Wine Economics Research Program
The Australian wine industry has enjoyed spectacular export-oriented output growth from the early 1990s. Producers in some other Southern Hemisphere countries and North America have also expanded their vineyard areas and upgraded the quality of their products. Meanwhile, Europe has begun to focus much more on what the consumer wants, but the European Union's policies continue to encourage excessive production. This has led to a major over-supply situation globally, and a commensurate fall in prices paid to grapegrowers by wineries. What were the key contributors to this extraordinary expansion? How sustainable is the expansion in terms of its demands on water and other resources? What are the relative contributions of factors affecting activities in the vineyards as compared with beyond the vineyard gate? What policy and industry responses are now required? What are the lessons for other agricultural and value-adding primary processing industries seeking to become more internationally competitive in a sustainable way?
The Centre's research program seeks answers to these and related questions from the perspectives of the Australian industry and globally. It uses a combination of analytical economic history (back to 1850 in Australia's case) and formal projections modelling to 2030. Lessons will be sought from previous booms, while model simulation results will show the likely effects of various possible developments in domestic and export markets, and of alternative tax and other policy changes.
Key outcomes from the research from an industry viewpoint will be comprehensive data bases on the Australian and global wine markets, and purpose-built models for analysing issues of concern to the industry (a general-equilibrium model of the Australian economy with separate grape and wine types fro each wine region, and a partial-equilibrium model of the world's wine markets which includes bilateral trade between all the key countries). Both models are used to examine likely effects of economic growth, structural changes, technological innovations, and reforms to wine consumer taxes, producer subsidies, and trade taxes and subsidies in Australia and elsewhere.
Funding for this research program during 2008-2011 has been kindly provided by the Grape and Wine Research and Development Corporation (Project No. UA08/04) and the University of Adelaide's Wine 2030 Research Network.