Radical wine sector reform to face New World rivals

Radical wine sector reform to face New World rivals


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The European Union’s top farm official last week called for a radical shake-up of the bloc’s wine sector to meet rising competition from New World wine producers.


Reforms aimed at streamlining wine production to meet demand were badly needed to ensure the survival of the sector, Mariann Fischer Boel told reporters.


“European wines are the best in the world,” Fischer Boel said. However, despite the rich history and quality of European wines, the sector faced severe problems, she warned.


Highlighting key challenges facing European wine producers, Fischer Boel said consumption was down and exports from the New World were making huge inroads into the EU market. “We in Europe are producing too much wine for which there is no market. We spend far too much money disposing of surpluses instead of building our quality and competitiveness. Over-complex rules hold back our producers and confuse our consumers,” she warned.


The EU farm chief said she was not advocating cutting the bloc’s 1.2 billion Euro annual budget for the wine sector but said the money should be used “more intelligently.”


The commission – the EU’s executive arm – said it favoured a radical reform of the sector, starting with measures to bring supply and demand back into balance before focusing on improving competitiveness, including the abolition of the system of planting rights.


Producers would be offered generous incentives to grub up uneconomic vineyards, outdated market-support measures such as distillation would be abolished and the system of labelling and wine-making practices would be updated and simplified, the commission said.


Final commission proposals on reform are expected to be tabled in December 2006 or January 2007. The EU has more than 1.5 million holdings producing wine, covering 3.4 million hectares, or two percent of the EU agricultural area.


Wine production in 2004 represented 5.4 percent of EU agricultural output, and more than 10 percent in France, Italy, Austria, Portugal, Luxembourg and Slovenia. The European Commission’s proposals for reforming the EU’s wine regime are a positive step towards enabling the sector to recover the huge ground it has lost in the global marketplace, Neil Parish MEP, Conservative agriculture spokesman in the European Parliament, said.
The proposals – which were unveiled to the European Parliament’s agriculture committee – will simplify existing rules, bring in clearer labelling and encourage better quality production. Central to the reform are plans to take around 400,000 hectares, or 12 percent, of vineyards out of production over the next five years, with some 2.4 billion Euro in aid being earmarked for compensation. Market management tools – such as support for by-product distillation, potable alcohol distillation, private storage aid and must aid – would be abolished. Crisis distillation would also be abolished Parish said the only way EU producers will thrive in the long-term is if they can bring a degree of market competition back to the sector and reduce overall production. Under the current wine regime, the EU spends around half a billion Euro each year on measures to store and distil wine surpluses.
Two weeks ago the European Commission announced a “crisis distillation,” meaning it would buy an additional 560 million litres of Spanish and Italian wine – on top of the regular annual EU purchase – to turn into fuel or disinfectant. And later, an extra 131 million Euro was given for yet more distillation in France and Italy. Parish said “The EU’s current wine regime is encouraging Continental producers to rest on their laurels, rather than strive to find new niches in the marketplace.


“Providing subsidies to Continental producers is unfair for taxpayers and harmful to the producers themselves who are often struggling to make ends meet. Getting them back into the marketplace will force them to become more competitive and find innovative ways of recapturing the market. Buying up surplus low quality wine is simply the wrong way to go because it encourages the production of yet more low quality wine.”
 


“Crisis distillation measures were meant to be a safety net but sadly they have become an almost annual occurrence. The fact is that Europe needs to make less, and better wine,” he said.
 

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