The Australian Bureau of Agricultural and Resource Economics (ABARE) said overall wine grape production would reach 1.81 million tonnes in the 2003-04 fiscal year.

Grape production had slumped 10 percent in the drought-troubled 2002-2003 season, the first annual output decline since 1997.

The latest figures were released just days after the Australian Bureau of Statistics (ABS) released data indicating a global wine glut was cutting deeply into the country's formerly buoyant wine exports.

In its latest report on the industry, the ABS said wine exports slumped 27 percent in November to 155.2 million dollars (118 million US).

Australian wine exports reached a record 2.4 billion dollars in the 12 months to June 2003 and the Australian Wine Export Council has set itself the ambitious goal of reaching three billion dollars in exports in calendar 2003.

But the dip in export volume, falling overseas prices and a sharp rise in the Australian dollar in recent months has made reaching the target difficult, industry experts said.

Australian Wine and Brandy Corporation spokesman Lawrie Stanford said last week that the industry had to adapt to new conditions after a decade of continuous growth.

"There is unfortunately little expectation of improvement ... due to ongoing retail consideration, global oversupply and the challenge of unfavourable exchange rates," he said.

In its report on Thursday, ABARE said most of the growth in wine grape production in the next three years would be white varieties after several years of strong growth in red wine production.

"Growth in premium red wine grape production over the years to 2005-06 is forecast to slow as plantings of red varieties continued to decline in 2002," said ABARE executive director Brian Fisher.

He said red wine grape production was forecast to increase by a moderate five percent by the 2005-06 season, while output of white varieties was slated to grow 15 percent.

Australia is the world's fourth largest wine exporter, accounting for about seven percent of world trade behind France, Italy and Spain.

TERRA.WIRE