The Australian and international wine glut is an example of market forces working normally. The call for vines to be pulled, with either implied or express government subsidies, is human nature working normally: the desire to privatise profits and socialise losses.
There's nothing new about wine industry figures calling for vine culling. In the early 1980s, the Federal and South Australian Governments were paying growers millions of dollars to do it. Then along came the Australian wine revolution and that subsidised destruction became the stuff of infamous legend.
Market forces being what they are though, if there's a buck to be made producing something, resources will be poured into producing it until that buck has been pretty well sopped up. Throw in some lifestyle farmers, the disgraced rural managed investment tax schemes - and that the rush into new vineyards was an international phenomenon, never mind the usual European subsidies - and, voila, a massive glut.
Wiser heads have been worried about overplanting for years. A quick Google finds a March 2000 Landline report on a looming glut, an increasingly regular theme as plantings continued apace over the decade.
The University of South Australia's Professor Larry Lockshin summarised the harsh reality in August's Wine Business Magazine:
''The market signal is very clear. Australia has too many grapes for the current world demand. Our style and our varieties are substitutable. Are there some that are unique enough to achieve a living for growers and wineries? The answer is yes, but again, these are the brands and styles that have built particular demand. There is no magic wand to wave over the 300,000 tonnes of excess grapes being grown in Australia that will miraculously transform them into a profitable crop.''
It was the elephant in the room of the 2008 Winemakers Federation of Australia Outlook conference your columnist had the pleasure of chairing, an elephant that was addressed, poked and prodded, but remained unmoved at the end of the proceedings.
No early-mover advantage
The reason for that is simple and two-fold: everyone wants other growers to be the ones to do it; and no-one wants to go to the considerable expense of pulling vines and returning land to pasture today if there's a chance the government might pay them to do it tomorrow. The growers going broke, the ones normally dealt with euphemistically by ''market forces'', haven't the funds to pull vines anyway.
So the chorus of glut, disaster and ruination steadily builds until it is loud enough to find a political ear attuned to this common-or-garden variety of agrarian socialism.
It's easy to be dismissive of their plight - no-one made them plant vineyards, many thousands of businesses fail each year without the exit subsidies some farmers can tap. Back the wrong horse and you can't expect a refund from the TAB.
But, on the other hand, why shouldn't grape growers try to line up for their suck of the taxpayer tit, or shake of the government sauce bottle? It looks like just about everyone else does.
The Rudd administration happily splashes nine-figure amounts on the local car manufacturers, does deals with pharmacy owners (the community cost of that nicely skewered by Jacob Saulwick yesterday) and Julia Gillard is gifting the ACTU's Union Education Foundation $10 million.
Good heavens, Anthony Albanese, every inch a product of the NSW Labor machine, tosses a lazy $10.4 million to the National Rugby League to build a new headquarters, but just make sure John Howard doesn't have an office in it.
And that's just a few of the more recent non-GFC-related interferences in markets of one kind or another that spring to mind.
You can pull a lot of vines for 10 or 20 million taxpayer dollars and arguably make a less-worse economic case for that compared with giving the money to the NRL and union shop stewards.
Unfortunately for the grape growers, they don't seem to have much union weight or be situated in marginal seats. And everyone except the producers enjoys wine bargains.
Email a friend