The impact of weather on the cost of production of wine grapes

The impact of weather on the cost of production of wine grapes

In 2015 Australian wine producers sold approximately $A4.67 billion of wine. This comprised of $A2.78 billion to Australian purchasers and $A1.89 billion in export sales. It is well recognised that seasonal weather patterns influence grapevine (Vitis viniferia) physiology and therefore wine grape characteristics, thus affecting the quality of wine produced from those grapes. Studies have shown that seasonal weather conditions have some influence on wine price. However, management strategies appear to counteract most of the influence that weather has on wine grape yield and some of the impacts to quality. Crop management strategies can be expected to have associated costs, however, almost no research has been undertaken to consider the influence of weather on wine grape production costs.

This study asks the question 'how does weather influence the cost of production of wine grapes'? It has been conducted using a multiple case study methodology and as there has been very little research undertaken to investigate this relationship, the research has been exploratory in nature. It has been conducted with both quantitative and qualitative data, strengthening construct validity and providing an opportunity to explore the research question more thoroughly.'

Financial data was received from six vineyards and was compared with weather variables, for different activities and phenological stages. Interviews were undertaken with representatives from the vineyards that supplied the financial data and industry key informants to gain deeper insight into the decisions that may influence expenditure.

This research has found three potential implications, worthy of further consideration for wine grape producers, (i) the practice of scheduled pesticide spraying has the potential to reduce the ability of wine grape producers to identify opportunities that climate change may provide to amend their spray schedules, reduce expenditure and potentially benefit the environment; (ii) unless the practice of scheduled pesticide spraying is taken into account, there is the potential for the over-estimation of the impact that a changing climate will have on pest and disease expenditure and thus vineyard profitability; (iii) while rainfall is expected to increase vineyard floor management costs and hot temperatures are likely to decrease costs, increased night temperatures are more likely to impact vineyards where monocotyledon plants are used on the vineyard floor.

This research resulted in three recommendations, two identifying areas for further study (i) improving the understanding of the relationship between disease pressure and spraying activity to enable better estimation of how changes in pest/disease pressure will translate into changes in pesticide/fungicide spray expenditure, and (ii) investigation of the use of dicotyledonous planting instead of monocotyledonous planting on the vineyard floor as a possible way to reduce vineyard floor management costs. The third recommendations relates to the difficulty accessing data to undertake this project and identifies the potential benefit of being able to financially assess a vineyard down to block level.