A HUMAN tragedy is unfolding in Sunraysia, as the wine industry's chronic oversupply brings the region to its knees.

Row after row of vines that just a few years ago formed the engine room of the world's most dynamic wine-exporting nation are being left to die.

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Irrigation districts that were once a sea of green in the growing season are fast turning into wastelands as growers cut their losses and abandon their vines.

And the worst of the downturn, which is forcing growers out of the industry, appears still to come, with grape prices this vintage expected to fall to as low as $150 a tonne, if they can be sold at all.

Mildura Rural City Mayor Glenn Milne said the effect of the downturn on Sunraysia was an "unprecedented disaster".

"We are going to lose a whole lot of really good farmers, families with a 50-60 year history of farming and they're just going to walk away," Cr Milne said.

Murray Valley Winegrowers chief executive Mike Stone said growers were abandoning their vineyards in droves.

Mr Stone said the MVW's database had shrunk from 1000 in 2005 to about 690 now, and the exodus was not over yet.

"The vineyard landscape up here looks like someone has dropped a bomb on it," he said. "The dead and dying vineyards are everywhere."

Mr Stone said prices last vintage were about 30 per cent lower than 2008 and prices this vintage looked like they would be 20-30 per cent lower again.

"You are looking at a cumulative 60 per cent drop in grape prices over the last few years," he said. "People have just reached breaking point."

Winemakers' Federation of Australia chief executive Stephen Strachan said no region was feeling the downturn more than Mildura, describing it as a "human tragedy".

But the pain is also being felt across the whole industry, particularly in the other irrigated inland regions of the Riverland and Riverina, where growers are being offered as little as $1 a tonne for their "above-contract" fruit this vintage.

Offers of $80 a tonne for chardonnay and other white varieties are also creating heartbreak for battle-weary growers.

Riverina Wine Grapes Marketing Board chief executive Brian Simpson confirmed one winery was offering $1 a tonne for fruit above contracted volumes.

This was to discourage the growers from bringing in more than their contracted amount.

But more alarming were the low offers from wineries for contract fruit, he said.

And wineries that had kept their prices up were capping volumes growers could bring in.

"The growers are saying they can't survive," Mr Simpson said. "We are dealing with a lot of distressed growers.

"I am already speaking to growers who say this will be their last year in the industry."

Wine Grape Growers' Australia executive director Mark McKenzie said the industry needed three years of significant downsizing, "and the pain could be over in three to five years or it could linger for another decade."

Mr McKenzie said the restructure required the removal of up to 25 per cent of uneconomical plantings, which could only be achieved with government intervention and the co-operation of wineries in removing their share of vines.

Victorian Farmers Federation Sunraysia branch president John Piccirillo said the region had never suffered as brutal a downturn. "It's totally unprecedented," he said.

Mr Piccirillo said at the market's peak in the early 1990s, growers received as much as $1400 a tonne.

He said most irrigators in the region wanted the Victorian Government's 4 per cent cap on water trade lifted because water was the only asset that had.

He said the cap would prevent many growers selling water during the next year to pay off debts.

However, the Victorian Government has remained firmly against lifting the cap.

Victorian Agriculture Minister Joe Helper said drought and other factors "have hit the Sunraysia district harder than most".

"We need to work together through this and that is what the Government will continue to do," Mr Helper said.

"Through a series of initiatives, programs and support through innovation, we will continue to stand by the viticulture industry and its communities through what is a difficult period of restructuring."