The Australian wine industry needs better regulation going forward, according to a parliamentary inquiry. The Senate's rural affairs committee today (13 October) delivered its report into the operation of the country's wine industry, and ruled out government intervention in pricing or any structural adjustment for the industry.

While acknowledging that the industry is plagued by business disputes amid tough conditions for growers and producers, the report stopped short of recommending the authorities get involved, but suggested a better regulatory framework be introduced. A mandatory code of conduct for growers and winemakers was also recommended.

"At a time of very strong exports, that so many are financially and commercially stressed must mean that you have to examine whether the way in which the industry is presently operating needs adjustment," the committee's chairman, Democrat senator Andrew Murray said.

"It's a sustainable industry because of the volumes, but it's not entirely a group of happy campers at the moment."

While growers are suffering from falling grape prices in light of the boom in plantings in the late 1990s, the report also noted that winemakers were also struggling, with many reporting a loss last year. Although price control for grapes was submitted as an option, the committee rejected it, saying: "A legislated floor price, if it was higher than the market price, would simply mean that more product would not sell. The only way to prevent that would be to control supply as well."

The committee partly blamed a tax incentive for planting vines that was introduced in 1993 and scrapped in the 2004 federal budget for the huge rise in plantings. The report subsequently said that a national body was required to represent farmers' views to the Government.

While distancing itself from getting involved in individual disputes, the committee emphasised the need to improve regulation. "Essentially, what you've got in the industry is some winemakers who are commercially very powerful and there are a lot of small winemakers and growers who are disadvantaged in that relationship," Senator Murray said.

"In that respect you've got to look for the mechanisms of competition law to protect such people."