EU plots 'fundamental' wine reform in 2006

By Chris Mercer

- Last updated on GMT

Related tags Wine makers Winemaking European union

As the EU announces another €450m round of subsidies for member
states to restructure their vineyards, plans are already being laid
for major reforms to Europe's wine sector next year.

France, Italy and Spain, as Europe's wine heavyweights, are set to receive roughly three quarters of the Commission's €450m subsidy allocation for the year starting July 2006.

If approved, the funding distribution will be similar to last year, with Hungary receiving most (€9m) out of the 10 new members.

The aim of the subsidies is to help wine makers adapt production to market demand by converting to different grape varieties, relocating vineyards and improving vineyard management.

The Commission has already given more than €2bn to Europe's wine sector for this purpose since 1999.

But, problems have continued with the Commission again forced to find an extra €145m in 'crisis funds' this year to distil wines into industrial alcohol and reduce the effects of over-production. The fund has been used every year apart from 2002/03 and 2003/04 since it started in 1982.

Now, a Commission spokesperson said the body was setting to work on a wide-ranging reform of the sector to sort out this problem. It also aims to break the link between aid and production in favour of a single payment scheme - in-line with changes already afoot in other agricultural sectors.

"Next year we will have fundamental reform. The wine sector is one of the remaining ones that has not been reformed,"​ said the spokesperson, adding that "this year, distillation has been useful but the effect is not what we expected"​.

Crisis distillation has remained a voluntary scheme and many wine makers see it only as a desperate last resort because they only receive a fraction of the market price for their wines. Some even prefer to throw their wine away.

Work on the Commission's reform 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.

Yet, the Commission is hampered by its lack of legal muscle, said its agriculture spokesperson. If countries like France do not fulfil promises made in order to get extra funding, it cannot take them to court. And, ripping up vines, like distillation, remains a voluntary scheme for wine makers.

However, moves to reform the wine sector will be anathema to some vintners, and the issue has the potential to be more explosive than sugar reform in Europe's wine regions.

Thousands of French wine makers protested in streets of southern France this year at a lack of government help for the crisis hitting the region. Wine production rose 23 per cent in France last year, leading prices to plummet by around 40 per cent in some areas of the country.

Southern France's militant vintner group, CRAV, has already launched a number of attacks on government offices and foreign wine supplies in the Languedoc-Roussillon region.

The Commission's proposals to reform the wine sector should appear by the second half of next year.

Related topics Markets Beer, Wine, Spirits, Cider

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