Prices trample wine farmers

Cape Town - Wine producers receive only 2% of the average R24 shelf price per 750ml bottle of wine sold in supermarkets and at other retail outlets.

Primary milk producers, in their turn, receive about 30% of the shelf price of ordinary milk.

The price that South African wines fetch overseas paints a grim picture.

This applies particularly to Britain, where most of the cheap wines are sold at a loss of about R6 a bottle.

This was a finding by Gert van Wyk, a VinPro agricultural economist, who did a financial analysis of primary wine producers' incomes - the results of which appear in the latest issue of the wine industry's magazine, WineLand.

"Primary wine producers are under serious pressure to produce sustainably in an economic way without a dramatic increase in the average domestic and overseas shelf prices," he declares.

He says the producer needs to receive a minimum of R1.07/bottle to produce profitably, compared with the 44c/bottle that is currently being realised in the country.

This income level applies to a yield of 15 tons of grapes per hectare.

At 44c/bottle and a yield of 15 tons per hectare, a producer realises a net farming income of R6 150 per hectare, compared with the estimated minimum of R15 000 per hectare required for economically sustainable production.

"This means that the primary producer's income needs to be at least 4% of the eventual shelf price.

"If one looks at the export market, an average shelf price of £3.99 seems to be fetched in Britain."

The study indicates that most of South Africa's wines are being sold at a loss in Britain.

- Sake24.com

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