 65 Louis 64 Peter 207 Peter 206 Pierina 169 Susan 4 Sebastian 197 Bruno 284 Florence 298 R A 73 Paul NSW Government Review Group 48 Review of the Wine Grapes Marketing Board 172 Marhese 215 John 179 Miriam 96 Peter 17 Dennis 187 Roy E 131 Dino 136 Silvano 173 Ron 23 Aldo 43 Frank 42 Michael 257 Albert & Tony 31 John 32 Vince 264 Catherine 230 Dario 231 Dario 232 Dario 241 Barbara 72 Frank 240 Frank 95 Joe 242 Joe 67 Pat 91 Pat 75 Tony 248 Brian 159 Amarjit 156 Gurnam 50 Harpreet 155 Jagraj 166 Kuldip 132 Manminder 153 Satvir 157 Sukhjit 83 Francis & Nerril 243 RJ & NC 38 Guiseppa 12 John 29 D & A 110 Peter 127 Gus 201 David 190 Jack 202 Mario 189 Steven 200 Steven 69 Giulio 281 Laurence 176 Neville 117 G, A&R 168 L&S 167 S&A 52 Dominic 278 Orizio 143 Ross 144 David 152 Don Rosa Rossetto Rossetto Royal Ryan Sainty Salvestrin Salvestro Santalucia Saraceno Scali Scali Scarfone Schirrpa Schirrpa Semmler Serafin Serafin Serafin Sergi Sergi Sergi Sergi Sergi Sergi Sergi Sergi Simpson Singh Singh Singh Singh Singh Singh Singh Singh Smith Snaidero Strano Strano Surian Tavella Tomasella Torresan Torresan Torresan Torresan Torresan Toscan Tovo Twigg Valeri Vasta Vasta Vecchie Vecchio Vecchio Vitucci Vitucci Wine grape grower Wine grape grower Wine grape grower Manager, P&S Bartter Vineyard Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Director, D Schirrpa Pty Ltd Director, D Schirrpa Pty Ltd Board employee (technical assistant) Manager, Serafin Vineyards Manager, Serafin Harvesting Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Board employee (executive officer) Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Wine grape grower Yenda NSW Griffith NSW Griffith NSW Griffith NSW Yenda NSW Hanwood NSW Griffith NSW Hanwood NSW Yenda NSW Yoogali NSW Leeton NSW Leeton NSW Griffith NSW Hanwood NSW Hanwood NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Widgelli NSW Tharbogang NSW Griffith NSW Hanwood NSW Griffith NSW Tharbogang NSW Hanwood NSW Hanwood NSW Griffith NSW Hanwood NSW Griffith NSW Leeton NSW Hillston NSW Bilbul NSW Yenda NSW Yenda NSW Hanwood NSW Leeton NSW Whitton NSW Yenda NSW Yenda NSW Bilbul NSW Leeton NSW Griffith NSW Yenda NSW Yenda NSW Bilbul NSW Yenda NSW Bilbul NSW Griffith NSW Griffith NSW Yenda NSW Lake Wyangan NSW Beelbangera NSW Beelbangera NSW Leeton NSW Griffith NSW Hanwood NSW Hanwood NSW Yoogali NSW NSW Government Review Group 49 Review of the Wine Grapes Marketing Board 261 John 133 Kevin 285 Peter 134 Robert 245 177 Andy 239 Jorge 178 Nancy 25 Raymond 78 Allen 112 Dino 66 Adrian 195 Giovanni 61 John 224 Leo L 225 Mary L 286 Luciano & Diane 205 Ignazio & Maria 260 Frank 259 Giovanni 279 John 276 P & E 170 G&S 216 Rodney 36 Joe Vitucci Wine grape grower Vitucci Wine grape grower Vitucci Wine grape grower Vitucci Wine grape grower Wine Grapes Marketing Board Wood Wine grape grower Wood Wine grape grower Wood Wine grape grower Zahra Wine grape grower Zalunardo Wine grape grower Zalunardo Wine grape grower Zandona Wine grape grower Zandona Wine grape grower Zandona Wine grape grower Zandona Wine grape grower Zandona Wine grape grower Zanotto Wine grape grower Zappacosta Wine grape grower Zirilli Wine grape grower Zirilli Wine grape grower Zirrilli Wine grape grower Zirrilli Wine grape grower Zordon Wine grape grower Zuccato Wine grape grower Zucco Lake Wyangan NSW Yoogali NSW Griffith NSW Hanwood NSW Griffith NSW Yenda NSW Yenda NSW Yenda NSW Yenda NSW Hanwood NSW Yoogali NSW Yenda NSW Yenda NSW Yenda NSW Griffith NSW Griffith NSW Yoogali NSW Yoogali NSW Tharbogang NSW Tharbogang NSW Tharbogang NSW Griffith NSW Yenda NSW Hanwood NSW Leeton NSW NSW Government Review Group 50 Review of the Wine Grapes Marketing Board APPENDIX D: OVERVIEW OF THE MIA WINEGRAPE INDUSTRY MIA WINE GRAPE PRODUCTION There are presently around 530 independent wine grape growers within the Board’s area of jurisdiction. The MIA, including winery-owned vineyards, produces around 11 per cent of Australia’s wine grapes and comprises approximately 8 per cent of national wine grape plantings by area. The farm-gate value of the 1999 harvest was approximately $90 million. Tables 1 to 5 show the estimated wine grape production, area planted and relative prices of the major production regions of Australia in 1999-2000. While Table 3 gives a good indication of the relative areas planted to wine grapes across the major Australian growing regions, the MIA Council of Horticultural Associations maintains a local industry database from which a more accurate estimate of the wine grape plantings within the MIA can be obtained (Table 4). Table 1: State Production of Winegrapes (tonnes) Fresh grapes crushed by: 1997-98 1998-99 South Australia 484,555 515,521 Victoria 157,777 189,928 New South Wales (a) 308,414 384,622 Western Australia 22,157 32,206 Tasmania 2,544 2,711 Queensland 204 852 Australia 9,75,699 1,125,840 (a) Includes Australian Capital Territory and Northern Territory Source: ABS 1329.0, 2000 (p.24) 1999-00 510,643 197,474 397,161 35,933 2,722 1,305 1,145,238 NSW Government Review Group 51 Review of the Wine Grapes Marketing Board Table 2: Regional Viticulture and Wine Production 1999-00 Not yet bearing ha 3,262 1,750 4,583 1,099 2,035 12,729 2,350 266 1,376 2,787 6,780 3,917 1,396 3,328 8,641 873 128 1,105 2,107 518 237 Grapes crushed (a) t 62,153 132,486 250,573 11,506 45,787 502,505 185,266 208,297 393,563 108,466 82,517 190,983 13,374 16,469 29,870 1,729 1,118,650 Beverage wine production (a) ‘000L 43,885 127,510 154,912 7,738 31,602 365,648 136,050 148,689 284,739 86,745 44,823 131,568 9,015 13,968 22,983 1,074 806,011 Region Central District Barossa District Riverland Northern District South Eastern District Total SA Murrumbidgee Hunter Valley Sunraysia (NSW) Rest of NSW Total NSW Sunraysia (VIC) Kerang-Swan Hill Rest of Victoria Total Victoria Margaret River Swan Shire Rest of WA Total WA Total Qld Total Tas Total Australia (b) Bearing ha 9,738 8,294 17,177 3,562 9,640 48,412 10,444 4,087 6,050 7,479 28,060 16,394 5,197 8,130 29,721 2,265 869 3,319 6,454 1,700 524 Winemaking t 79,820 52,323 274,132 17,464 63,873 487,612 143,168 25,965 74,492 58,633 302,257 196,576 49,172 59,512 305,260 14,667 4,643 18,671 37,982 2,018 3,369 Other t 468 291 4,822 49 6 5,635 2,807 163 34,272 1,694 38,937 117,168 32,805 790 150,763 262 2,042 1,731 4,035 3,842 - 115,068 31,109 1,138,585 204,229 (Source: ABS, Australian Wine and Grape Industry, 1329.0, 2000, p25); a) Winemakers crushing more than 400 tonnes b) Total for area of vines and grape production includes ACT and NT Table 3: MIA Wine Grape Plantings Grape Colour Red Plantings White Plantings Other Plantings Total Plantings Bearing Non-bearing At 1996 ha 1997 ha 886.57 249.62 0.20 1136.39 9737.06 1136.39 1998 ha 1355.74 160.33 1516.07 9737.06 2652.46 1999 ha 405.03 180.58 585.61 10873.45 2101.68 2000 ha ? ? ? ? 12389.52 <585.61 ? Total 9737.06 10873.45 12389.52 12975.13 Source: MIACHA database (Wine Grapes Marketing Board Annual Horticultural Survey). NSW Government Review Group 52 Review of the Wine Grapes Marketing Board Table 4: Wine Grape Price and Tonnage Regional Comparison Riverina (weighted avg) 1999 2000 $ $ 686 565 358 318 346 325 303 267 367 314 516 352 384 363 382 356 306 263 329 296 438 401 431 383 377 338 303 283 497 491 339 309 408 348 Sunraysia (weighted avg) 1999 2000 $ $ 565 679 318 355 325 350 267 225 WHITE Chardonnay Chenin Blanc Colombard Doradillo Marsanne Muscadelle Muscat Blanc Muscat Gordo Pedro Palomino Riesling Sauv. Blanc Semillon Sultana Traminer Trebbiano Verdelho Change $ -121 -40 -21 -36 -53 -164 -21 -26 -43 -33 -37 -48 -39 -20 -6 -30 -60 Change $ 114 37 25 -42 363 356 296 401 383 338 283 491 348 324 327 246 389 446 497 311 450 418 -39 -29 -50 -12 63 159 28 -41 70 RED Cabernet Sauv. 989 670 -319 670 804 134 Durif 793 447 -346 Grenache 600 442 -158 442 606 164 Mataro 688 427 -261 427 679 252 Merlot 988 565 -423 565 773 208 Pinot Noir 635 557 -78 557 626 69 Ruby Cabernet 804 518 -286 518 707 189 Shiraz 877 506 -371 506 812 306 Source: 1. Riverina Utilisation & Pricing Survey 2001 to 2005 (Wine Grapes Marketing Board August 2000); 2. Australian Regional Wine Grape Crush Survey 2000, Victoria/NSW Murray Valley. NSW Government Review Group 53