Addressing the Long-term Structural Surplus in the Australian Red Wine Industry

Senator Matthew Canavan questioned Professor Kym Anderson about the Australian red wine industry's long-term surplus. Professor Anderson argued that government intervention is unnecessary, as the market will self-correct as freight rates decrease and global demand increases. The conversation also covered contracts that guarantee grape volumes in certain regions. According to Professor Anderson, these inflexible arrangements hinder adjustment and delay exit decisions. To address the surplus, Professor Anderson suggested improving marketing efficiency as a short-term solution for growers, while investing in research and development to reduce costs is a longer-term strategy.