The findings are contained in a new ABARE report, A survey of wine grape growing farms in the Murray Valley and Barossa regions 2006-07, released today by Phillip Glyde, Executive Director of ABARE.

Murray Valley

The Murray Valley region has around 1300 wine grape growers and accounts for approximately 25pc of all wine grapes crushed in Australia annually.

"The wine grape growing industry in the Murray Valley is reliant on irrigation and many growers indicated that uncertainty about irrigation water, land use planning and labour shortages were impediments to farm expansion," Mr Glyde said.

Weaker wine grape prices and lower yields resulted in weaker financial returns to growers in 2006-07.

Wine grape growers in the Murray Valley realised, on average, farm business profits of only around $9000 in that year.

At the time of the survey, around 30pc of growers in the Murray Valley had intentions to leave agriculture within five years.

In addition, an estimated 10pc were intending to diversify or change their agricultural operation.

Barossa region

With around 540 wine grape growers, the region accounts for approximately 5pc of all wine grapes crushed in Australia each year.

"Drought conditions and high temperatures during the 2006-07 growing season had a severe impact on regional wine grape production, with wine grape farms recording business losses averaging around -$29 000 per farm," Mr Glyde said.

At the time of the survey, around three-quarters of growers in the Barossa region expected to have a similar level of involvement in the industry in five years time.

Around 8pc of growers expected to be semi-retired and about 3pc expected to be fully retired within five years.

* The report was one of a series of ABARE reports commissioned by the Grape and Wine Research and Development Corporation on the financial performance of wine grape growers.