Wirra Wirra Vineyard, McLaren Vale - Press Conference

  • Joint transcript with:
  • Senator the Hon Murray Watt, Minister for Agriculture, Fisheries and Forestry, Minister for Emergency Management
Subjects: Resumption of wine exports to China, new Government support for the Australian wine industry, Australia-China relationship.

Matthew Deller: Well, it’s a great pleasure today to welcome Ministers Scriven, Farrell and Watt to Wirra Wirra. We are proudly 130 years old as a winery today, and we’re very excited to be re-entering into the China market.

At Wirra Wirra we export to around 30 wine markets around the world. We like to make sure that we don’t have our eggs in one basket, and China is now the biggest basket for Australian wine, and it’s a thrill to add the China market to our repertoire of global export markets.

Minister for Trade, Don Farrell: All right, thank you for coming along today, and thank you for Minister Watt joining us here in South Australia, and Minister Scriven is joining us with Matt here at the Wirra Wirra – the beautiful Wirra Wirra Vineyard in McLaren Vale.

In the last four weeks we have sold more wine into China – beautiful Australian wine into China – than we have sold in the previous three years. Already in the few weeks since the China market reopened to Australian wine, Australian winemakers have sold $86 million worth of wine. $80 million of that – almost all of it – has been premium wine from South Australia and, in particular, the McLaren Vale region.

When the government came to office about two years ago, we had $20 billion worth of trade impediments with the Chinese markets. We have now almost entirely removed all of those impediments. We just have one product left – getting lobsters back into China. But this is obviously very good news for Australian winemakers. China was our largest export market, and I believe that the volumes that we are already seeing back into the China market will very quickly mean that we resume our sales into China.

People say that the Chinese are drinking less, and that has been true. One of the reasons for that is they haven’t had the opportunity to buy beautiful Australian big, bold, particularly red wines. The Chinese consumers now have that opportunity, and already we’re seeing just how successful Australian wines can be in that very competitive Chinese market.

This weekend we will be welcoming the Premier of China and the Trade Minister. The Trade Minister, Wang Wentao is my equivalent in the Chinese system. It’s been Wang Wentao that we’ve been negotiating with over the last two years to get our products back into China. Our objective has been to stabilise our relationship with China, while at all times making sure that we defend our national interest, and our national security. But stabilise our relationship so that we can resume trade in all of those products that had previously been subject to impediments.

China is our largest trading market. It’s larger than the next five trading markets. Last year, sales of $327 billion, overwhelmingly in Australia’s favour, so it’s an important market. And as you can see from the figures I just talked about earlier - $86 million of Australian wine back into the China market – we need to ensure that that relationship remains stable, and that the Chinese consumers continue to get the benefit of the wonderful Australian food and wine that we produce here in McLaren Vale and in South Australia.

On that note, I’ll hand over to my very good friend Clare Scriven, the state Agriculture Minister.

Minister Clare Scriven: Thanks very much Don. It really is a pleasure to be here today to be able to celebrate the advances that we’re seeing for the South Australian producers. We know the challenges that we have, particularly in the red wine sector, and the fact that we are now having these increased amounts for exports to China can only benefit South Australia significantly.

I’m looking forward to in a moment what Minister Watt has to present as well, because South Australia has led a national working group in terms of the oversupply of red wine, because so much of South Australia’s producers and winemakers are affected. We produce 50 per cent of all Australia’s wine and 80 per cent of Australia’s premium wine right here in South Australia. So, the advances and the support that can be provided will have significant benefits for our state.

And I pass over to Murray Watt.

Minister for Agriculture, Murray Watt: Thanks very much Clare. I’m delighted to join Don and yourself here at Wirra Wirra, and thank you to Mathew and team for hosting us at one of Australia’s oldest and most famous wineries. Of course, Wirra Wirra is not just famous here in Australia, it’s famous internationally. And it’s terrific to hear that Wirra Wirra, along with about 350 other Australian wineries, are already back in the crucial China market.

Now, Don has taken you through some of those figures about what that means in dollar terms for winemakers, particularly here in South Australia, but across the country as well. And this is just in the very first month that we’ve seen suspensions lifted, so we can only imagine the future growth that is going to happen in wine exports to China now that we are seeing them back in there.

This is a really important step, I think, in the wine industry starting to turn a corner after what has been a really difficult period over the last couple of years for this industry here in South Australia. I think many people have learned that while, as important as the China market is and will remain, it is important that we also diversify our markets. I know Wirra Wirra has done that, and most of the other winemakers who I’ve met with have very much invested in diversifying their markets as well.

