The Inquiry into the Australian Winegrape Purchases Code of Conduct | Uncorking the Truth About Australia's Winegrape Industry

Introduction

On 19 September 2024, the Senate referred an inquiry into the Australian winegrape purchases code of conduct (the Code) to the Rural and Regional Affairs and Transport References Committee (the Committee) to investigate the adequacy of current voluntary application of the Code. Hearing submissions from individuals, winegrowers’ associations, and various government bodies, including the Australian Competition Consumer Commission (ACCC), the Committee handed down their final report on 28 February 2025. Crucially, it draws important conclusions regarding the industry issues of market inequalities, transparency of information, and the current structures of pricing, demand forecasting and employment conditions within the supply chain.

Key Areas of Investigation

The Committee firstly considered the state of Australia’s wine industry and concluded that the industry has faced significant challenges in recent years, particularly due to loss of key markets like China and a global shift away from wine to other beverages. The Committee acknowledged the hardships that have been subsequently faced by many industry participants, particularly regarding concerns over business prospects and mental wellbeing.

Secondly, the Committee found that the voluntary Code is failing to protect winegrape growers, leaving them with little bargaining power against large processors and an imbalanced historical structure. This has resulted in anxiety and insecurity, particularly around pricing and payment disputes, which has hindered growers' ability to plan and expand. The Committee concluded that strengthening representation and modifying the Code to address these concerns would boost grower confidence and thus positively impact the broader Australian wine industry.

Lastly, the Committee emphasised the importance of recognising that two separate issues are facing the wine industry: the oversupply of grapes and wine because of decreasing domestic and global demand and secondly, the inadequacy the terms and conditions of commercial relationships in the industry. While the first issue requires further investigation and research within the industry, the Committee was confident that a mandatory code, with amendments addressing key issues, would see significant improvements to the wellbeing of growers.

Recommendations

The Committee’s conclusions are clearly reflected in their five recommendations in the final report.

Importantly, the Committee’s first recommendation was that the Treasurer, in consultation with stakeholders and the ACCC, should develop a mandatory code of conduct for winegrape purchases across all Australian regions, focusing on the Riverland, Riverina, and Murray Valley regions. The code should ensure fair and equitable payment terms, quality requirements, earlier indicative pricing, and binding dispute resolution.

The other recommendations, as summarised below, suggested areas of further continuance or investigation within the industry:

1.1 Per recommendation 2, the Committee emphasised continuing the collection and dissemination of wine and grape data for the benefit of the industry.

1.2 Per recommendation 3, it stated that the Australian Government should explore solutions for dealing with surplus wine, including converting it into industrial alcohol.

1.3 Per recommendation 4, the Committee called for investigating support packages for grape growers to transition out of winegrapes or for land uses in the warm inland wine regions.

1.4 Lastly, per recommendation 5, it stated that Australian Grape and Wine should provide an updated Pre-Budget Submission which the Department of Agriculture should utilise to guide investment in expanding markets and promoting wineries to support the wine industry.

The Post-Inquiry Landscape

While the recommendation to implement a mandatory Code has been put forward, it still awaits legislative action by the government before it can take effect. The proposal has garnered support from industry stakeholders who see it as a useful step toward addressing power imbalances and protecting growers' interests, and therefore there is optimism that the government will act expeditiously. However, with a federal election to be held by 17 May, the timeline for action remains uncertain.

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