It is wine grapes that are in over supply and the Chinese don't want our wine, not yet anyway.
Things went belly up thanks largely to a massive increase in plantings by major corporations cashing in on the boom 15 years back. Couple that with our high production costs compared to our South African and South American competitors and the over allocation of water rights which had to be pulled back and thus drove water prices through the roof. This combination has resulted in wine grape production being borderline viable. The big corporate wine grape growers had the links to secure winery contracts but the small grape grower was often unable to secure a contract.
When this scenario plays out often all you can do is turn the tap off and sell your water.
Malthusian principles of greed I guess.