Now, that is also something that the Albanese government wants to continue supporting moving forward, because we recognise that as important as it is for winemakers to get back into the China market – and we will continue to support that – we do recognise that there are some winemakers who aren’t exporting and who are unlikely to export to China, and who are experiencing significant other problems along the way.

So I’m very pleased to announce today that the Albanese Government will be providing a $3.5 million package of new funding to support Australia’s wine industry, to build demand for its products both here and overseas, to support growers with better data about what is being grown around the country and what is in demand and what is being oversupplied, and also to assist growers to explore new markets, new products as well as explore some of the competition and regulatory issues that we see winemakers experiencing.

Now, as Clare said, this work and this announcement today from the Albanese government follows a number of months of work led by South Australia, but joined by the Commonwealth Government, and other states as well to get out on the ground and listen to growers, listen to winemakers about what issues they were confronting.

Of course, it won’t surprise you to hear that getting back in the China market is pretty much the number one issue that winemakers have been raising with us, but there are a range of other issues that have been raised as well, and this funding package announced today – $3.5 million in new funding – goes a long way to address some of the other issues that came up during that consultation phase.

So, I’m happy to take you through any further detail about that, but I’m sure all of us are welcome to take questions that you might have.

Journalist: What are those other issues? I understand there’s some environmental factors that growers are dealing with?

Murray Watt: Yeah, I can give you a couple of answers and Clare might be able to elaborate on some of that as well. Some of the issues that came through in the consultation that we’ve been doing with growers and winemakers are things like our export markets, wanting to make sure that winemakers and growers are supported overseas. Of course, the fact that we have been absent from the China market means that other countries have been getting into getting in there and marketing their product heavily. So, some of the money that we’re announcing today will go towards an additional person to undertake marketing activities in China to help re-establish that market. And I know Don’s department is putting some funding into that as well.

But we will also be placing people in the US and Japan – two other key markets for Australian wine that we think have potential to grow further as well. People have been raising, many growers have been raising concerns about the lack of market power they have in their dealings with retailers and wine growers – winemakers. So, there is money in this package to explore whether we should be having a mandatory code of conduct to regulate the dealings between growers and other players within the overall wine supply chain.

But also, people have been saying to us that they lack information about who is growing what, because the issue that we are dealing with is an oversupply of red wine grapes. So, some of this money will also go towards establishing a national wine register which growers will be able to hop on to and can see who is growing what quantities of what kind of grapes and what’s actually in demand, so that growers are able to make better informed choices about what they grow and have some confidence that there’s going to be a market for that product going forward. So, they’re a few of the things there.

The environmental factors, I know there has been a discussion about, for example, people disposing of fencing and other issues. But Clare might be able to talk to you a little bit more about that.

I’ll come back after that, yeah.

Clare Scriven: Well, I think it’s fair to say that South Australia and Australia more broadly is very, very well established in terms of its sustainability credentials. What we’re talking about when it comes to things like fencing is for those producers who may be looking to exit the wine industry and need to be able to dispose of things like their fence posts, which have some environmental difficulties associated with them.

So that’s part of the work that has been – is part of the issues that have been raised through the working group, and also directly with myself and others. And that’s something that we’re continuing to work through.

Journalist: Is the funding for that separate or is this package specific to those market investments in the US, China and Japan?

Clare Scriven: Yeah, so my understanding is this federal package is about a number of things: it’s about increasing access to other markets, so diversification; it’s about providing some support to look at diversification potentially into other crops for those producers who want to pursue that; and also, further support for something that South Australia is already leading in, which is around no and low alcohol. So, there’s a number of measures within this, all of which are very much welcomed by South Australia.

Murray Watt: I might just add one other thing that I forgot to mention in this package. So, as I say, there’s $3.5 million dollars in new funding to cover off those ranges of initiatives that I’ve just gone through. We’ll continue to have discussions with the states and territories and the industry about what further support is required. But we’re also confirming today that we will extend for another year the $10 million federal Wine Cellar Door Grants Program that has been very successful around Australia. I don’t know whether Wirra Wirra has taken advantage of that.

Matthew Deller: We have, indeed.

Murray Watt: Sounds like they have. And that program has been running for a number of years now. It’s really an agritourism initiative supported by Don and his Department. And the way that works is that cellar doors can seek grants of up to $100,000 to do some refurbishments, to do some extensions, to spruce themselves up and attract more people to come and visit and not only enjoy the tourism aspects but, of course, buy wine. So that $10 million program is being extended for another year, and that’s another big investment in our wine industry.

Journalist: South Australia has been struggling. Many will be disappointed by this announcement of $3.5 million. Why did you decide on this low figure?

