On January 7, Australia’s Department of Agriculture, Fisheries, and Forestry (DAFF) announced the decision to introduce a new mandatory Code of Conduct for Wine Grape Purchases from January 1, 2027.
Speaking to AgTechNavigator, Chris Dent, chairman of Murray Valley Winegrowers Incorporated (MVWI), said the mandatory code would set the stage for more collaborative winery-grower relationships and support a more sustainable future for the sector.
MVWI is a trade association representing grape growers in the Murray Darling and Swan Hill regions.
While the code of conduct has generally been welcomed by growers, Dent stressed that the code will only governs winery–grower relationships where a formal contract exists, highlighting the code’s limitations.
“We’ve got growers who don’t have a contract at all. They’re going from one year to the next, growing the grapes and not knowing who they’re going to sell them to. So, if you don’t have a contract, none of this matters.”
This group accounts for a significant share of producers in the Murray Valley, with Dent estimating it could represent at least one-third to of growers in the region.
Against the current challenges of Australia’s wine sector, growers without contracts are the most exposed to market volatility and power imbalances.
“There is going to be a significant amount – and I mean significant – amount of fruit that won’t find a home this year because they’re not contracted,” said Dent.
And with widespread oversupply and falling consumer demand, securing a contract has become increasingly difficult for these growers.
“It is unprecedented how bad the problem is now. It isn’t just a temporary blip that people can weather for a couple of years and it will all be resolved. The fact is that consumption is dropping dramatically. Demand is falling off fast, and it’s very hard to see that coming back to any great magnitude again,” said Dent.
Better data for better decisions
The proposed mandatory code will require winemakers to comply with enforceable standards.
Wineries that fail to comply will face penalties, with the Australian Competition and Consumer Commission (ACCC) overseeing compliance.
This reform was based on the recommendations of Dr Craig Emerson’s independent review of Australia’s wine and grape sector, which called for stronger safeguards against market pressures and volatility.
In addition to clearer rules around pricing announcements, dispute resolution, and contractual behaviour, another key objective of the code was to make market data and pricing information more accessible to growers.
The code of conduct would make it mandatory to participate in the national surveys like the National Vintage Survey by Wine Australia.
“That’s really important for the industry in terms of understanding how many grapes are crushed. At the moment, it’s a voluntary survey so there’s rubberiness in those numbers… It’s about making data accurate so we can make better decisions from it,” said Dent.
An existing code of conduct has been in place for several years, but its voluntary nature has significantly limited its effectiveness.
Dent described the voluntary code as a “toothless tiger” as there were no penalties or recourse for non-compliance.
“A lot of growers in our region were getting quite frustrated that there were some wineries that weren’t on the code. They could still do what they wanted when it suited them. They could adjust the agreement, change the conditions, or maybe change their payment terms to suit what they wanted.”
The move to a mandatory, government-backed code is therefore seen as essential to create a more transparent and fair playing field.
Payment terms remain undecided
Payment terms remain one of the most contentious and unresolved elements of the proposed mandatory code.
The Emerson Review recommended introducing standardised payment timeframes of full payment within 30 to 60 days.
However, the government has opted not to mandate specific terms, citing the complexity of existing payment practices across the sector.
“The Government notes the complex nature of payment practices within the wine and grape sector and is mindful of the unintended consequences that could result from mandated payment times. In this context, the Government will monitor payment practices as part of reviewing the mandatory Code and carefully consider whether future improvements can be made.”
Dent explained that current payment terms vary widely, from staggered payments spread across months to extended schedules that can run close to a year after delivery.
To shift to full payment within a 30 to 60-day timeframe would be considered a “massive change” for some, depending on how they plan their cash flow.
Dent concluded that while the code will not alleviate current challenges, it represented meaningful progress for the industry.
“It will improve business practices, and I can see a lot of benefit once we come out of this current oversupply. But now, all of my colleagues and fellow growers are in a lot of pain dealing with the immediate situation, where growers either can’t sell their grapes or prices are very low. As a result, they’re not getting excited about this announcement because it’s not going to change that dynamic or address the issue in the short term. That is fundamentally a supply-and-demand economic equation.
“Having all this in place when things do improve, when production equals demand, we will have a framework to build a strong winery-grower relationship and take this industry forward towards more of a partnership.”
