The South African wine industry expects 2020 to be a difficult year, but remains hopeful that it will be able to build on some of the momentum gained in 2019 to overcome major challenges.
Presenters at the fifteenth Nedbank Vinpro Information Day, held in Cape Town, on Thursday, were upfront about the stark realities facing the industry, while advising on the way forward.
“There was a renewed energy in the South African wine industry in 2019 following a long downward cycle,” Vinpro chairperson Anton Smuts commented in a media release issued after the event.
Two consecutive smaller crops, owing to the drought, led to upward wine price adjustments filtering down to the farm gate and producers are reinvesting.
Smuts called on wine grape producers and wineries to keep up this momentum, but warned against pushing up prices without adding value.
He noted that challenges, such as tough market conditions, policy uncertainty and unfavourable climatic conditions, would remain this year but said they could also be overcome.
The drought had a significant impact on South Africa’s wine production, which decreased by 90-million litres a year in 2018 and 2019.
Lower availability resulted in higher wine prices, which filtered down to more sustainable net farm income levels.
In 2015, only 15% of producers were profitable compared with 28% in 2019.
However, some regions will still take time to recover.
Producers are also expected to continue the surge of new plantings, with an estimated 4 000 ha to be planted this year.
Overall, the 2020 harvest is expected to be somewhat bigger than the 2019 harvest but still smaller than the average over the past five years.
This year’s harvest kicked off at least one week earlier than usual following relatively moderate temperatures during the ripening period.
It was noted that sampling during harvest would be very important.
Also, an increase in pests and diseases will demand precision management, especially with regard to mealybug and the effect of downy mildew. Water must also be managed conservatively.
Meanwhile, government has embarked on a masterplan initiative, through which it, business and labour will work together to establish a conducive environment for investment and inclusive economic growth in the agricultural and agroprocessing sector.
Agbiz CEO Dr John Purchase said the respective agricultural commodities were being represented in the process, with the overarching masterplan to be finalised by the end of September.
It was noted that trade agreements would be imperative for growth going forward.
Nearly half of South Africa’s agricultural exports (in value) are destined for Africa, followed by Europe and Asia.
Agreements such as the African Continental Free Trade Agreement, and a preferential trade agreement with the UK post-Brexit would bode well for these two major export markets.
There is still considerable work to be done to secure preferential trade agreements in Asia, a market which is posited to hold much potential.