EU fines French wine sector mis-management

The European Commission has ordered France to pay back €14.5m of CAP funding it received to restructure and modernise vineyards, after the money was mispent.

"The area actually under vines represented on average only 90 per cent of the area acknowledged as being eligible. Furthermore, new planting rights were exercised for 12.25 per cent of the areas whereas a limit of 10 per cent was set by the regulation,"​ said the Commission, justifying its decision.

The €14.5m charge means France will have to pay back almost three times the amount it is getting from the EU to turn 1.5m hectolitres (hl) of quality 'appellation contrôlée' (AOC) wines into industrial alcohol.

The crisis distillation buying price for AOC wines was set at €3.35 per hl, which works out at a total spend of €5m.

The Commission carries out more than 200 inspections every year to make sure member states are spending CAP funding correctly. It even expects countries to track spending further down the line by using aerial or satellite photography to check fields.

The charge on France's wine sector is one of the biggest brought by the Commission this year and adds further evidence that it plans to get tough on the EU wine sector.

A Commission spokesperson told www.BeverageDaily.com​ that proposals to reform the wine sector were likely to be put forward next year.

Work on the proposals is not yet very advanced but general strategies being examined include better monitoring of member states' industries, tightening re-planting rights and ripping up more vines.

The French government agreed to begin implementing these three policies to get crisis distillation funding this year. French delegates at a Commission meeting pledged to rip up between 15,000 and 18,000 hectares of vines in exchange for crisis distillation.

One problem for the Commission is its lack of legal muscle. If countries like France do not fulfil promises made in order to get extra funding, it cannot take them to court. It could, however, decide to refuse or reduce crisis funding the next year.

Overproduction and competition from New World wines have touched all of the EU's major wine producers - Spain, France, Italy, Greece - this year.

Italy has become the last of the four to apply for crisis distillation, though the Commission spokesperson said its request for funding to distil six million hl of table wine was "very unlikely"​ to be successful. Three to four million hl is seen as more realistic.

The EU budget already sets aside around €220m every year to fund wine distillation, but has not had to find extra crisis funds since the 2001/2002 season; mainly because Italy, France and Spain had managed to reduce wine production by a combined 22mhl (14 per cent) from the year 2000.

However, Spanish production crept up by eight million hl in 2003 and the French and Italians followed suit in 2004, increasing their production by 11m and 8.5m respectively.

Tensions have sporadically erupted between the nations, particularly in France's Languedoc-Roussillon region where the militant vintner group, CRAV, has claimed responsibility for attacks on tankers and distilleries containing foreign wines.

French wine makers met with government officials last Wednesday to discuss the on-going crisis and ask for help to distil an extra three million hl of 'vins de pays' and 'vins de table'.

France, Italy and Spain still control around 60 per cent of world wine exports, but the New World is eating into their markets. Australia recently overtook France to become the UK's biggest wine supplier and a recent report by UK consultancy IWSR​ predicts Italy could lose 37 per cent of its export markets by 2008.