Brussels, 18/05/2006 (Agence Europe) - In mid-June the Commission is expected to adopt a communication presenting options for reform of the Common Wine Market (CWM). According to a preliminary version of this document, it will be accompanied by a critical study of the state of affairs in this sector. Agriculture Commissioner Mariann Fischer Boel calls for a very simplified system that chops out most of the current market management mechanisms (such as crisis distillation and private storage).
The Commission has drawn up quite a long list of the problem areas in the CWM, which dates back from 1999, as well as developments in the market: consumption of EU wine has diminished by 750,000 hectolitres (hl) annually; the structural surplus in the wine sector is estimated to be 15 million hl, almost 8.4% of EU-27 production; annually, 15% of wine production has to be withdrawn from the market through the crisis distillation mechanism; since 1996, European wine imports from so-called “new world” countries (Argentina, Chile, Australia etc.) has increased by 10% every year and reached nearly 11.8 million hl in 2005, whereas the quality of EU wine has barely increased (13.2 million hl in 2005); the success of new vine plantation banning policies has been limited by new plantation rights; planter rights increase production costs and put a brake on implementing more rational structures in vineyards, which reduces the competitiveness of EU firms; the restructuring system has certainly improved the quality of wine but has not increased production; some Member States have still not solved their problems involving illegally planted vines (this involves plantations planted since September 1998); market management measures allowing for distillation are not very efficient in preserving farmers' incomes and have become permanent tools for getting rid of un-sellable surpluses (paid for out of the Community budget); crisis distillation has become a structural measure (like private storage) and also involves quality wines (whereas it was initially meant to be for inferior quality wines known as “table wines”); Community rules on manufacture and oenological practices are too rigid and too complicated, thus reducing competitiveness in the European sector even more; labelling rules should also be revised because they often cause the consumer to make mistakes.
The Commission is presenting four options but has already put three of them to the side: the status quo, which cannot be maintained due to the problems revealed, the continued logic of the 2003 reforms, the Common Agricultural Policy (CAP) and the complete liberalisation of the wine market (which would mean getting rid of all production and market potential instruments and therefore EU aid planned till now, which cost € 1.3 billion in 2005). The Commission is planning on two variations of “fundamental reform” of the sector, the first in one stage (abolition of the system of plantation rights and suppression of the Grubbing-Up scheme and the second in two stage: (grubbing up and restrictions on planting rights).
First scenario of radical reform: current policy in planting rights expires in 2010 at the latest. The Commission is even thinking of its immediate suppression. Current aid granted to winegrowers who grubb-up will be abolished and the system of single payments will apply to hectares grubbed-up by the producer. Funding will be distributed between each producer Member State within a national envelope submitted to common rules. Each country will have the choice of a variety of instruments, notably a security net mechanism for compensating the suppression of crisis distillation. There are also a number of measures supporting winegrowers (pre-pension plans, agro-environmental measures) will be integrated into EU Member State rural development programmes.
Second scenario of radical reform: the Commission is proposing a version that is a little less liberal and closely linked to the grubbing-up policy in an effort to end overproduction. In this respect, the grubbing-up programme will be temporarily reactivated with the goal of getting rid of 400,000 hectares of production over a five year period, with an aid envelope of € 2.4 billion in total for the period. The single payment system (aid decoupled from production) will apply to surfaces kept in production. The system for restrictions on planter rights will be extended till 2013. The budgetary envelope for each Member State could be supplemented depending on the number of hectares grubbed-up.
Main elements of a radical reform: the Commission is suggesting two similar measures for the two varieties of radical reform. It is proposing to end the crisis distillation measures or replace them with a security net system.
The Commission is proposing the abandonment of other management measures such as the distillation of by-products, distillation of potable and grape derived spirits, private storage and support for musts.
A budgetary envelope will be made available to each Member State producer to fund measures deemed necessary. Funding could be used for implementing crisis management measures (insurance against natural disasters, cover against income shortfalls, specific sector mutual funds). The Commission is proposing to back up rural development programmes to help this sector. It has suggested that in this context, pre-treaty aid (up to € 18,000 a year and € 180,000 for a fifteen year period) and agro-environmental measures (€ 900 per hectare maximum for a period lasting between five and seven years).
The European quality wine notion will be confirmed and promoted at a world level. Nonetheless, wine producers will be allowed to produce and sell “new world” kinds of wine to meet foreign competition. The Commission is also envisaging the strengthening of inspection instruments in Member States, particularly for different varieties of wine.
Oenological practices, the Commission is proposing that for European wine exported to certain third countries, certain EU techniques be agreed at an international level. It is also planning that the EU ends its ban on imported winemaking musts and mixes of Community wines with wine from third countries. The requirement for a natural wine alcohol minimum will be got rid of. The Commission is in favour of a single legislative framework for wine labelling.
The Community budget planned for wine (almost € 1.3 billion in 2005) will not be reduced, but spending will be done in a totally different way, according to the Commission's initial analyses.