'100 wine producers are lost each year'
Over the past decade 900 local wine producers have failed, with 100 being lost every year, which is worsening unemployment in the country, Rico Basson, managing director of Vinpro, the representative body of the local wine industry.
According to the SA Wine Industry Information and Systems, last year industry revenues contributed more than R36 billion to the national gross domestic product (GDP) and provided over 300 000 jobs.
Last year the industry’s return on investments was less than 1 percent due to the drought compared with 2 percent in 2015, he said speaking at the Nedbank VinPro Information Day held in Cape Town.
“We are losing 100 producers a year. In the last 10 years we lost 900. You can think of the labour component that goes with that.” He said South Africa had lost about 1800 hectares in the past two years.
“My gut feel is that 96 000ha could come down to 90 000ha. Is this unique? No. The Australians have uprooted about 32 000ha, California has done 20 000ha. We can’t be innocent bystanders but must start doing something about it. If we don’t do that we will not be able to catch the next cycle.”
But looking ahead Basson said local wine sales could grow by about 100 million litres in 10 years’ time, and thanks to local players it has now reached 400 million litres in year two. The value of exports has now reached R9 billion.
Meanwhile, according to Shehnaz Somers, the head of commercial underwriting at Santam, the recent spate of fires in the winelands of the Western Cape had brought the issue of the producers’ risk to the fore, with a number of farms being adversely affected.
She said the company was assessing the damage and loss as a result of fires spreading to well-known vineyards and guest farms in the winelands and surrounding areas over the past month.
“Our claims team is assessing about 50 claims related to the recent fires, most of which are related to buildings and vineyards, but it is still too early to report on the exact extent of the damage. We know that last year, runaway fires destroyed vineyards in Stellenbosch, Overberg, Simonsberg and Kogelberg early in 2016 resulting in losses estimated at around R240 000 per hectare.
"This included the loss to the farmers and the additional labour costs required to re-establish the vineyards.”
Somers said it could take between five and seven years for an average wine vineyard to become productive again after a loss or significant damage.
“The destruction of vineyards by fire, crime or weather-related events also has a significant impact on the overall production volumes which in turn places international exports and revenues, and ultimately the livelihoods of those communities engaged in the wine-producing sector at risk.”
Somers said last year Santam paid 596 claims worth more than R9.4 million to the industry. She said they were specifically related to agricultural assets and, in many cases, were as a result of fire, accidental damage or liability.
“The wine industry requires a highly specialised approach to insurance which is why we have a team of experts who are adept at their approach We believe that safeguarding their revenues is pivotal to the sustainability of wine farming in South Africa.”