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Johannesburg - South Africa's wine producers are under such pressure that wine production is not economically viable in the long run.
This is according to a report by the wine producers' service organisation VinPro, and Winetech.
According to the report, average production costs in the wine industry have risen by 24% over the past five years to R23 578/ha.
Over the same period wine producers' income and net income have fallen by 6% and 52% respectively.
"Despite the current high input costs a further increase of 20% (in input costs) is expected for the 2009 harvest,? reads the report.
This is being driven by the high increases in the prices of fertiliser, pesticides, fuel and electricity.
The research shows that the income of producers has fallen 6% since 2004. Net farm income (after deductions for labour, direct costs and mechanisation) was down by 52%.
The average net farm income in 2008 was, in all, R5 901/ha. For economically sustainable production, says the report, income needs to be almost three times this amount.
Farmers' total debt rose and interest rates also went up.
"It's a fact that many producers are unable to replace their old or unprofitable vineyards." Producers are also struggling to replace tractors and other vehicles.
But there is some good news. There are signs of wine prices rising. Exports are on the increase, and a surplus of red wine has also been eliminated.
- Sake24.com
For more business news in Afrikaans, go to Sake24.com.