Making The European Wine Sector More Competitive

Making the European wine sector more competitive

In their third debate on how best to reform the wine sector, EU agriculture ministers, meeting in Luxembourg on 22-23 October, discussed ways to balance supply and demand and win back markets.

The Moselle valley is one of Europe's picturesque wine producing regions. Quality sweet and fruity whites are produced along the Moselle river which runs through and along the borders of three european countries: France, Germany and Luxembourg (Copyright: Administration communale de Schengen)

The idea of transferring payments from the first pillar (direct and market aid) to the second pillar (rural development) of the common agricultural policy is still a stumbling block in the eyes of many delegates. A budget rising from €100 million in 2009 to €400 million from 2014 would be allocated to support communities involved in the wine sector.

In order to improve competitiveness in the sector and help those wishing to leave it, producers would be offered grubbing up aid over five years, the average premium decreasing from €7,174/hectare in year one to €2,938/ha in year five.

The budget for such a measure, which would be implemented on a voluntary basis, could cover up to 200 000 hectares of wineyards.

The EU is facing increasing competition from other world wine producers. It is hoped an agreement will be reached by the end of the year.

More information:

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Wine (Provisional Version)

The Council held a policy debate on the reform of the wine sector based on the following questionnaire (13883/07):

1. Taking it that you agree with the principle of a national envelope, what kind of measures should be covered, taking into account the proposed transfer of resources from Pillar I to Pillar II?

2. In order to mitigate the effects of the reform on producers, should Member States be allowed to use part of the budget available under their national envelopes, namely in the form of decoupled payments under the Single Payment System?

3. Taking into account its economic, social and environmental dimensions, what should be the level of ambition, the length and the modalities of the grubbing-up programme under the reformed wine regime?

Menu of national envelopes

Most delegations could support the principle of national envelopes and would agree to extending the list of measures eligible ("the menu") under the envelopes. Those delegations shared the Commission's view that such envelopes make it possible to meet the specific needs of each Member State:

– support for restructuring and/or conversion at the level of production, processing and/or marketing;

– promotion of new production techniques;

– promotion, both within the internal market and in third countries, compatible with public health measures;

– agri-environmental measures;

– crisis prevention and management measures;

– green harvesting 1.

Some delegations, which were more reticent on some of the measures proposed, drew the Council's attention to the need to check the compatibility of the measures with the World Trade Organisation (WTO) green box.

Transfer from the first to the second pillar

This proposal was received with scepticism by most delegations, who feared a re-nationalisation of the CAP or that resources would not be channelled to the wine sector, and so preferred that they be kept under the first pillar.

However, some delegations felt, like the Commission, that the proposal was an active means of supporting certain vulnerable wine regions.

Method of allocating envelopes

Several delegations, in particular some of the new Member States, requested that the allocation of resources guarantee equal treatment of all Member States.

Decoupled payment

Some delegations could accept decoupled payment, for example in the form of transitional measures like the arrangements adopted for the processing of certain fruit and vegetables. Most did not see the immediate need and did not wish the solution to be adopted as compensation for the abolition of chaptalisation.

In the course of this exchange of views, several delegations expressed a desire to continue to use the term "fruit wines", and, where appropriate, mention it on the label, in line with the solution adopted for vodka in the proceedings on spirit drinks.

1. This is the harvesting of unripe grapes in order to avoid over-production. Doubts have been expressed as to the effectiveness of this measure.

Grubbing-up scheme

Some delegations welcomed the grubbing-up scheme as a way of rebalancing the market and/or as a socially-based offer to producers wishing to leave the sector, provided the measure was voluntary.

However, opinions continued to be divided as to the duration of the scheme (5 years or less), degressivity and/or the level of premiums. Some delegations, however, indicated a preference for grubbing-up on a wider scale than was provided for, and expressed doubts as to the effectiveness of the system advocated in view of the large number of proposed exemptions.

While they had some reservations, other delegations said they could accept a grubbing-up scheme which was not an end in itself, while allowing Member States some leeway in restricting grubbing-up in sensitive areas. Several delegations seriously doubted whether the proposed grubbing-up scheme would be effective in resolving the problem of over-production, and would prefer to incorporate this measure into the national envelopes.

According to the Commission representative:

– the national envelopes should enable Member States to choose the solutions best adapted to their specific wine-growing characteristics, but should not constitute a disguised means of reintroducing tools which had proved ineffective for reviving the sector's competitiveness;

– the amount of the national envelopes was a "Pandora's box" which it would be too risky to reopen;

– transfer to the second pillar was a measure adapted to the specific problem encountered by certain wine-growing regions;

– the grubbing-up scheme represented an offer to producers wishing to leave the sector with dignity, though the Commission was open to all constructive proposals concerning both the duration of the scheme and the ceiling of 200 000 hectares.

The Council asked its preparatory bodies to continue examining the proposal with a view to returning to this question at its next meeting on agriculture and reaching political agreement at the end of the year.

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View complete report: Council Of The European Union / Provisional Version / 2825th Council meeting / Agriculture and Fisheries.

ENDS

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