Murray Watt: Well, I mean, obviously every interest group would always like more money from government than what government is able to provide. But we do think that this goes a substantial way towards dealing with some of the major structural problems that this industry is facing. What these grants and this funding will do is set the industry up for future success.

We’re not in the habit of providing tens of millions of dollars to pay people to exit an industry. What we’re actually looking to do is to restructure the industry and put it on a good footing for the future by restoring those export markets, diversifying our export markets and giving growers, and winemakers the information they need to be successful going forward.

Journalist: As you know, Riverland is the major export producer of wine in Australia. What is available through this package to support them in the short term?

Murray Watt: Well, as I say, this package is more one of setting the industry up for the future rather than about supporting people in the short term with their financial difficulties. The Department of Agriculture, Fisheries and Forestry already has a range of financial support programs that growers are able to access right now if they’re in financial difficulty – things like the Farm Household Allowance, which is a form of income support paid to farmers who are in financial difficulty. For those who are looking for concessional loans, those sorts of things are available through the Regional Investment Corporation. So, there are a number of financial support packages in place already for growers and other farmers right around the country. And I’d encourage people who are in financial difficulty to explore those options.

What we’re announcing today is a package of funding, as I say, to set this industry up successfully for the long term. But equally, I don’t think we should underestimate the significance of restoring the China market. And I want to pay tribute to Don, to Penny Wong, to the officials from our departments, and to the industry who’ve done a huge amount of work over the last couple of years to restore that market. And this is another example of the fact that the Albanese government has been able to stabilise our relationship with China, and that is producing real dividends for growers in the Riverland, right across South Australia, and right across the country.

Journalist: [Indistinct] red wine [indistinct] industry. [Indistinct] would you consider [indistinct].

Murray Watt: Well, federal governments don’t typically provide tens of millions of dollars to industry to enable people to leave that industry of their own accord. The issues that have caused the difficulties that growers have been facing are the ones that we’ve been working through: restoring that market to China, opening up new markets in other parts of the country, and now providing additional support to the industry to structure itself for the future.

What we’re about is, as a government, is assisting this industry to become bigger, better and earn more money for the growers and the country as a whole, rather than shutting it down and letting people exit the industry.

Journalist: $3.5 million is not a lot to go around producers  and growing demand. You mentioned some of the things the money will be put towards – new markets, better regulation, et cetera. Is this going to be enough?

Murray Watt: Well, this is money that wasn’t available to the industry last week or the month before that the Albanese government is now putting on the table along with reopening a market that has already delivered $86 million in exports in one month alone. I don’t think we should ignore the size of those figures. Now, this money may not be as much as what the growers are seeking and what the industry as a whole is seeking. But they are important contributions from every taxpayer in Australia to enable this industry to succeed going forward.

Journalist: And finally, is there any possibility of providing additional support given that, you know, some communities are doing it tough?

Murray Watt: Look, we will always consider requests for support, and we’ll always consider requests from every industry that come in. But, as I say, our key goal here is making sure that the Federal Government is enabling this industry to grow, to remain strong, rather than paying people to leave the industry. I should make the point that during the consultation that’s been led by South Australia and that we’ve been part of, there are a range of views within the industry about what is the right way to go.

I know that some people have presented it as if every grower is looking for a payment to exit the industry. That is not the case. Even amongst growers themselves, some people support exit payments, some people don’t. Amongst winemakers some people support some things, and some people support others. So, it's not the case that there’s a universal view that we should be paying growers to exit the industry. On balance, the majority view is that what we should be using taxpayers’ money for is to invest in the industry to make it stronger and better for the future. And that’s what we’ve decided to do.

Journalist: In terms of the remaining trade impediments from China, how confident are you about those being removed?

Minister for Trade: Look, I’m very confident. Over the last two years I’ve had seven meetings with my counterpart Wang Wentao, and on each occasion that we’ve had a meeting we’ve made more and more progress. Just to put into perspective the progress that we’ve already made, we started with $20 billion worth of trade impediments. In the negotiations with the European Union, which were not successful, the offer from the Europeans for beef and sheep meat was $1 billion. So, we have recovered almost $20 billion worth of sales into the Chinese market over that last two years.

I’m very confident that not only will we remove all of the remaining trade impediments, but that we can actually continue to build on our trading relationship with China. I mentioned earlier that last year our trading relationship with China resulted in $327 billion worth of trade. I can’t see why that figure can’t be $400 billion. And I think the fact that for the first time in seven years we’ve had a senior Chinese government official come to Australia – Premier Li – not only coming to Australia but coming to Adelaide. I think that’s going to send a very, very positive message to the Chinese consumers that Australia is back into the Chinese market in all of these products but that we have wonderful food, and wine that we can sell into China. And I am very, very optimistic that given the quality, the clean and green nature of Australian agricultural products, that we can very quickly build upon our reputation in China. This visit by the Chinese Premier I think will simply encourage more and more trade between Australia and China.

