1. New legislation for securing rights over fruit sold to wineries that become insolvent

Legislation that came into effect in January 2012, has improved grower’s rights in reclaiming their fruit, or the value of it, from purchasers whose businesses become insolvent (can’t pay their debts).  It is called the Personal Property Security Act (PPSA).

Traditionally, this issue is the role of a Retention of Title (ROT) clause in a contract.

A ROT clause specifies when ownership passes from the seller (grower) to buyer and the Code of Conduct states that an “… Agreement must state when title in the winegrapes passes from the winegrape grower to the winegrape purchaser”.

The specified point of handing-over title is usually when full payment has been made.  That is, until the fruit is paid for, it remains the property of the grower.  If the buyer is insolvent and therefore unable to pay for the grapes, they should be returned to the grower.

The first difficulty with ROT clauses is that a grower’s grapes are hard to identify when taken by a purchaser – because they are mixed with others or creating even greater difficulties, they are converted into wine.  Nevertheless, a ROT clause potentially gives the seller some recourse to reclaim the value of their grapes from the sale of the wine the grapes are converted into.  The second difficulty then arises.  If a business becomes insolvent, the value of its assets (including the wine) goes first of all to ‘secured’ creditors and only if there is any value left over, will ‘unsecured’ creditors be paid.  Growers are, unfortunately, are unsecured creditors in these transactions.

However, the new PPSA legislation makes the provision for growers to become secured creditors.  Moreover, because as a secured creditor, the grower draws on the asset value of the business rather than regaining the original fruit that was passed over, the problems of fruit co-mingling and conversion into wine is overcome.

To access the rights provided in the PPSA, certain things have to happen.

  • A contract that is compliant with the PPSA legislation needs to exist (for example, it will need a Retention of Title clause).
  • The buyer needs to agree to the contract being jointly registered on the Personal Property Security Register (PPSR).
  • Registration on the PPSR will involve a small charge.  Registration can be done by an agent or it can be done by the grower on a government controlled website.

There are a number of law firms that are responding to the new legislation by providing advice and services including registration of contracts.  The reader should note that this article does not represent legal advice but rather, a non-expert interpretation of the PPSA provisions.  Independent legal advice is recommended.  The benefits could be great, particularly with the challenging conditions currently in the wine sector.

For more information on the PPSR go to:  www.ppsr.gov.au


2.  New guidelines for managed investment schemes

The Australian Securities and Investment Corporation (ASIC) has released an investor guide with new disclosure benchmarks and principles for agribusiness managed investment schemes (MIS).  The guide is designed to improve investor awareness of the risk associated with MIS products.  This is part of ASIC’s response to the high profile collapse of several MIS’s over the past five years, which raised concerns over whether the risks of such schemes were adequately disclosed to investors.  WGGA supports this initiative, as we have been calling for better regulation of such schemes since 2008.

It should nevertheless be noted that the disclosure benchmarks advocated by ASIC are not compulsory but are expected to be met by “responsible entities” when advertising.  In this sense, it will enable the distinction between responsible and irresponsible agribusiness investment schemes.

For information on the investor guide and new disclosure benchmarks, go to http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Overview.   The investor guide can also be downloaded from the WGGA website.

For more general information on managed agri-business investment schemes, visit the ASIC “Smart Money” website at https://www.moneysmart.gov.au/investing/complex-investments/agribusiness-schemes


3.  Register with WGGA for direct access to information and members only benefits

Grapegrowers in South Australia, Murray Valley and the Riverina are reminded that you are already members of WGGA as a result of money paid on your behalf by the Wine Grape Council of SA, the Murray Valley Winegrape Growers and the Wine Grapes Marketing Board.  However, you need to register with us to receive direct and early access to the latest information and updates, as well as restricted content on our website.  When you register, you will receive a login and password for the website, and we will email you our United Grower newsletter, e-Alerts and other timely information.  To register, contact the office on 8133 4400 or visit the membership page of our website.


4.  Have you experienced any bad practices with winegrape purchasers?  Let us know

WGGA has received a few concerns about purchasing practices this vintage – eg wineries not notifying prices until after delivery of fruit – which contravenes the Code of Conduct.  We would like to know what kinds of bad practices might be occurring and how frequently, so that we can assess how best to respond to the issue at a national level.  Please contact us by email, telephone or via our website.  Your information will be kept completely confidential.

If you are having difficulties with your winery, you might like to have a look at the dispute resolution process outlined under the Australian Code of Conduct (see www.wgga.com.au/code2) or refer to the Barossa Grape & Wine Association’s excellent publication A Guide to Negotiating the Sale of Wine Grapes in the Barossa (www.mybookingmanager.com/grapebooklet) – or speak to your local industry association.


If you have any questions regarding the above please feel free to contact:

Lawrie Stanford | Executive Director       E: [email protected] or
Kelly Bonser       | Office Administrator   E: [email protected]