A&F Bulletin - Wine industry growth in Marlborough

Columns
Monday, May 23, 2016

There are plans to plant 6,800 new hectares of grapes in Marlborough over the next five years.

To put that into some sort of context, that increase in area is equivalent to the current producing area of both Hawke’s Bay and Central Otago.

This information comes from the latest Marlborough Viticulture Labour Market Survey, which tells us that the planned plantings will result in an increase of hectares in production from 23,619 hectares to 29,270 hectares between 2015/2016 and 2019/2020.

Just over half of the new plantings will, according to the survey, be established in the Lower Wairau Valley (51%), with 16% in the Lower Wairau Valley, and 7% in the combined Awatere/Blind River/Grassmere/Flaxbourne/Kekerengu area. The location of the remaining 25% is yet unknown.

Growth is being driven by our existing large wine companies and growers, who together represent 68% of grape hectares currently in production. By 2019/20, these will represent 73% of the projected hectares in production.

The industry’s current optimism and willingness to invest in further development is a reflection of the strength of what is, nationally, our 6th-largest export. Marlborough’s flagship variety, sauvignon blanc, currently has an export value of $1.2 billion and in our North American and Asian export markets, growth has been particularly strong.

The pace and scale of the projected growth as presented by the survey is exciting for Marlborough’s already vibrant wine industry, but it does present a number of key challenges for the region.

An obvious challenge is the need to find more skilled labour.

The viticulture labour market predicts its total worker numbers will increase from almost 8,500 to more than 10,000 by 2019/20 - an increase of 24%. There will be a 34% increase in demand for summer RSE workers, and a 36% increase in demand for winter RSE workers.

What this means is raising the RSE scheme cap, which last year was lifted to 9500.
However, if this raise is to happen, the industry will have to step up their efforts to employ New Zealand workers.

The industry is aware that this is an area where they must be proactive.

New Zealand’s immigration policies also support this approach. They are designed to enable employers to access the skills they need to fill gaps in their workforce from overseas only if they have taken all reasonable steps to recruit and train New Zealanders for those positions first.

In saying that, I do support raising the RSE cap, because in a seasonal industry like this, there are inevitably gaps in the labour market that need to be filled.

On the whole RSE workers have proven they do a fantastic job to fill those gaps, and for them, the opportunity to work here benefits their communities back home too.

But raising the cap does present the second challenge, which is accommodating the extra labour force and providing adequate levels of pastoral care and services such as healthcare.

The projected accommodation need is for 189 houses for permanent workers, 442 beds for casual workers and 600 beds for RSE workers.

While these are certainly real and to some extent pressing issues, these are issues of growth, and this in itself is positive.

I am absolutely confident these are challenges that Marlborough will face and overcome, as it has in the past during times of rapid growth: For example, the 68% increase of hectares in grape production that occurred from 2006-2010.

As the viticulture industry continues to grow and boost our economy, the spin-offs for Marlborough as a whole, and that of course includes the rural sector, are increased investment and innovation, more and higher-value jobs, higher wages and new career pathways.

These are exciting times not only for our wine industry, but for us all.