ECONOMY

EU wine reform plan diluted?

BRUSSELS – Europe’s farm chief has backtracked on her plan for winemakers to get cash incentives for digging up vines to drain the EU’s surplus wine lakes, halving the area earmarked for abandonment, a document showed on Thursday. Apart from fending off competition from New World wines by focusing more on quality than quantity, the idea is to divert subsidies to discourage unwanted surpluses that usually end up being distilled into industrial alcohol or biofuel. Last June, in a blueprint for shaking up policy on wine, a sector last reformed in 1999, EU Agriculture Commissioner Mariann Fischer Boel outlined her general idea to scrap or at least simplify many subsidies and limit unnecessary production. At the time, she suggested offering cash rewards over five years for winemakers to dig up vines on land that they do not need to use, removing 400,000 hectares of vines out of the EU’s existing 3.4 million hectares. But in an internal update to last year’s blueprint, that area has now been halved to 200,000 hectares. Fischer Boel’s formal reform proposal is not due for publication until July. «Under the same yield assumption retained in the original impact assessment, the grubbing-up (removal) of 200,000 hectares of vineyard could reduce the wine surplus by approximately 7.5 million hectoliters,» the document said. For the main wine countries of Southern Europe – France, Spain and Italy, also the world’s top three producers – this has been the most controversial element of the plan. They had complained that 400,000 hectares was far too high a figure. Together, the trio accounts for 80 percent of the EU’s wine-growing area. The document, obtained by Reuters, said 60,000 hectares of vines might be dug up in the reform’s first year and a further 50,000 hectares in the second, without giving any more details. But if nothing was done to overhaul the sector, the EU’s wine surplus in a normal year would reach some 12.8 million hectoliters, or 7.2 percent of production, it said. Other proposed measures that would help to reduce the EU’s wine lakes include a ban on using sugar in winemaking, a practice used by countries with cooler climates such as Luxembourg and Austria to boost alcohol content. But the main factor to remove economic incentives for overproduction remains to scrap support for distilling unwanted surpluses, as Fischer Boel suggested in her blueprint last June. She has often complained of the large amount of cash that the EU spends on distilling unwanted wine – around half a billion euros a year. Most of the existing distillation schemes and subsidies for private storage of wine would end under the reform plan. While wine stocks would probably increase in the first year after the reform since subsidized distillation would no longer exist, the annual stock increases were expected to diminish as the market gradually entered into balance, it said. Another cornerstone of the plan is for country allowances based on historical output. EU countries would get more leeway to control vineyard abandonment and perhaps also some extra cash per hectare of vines that they remove from production. Those allowances would have a «special emphasis on measures for the promotion of European wine on non-EU markets… and on responsible and moderate wine consumption,» the document said. Vine planting is strictly controlled in the EU, both by area and approved varieties. New plantings are not allowed until mid-2010 except under particular circumstances. Fischer Boel’s idea is to extend that ban until 2013 and then scrap it. «At the end of the first phase of the reform, the market balance is expected to be virtually restored, therefore the ban on new plantings could be lifted without risking affecting the equilibrium,» the document said.