by Michael Fridjhon and Joel B. Payne
The worldwide oversupply of wine has become an economic nightmare for South African growers. Large wineries are now offering farmers cash not to harvest contracted grapes next year. Many vineyards are now even being liquidated. Analysts believe that
Stellenbosch is the most impacted region, with more than 50 farms for sale. Foreign buyers, many of them buying as pleasure investments, rather than to farm grapes, are able to snap up insolvent farms.
Where farmers once earned up to 7,500 Rands a tonne for red grapes, prices have fallen to 1,500, far below the cost of production. The weak domestic consumption of only seven litres a person does little to prevent the fall in prices when exports fail. Johan van Rooyen, head of the South African Wine Industry Council, notes that high volumes of wine are now being sold at any price to make room for the next harvest.
