Australian wine industry feels heat from climate change

By Victoria Thieberger

MELBOURNE (Reuters) - Australian grape growers reckon they are the canary in the coalmine of global warming, as a long drought forces winemakers to rethink the styles of wine they can produce and the regions they can grow in.

The three largest grape-growing regions in Australia, the driest inhabited continent on earth, all depend on irrigation to survive. The high cost of water has made life tough for growers.

Some say they probably won't survive this year's harvest, because of the cost of keeping vines alive. Water prices surged above A$1,000 a megaliter last year from around A$300.

"On the back of three very ordinary years, this year is probably the worst that could have occurred with the drought and the high costs of water," said Michael de Palma, a mid-sized grower in Redcliffe near Mildura in the Murray Valley, one of the country's three big wine regions.

"In this depressed situation, growers have only two choices, stick it out as long as they can or to cut their losses and get out," said de Palma, who is part-way through a weather-influenced early harvest on his 40-hectare vineyard.

Recent rains have bypassed the country's parched inland wine regions, and have fallen half-way through the harvest in eastern Australia, too late to help the berries and instead causing a mildew-like disease.

De Palma, the chairman of Murray Valley Winegrowers, said he would wait to see the results of his harvest before deciding whether to sell up or hold on to his vineyard, which mainly supplies Foster's Group, Australia's largest wine company.

He estimated around 40 percent of grape growers in the Murray Valley who had access to water trading couldn't afford to buy water last year, while most of the others had to borrow to do so, going deeper into debt.