In Australia's wine regions, many growers have abandoned their vineyards, and others are contemplating doing the same.

It is normally the time of year when growers would be watching their vines for the first signs of life and getting ready to water them. But an oversupply of grapes, a lack of water and dwindling export markets are pushing them out of the industry.

Dougal Leslie from the Murray Goulburn area in Victoria has been growing wine grapes for 15 years, but this season he has abandoned his crop.

"You have got a severe water shortage down here," he said.

"Unless it rains in our catchment areas, we may only end up with 20 per cent of our water allocation by February. So all in all I just felt there was no hope.

"The wife and I decided it was pointless carrying on so we just decided to sell our water allocation, sell all the machinery, and I've just gone and got a job."

The wine industry estimates that more than 2,000 growers will be forced off their farms - a quarter of the industry - in the next two years.

The executive director of Wine Grape Growers Australia, Mark McKenzie, says last year saw a reversal in major export markets, which was compounded by the global financial crisis.

"We find ourselves in a situation where our plantings are overheated," he said.

"Even looking optimistically at the likely renewal of market growth, it is unlikely that we are going to be able to soak up all of the vineyard production and wine production flows from that."

It is not just the high Australian dollar forcing the industry out of lucrative markets like the United States and the UK.

Emerging wine countries such as Chile, Argentina and South Africa are producing cheaper wine and flooding those markets.

"We've lost about $650 million worth of export value over the last 18 months or so," Mr McKenzie said.

"Particularly when in markets like the UK, you have every wine-producing nation on earth competing in that market place. Extremely competitive, extremely price sensitive, and, of course, with a government that continues to increase excise on imported wine products."

He also says the tax incentives and managed investment schemes which lured people to the industry during the 1990s have made the situation worse.

"That got driven by tax policy and of course, off the back of that, we as a grape-grower group have called on the Government to put a moratorium on further managed investment schemes in the vineyard sector because we simply don't have any need for additional plantings at this point," he said.

The industry hopes it can survive these hard times but Mr Leslie is not so sure.

"The people in the know seem to think that we needed to cut our tonnage by nearly half so that means half the vineyards in Australia have got to go somewhere," he said.

"I don't think anybody is making any money to maintain their vineyards in the meantime."