Now, as the Agriculture Minister said, we’re not just relying on China anymore - you can’t have all your eggs in your one basket. We’ve now got a new trade agreement with India. Already, agricultural sales into India are 60 per cent higher than they were last year. We’re building on our relationship in Southeast Asia to get more sales into Southeast Asia. Too often we’ve flown over Southeast Asia into China, Japan and Korea. Well, now we want to sell more products into Southeast Asia. Our agreement with the United Kingdom has doubled our agricultural exports into the United Kingdom.

Journalist: In terms of the lobster issue, what do you think have been the sticking points and will that be resolved by next week?

Minister for Trade: Look, I think there’s both a willingness on our part and the part of the Chinese government to remove all of the impediments in our relationship. There’s one remaining product, and that’s lobster. And I’d be very confident that the visit this week will result in a very successful outcome for lobster producers in South Australia.

Journalist: [Indistinct] South Australia’s winemakers [indistinct] worth of wine. How does that compare? I know that’s only one month, but how does that compare to other years?

Minister for Trade: Well, if you very quickly do the maths, prior to the impediments being implemented Australia sold about $1.2 billion worth of wine into China. We were the largest exporters of any country into the Chinese market. If you quickly do your calculations, that figure of $86 million over a 12-month period, you very quickly get back to that $1.2 billion. So, I’m optimistic that if, like other products like barley, where we’re now selling more barley into China than before the impediments, I’m very optimistic that we can get a full recovery of the Australian wine market into China.

All the evidence so far is that there’s some pent-up demand for Australian wine into the Chinese market. The Australian industry is ready to do it, and I think talk of pulling out vines is far too pessimistic. The last time we did this within two years we had an undersupply of wine. I think we need to remain optimistic not only about the quality of Australian wine, but for the opportunity now not just with China but with India, Southeast Asia, United Kingdom, all of these new countries – United Arab Emirates are talking about a free trade agreement with Australia. There’s lots and lots of opportunities, and my message to the Australian wine industry would be: look, you’ve had some really tough times but there’s a reason to be optimistic about the future.

Journalist: Pandas here in South Australia have been getting a lot of attention here as well before this weekend. Should we get our hopes up that the pandas will stay?

Minister for Trade: I think we should be very optimistic that not just have we got wine back into China, but we’re going to keep the pandas here in the beautiful Adelaide Zoo. I know the Foreign Minister and the Prime Minister have both been talking with the Chinese officials and I think with any luck on Sunday morning we’ll have some very, very good news on this topic.

Journalist: Is it likely that not only will they stay but are we likely to see some new pandas as well?

Minister for Trade: I’d just be very happy to keep the two wonderful pandas that we’ve got.

Journalist: [Indistinct], does that suggest that China may reduce its imports of French wine? What does that mean for Australia?

Minister for Trade: Well, look, we don’t want to see any country the subject of increased tariffs into the China market. We saw the damage that it did particularly to Australian winemakers, and we don’t want French, Spanish, Italian winemakers to be subject to the same bans. Obviously if there was a reduction in wine from Europe into China then that would create some additional opportunities for Australian winemakers. And, of course, we’ve seen with Wirra Wirra already 15,000 bottles of magnificent wine – I’m not sure if they’re all Church Block or what; I noticed on the way in Church Block won another gold medal. But I’m sure that 15,000 bottles of Wirra Wirra wine into China is just the start.

Journalist: A question for you, Matt. When did you start selling to China and how many orders have you already sent?

Matthew Deller: Yeah, we acted fairly quickly. The first container left soon after the tariffs were lifted and they’ve arrived in China now. And we have another order coming in July hot on its heels. As Minister Farrell says, it is mostly Church Block, and the Chinese consumers are very excited to start drinking Church Block again.

Journalist: And so is that 15,000 bottles in two shipments or is that just the one?

Matthew Deller: That’s the first shipment.

Journalist: That’s the first shipment. So, you’ve got another 15,000 on the way?

Matthew Deller: Correct.

Journalist: What do you think has changed, what have you done personally on re-entering the Chinese market?

Matthew Deller: Yeah, so the China market has shrunk in half since 2017. Imports have actually shrunk to a third of their 2017 volumes because of a burgeoning domestic wine industry in China. However, what has gone away is mostly the corporate gifting and corporate entertaining side of things. So, for Wirra Wirra we’re quite excited about the new China wine market because it is literally consumers enjoying wine for wine’s sake.

Journalist: Thank you.

Minister for Trade: Thanks very much.

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