LARGE-scale vineyard removal in key inland regions has sent Australia's wine grape production into freefall.
The Winemakers' Federation of Australia's 2010 vintage report, released on Monday, puts this year's crush at 1.53 million tonnes.
That's a 12 per cent decrease on last year and 300,000 tonnes lower than the 2008 vintage.
The WFA survey found a 15 per cent fall in white grape production and an 8 per cent fall in reds.
WFA chief executive Stephen Strachan said vineyard removal, mainly in the Murray Darling Basin, was a major factor in the smaller vintage.
"Many regions have reported average yields (so) a lot of this reduction has been due to vineyard removal," Mr Strachan said.
Wine grape grower groups in the Murray Valley and Riverland estimate as many as 8000ha of vines have been taken out of production in the past two years.
Mr Strachan said the smaller vintage was a "step in the right direction" that would help the industry battle its way through the current oversupply.
Murray Valley Winegrape Growers chief executive Mike Stone said production in his region had fallen by 75,000 tonnes to about 300,000 tonnes.
"Certainly in the current environment, the fall in national production is good news," Mr Stone said.
"But we need to get it down to 1.3-1.4 million tonnes, at least for a few years, to give us some breathing space."
Mr Stone said "the way things are going, in terms of people leaving the industry, there's every prospect of that happening".
He estimated average Murray Valley chardonnay prices would be $194 a tonne this year, compared to $758 a tonne in 1999.
Mr Stone said growers would receive an average of about $307 a tonne for shiraz, whereas in 1999, they were paid $1146.
"There's no way that people can withstand prices that don't meet cost of production year after year," he said.
"We have seen several years of below cost prices and we've had another year of it, so there will be more people getting out of the industry as surely as night follows day."
