This is the mighty Orange River, the lifeblood of the region and an unexpected breadbasket for South Africa. Amidst the fruit trees, thousands of hectares of vines produce some of the world's finest raisins and table grapes. Yet, nestled among these, you will find something unusual – wine grapes, growing hundreds of kilometres away from the renowned heart of the South African wine industry in Stellenbosch.
How did wine grapes come to be cultivated in this remote location, and what has caused their dramatic decline in recent years? This intriguing story unfolds against the backdrop of political, economic, and agricultural developments that have shaped the Orange River region.
The Orange River Scheme, initiated in 1956, aimed to expand the irrigation area along the Orange River, thereby bringing more fertile land into production by tapping into the lower Orange River. This infrastructure project also had political motivations, primarily countering urbanization and addressing the "poor white problem" outlined in the 1933 Carnegie report through civil infrastructure projects, ultimately providing small holdings to urban poor.
The primary motivation for granting wine vineyard planting quotas in the Orange River was political, stemming from competition between the KWV and the then Soft Fruit Board.
The KWV pressured the government to prohibit the distillation of substandard fruits to prevent illegal trade and safety concerns in their early years, which was a major issue for the growth of the South African wine industry in the early 20th century. With the expansion of KWV's powers over the wine and spirits industry in 1927, all distillation was overseen by KWV, and fruit distillation was banned. During WWII, the fruit export market collapsed, prompting the Soft Fruit Board to seek government aid. This resulted in the establishment of distilleries for table and drying grapes by President Smuts through the use of emergency war powers, bypassing the KWV.
With the irrigation scheme's expansion, there was a need for distillation facilities in the Northern Cape to process substandard table and drying grapes. Anticipating an influx of spirits into the market and addressing lingering concerns, KWV allocated vineyard hectares in the Orange River to ensure a presence there and attempt to increase levies and subsidies to compensate for the incoming spirits. This decision was contrary to the economic realities of the time, as KWV already had a surplus production of wine and spirits.
Wine processing in the Orange River area was initially integral to sustainability planning, focusing on spirits distillation and later dry white wine production by combining surplus dried grapes and table grapes to make the system economically viable.
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To oversee this production, Orange River Cellars (ORC) was established in 1965 and was ready for business with the opening of the irrigation scheme in 1966. Through the years they have become well known for their semi sweet and sweet white wines.
Concerns about the sustainability of wine production in the region emerged following the abolition of KWV's market control in 1995, due to the area's remote location away from export ports and major markets. The guaranteed market and price floor were no longer assured, and producers were left to the whims of the open market to expose any shortcomings in their area.
In the early 2000s, there were already technical experts expressing concerns about high input costs and small production units of wine grapes. The situation was worsened as 70% of wine grapes were not French noble cultivars, and only suitable for sweet and dry white or distillation. The decline became evident around 2013-2014 when, after years of stagnant wine grape prices, the minimum wage increased by 39% between 2012-2014. Additionally, the average raisin price rose by 29%, maintaining strong growth to date, leading to fewer grapes going for wine production.
By 2018, it was no longer viable to farm wine grapes in the Orange River area, and hectares rapidly decreased as producers removed vineyards to cut overhead costs. Vineyard replacement ceased from the early 2010s as investments shifted to raisins and alternative crops. Economic factors increased raisin hectares from 4,913 ha in 2007 to 15,626 ha in 2022, while the total wine grape area decreased from 5,149 ha to 2,840 ha. Diesel prices rose by 250% from 2008 to 2022, significantly impacting producer payouts due to transportation costs.
There is a direct correlation between payouts to producers and the fixed costs of the cellar, especially energy and fuel. Producers have observed a direct correlation between wine grape hectares in the Orange River and the minimum wage, particularly given the low level of mechanization in the area due to the small component that wine grapes make out of the total production units of producers. The situation reached a critical point in 2019 when increasing input costs and decreasing delivered tonnes led to drastic payout reductions for wine grapes. Each subsequent cycle saw fewer tonnes processed, leading to even lower payouts. By 2023, only one of ORC cellars was operational, processing fewer than 30,000 tonnes.
ORC is working hard on a premiumization strategy and trying to stabilize the hectares with ongoing discussions with the remaining producers to bring them on board with this new strategy. This strategy has seemed to have borne fruit: The Orange River recovery strategy has been well underway since 2024. Omstaan, their excellent range of premium wines, is evidence of this recovery. The range shows the expertise and quality that can be produced in this unique area.
The sustainability of producers in the area now depends on a mix of raisins, nuts and cash crops along with their wine grape component. Given the current port issues, table grapes in the area are also under pressure, cementing the importance of having a dynamic and diversified farming unit to survive in this beautiful but rugged area. However, the region can turn its historical disadvantages into advantages by capitalizing on emerging markets in South Africa and Africa for which they are ideally located.
Despite the uncertain future and the unlikelihood of wine production returning to the high-volume bulk levels observed during the market control days under the KWV, the story of wine grapes in the Orange River region is far from over. Instead, it marks the beginning of a new and captivating chapter in wine production within this intriguing desert landscape.
Petri de Beer
Winemaker, agricultural economist, farmer, and writer. Petri de Beer is an award-winning winemaker based in Stellenbosch. Having finished his Masters degree in Wine Chemistry at Stellenbosch University, he is currently broadening his repertoire with a PhD degree in Agricultural Economics focussing on the South African wine industry and writing for wine.co.za about topical issues affecting the industry
