European wine reform

After one year’s discussion the European Commission have adopted proposals for a wide-ranging reform of the Common Market Organisation for wine. This aims to increase the competitiveness of EU producers, win back markets, balance supply and demand, simplify the rules, preserve the best traditions of EU wine production, reinforce the social fabric of rural areas and respect the environment.

The debate inside EU is very strong. There are two opposite factions: the actors of the wine industry are mainly contrary to this reform. To read a web review click here.

Details of the proposal:

Abolition of market management measures: from day one of the entry into force of the reform, the following measures will be abolished: crisis distillation, support for by-product distillation, potable alcohol and dual-purpose grape distillation, private storage aid, export refunds, aid for must for enrichment of wine.

Ban on sugar for enrichment: the use of sugar for enriching wine will be banned from the day the reform comes into force. This process is not in line with OIV or EU definitions. Ending chaptalisation and the aid for must will enable the balance to be maintained between north and south. All producers will then make wine purely from grapes and unsubsidised must.

Grubbing-up scheme: Growers who wish to leave the sector will be offered a voluntary grubbing-up premium. In year one, the premium will 30% higher than current levels and, to encourage uptake from year one, it will decrease over the five years of the scheme. To avoid social or environmental problems, Member States will be allowed to limit grubbing-up in mountains and steep slope vineyards and in environmentally sensitive regions and stop grubbing-up if the total reaches 10 percent of country’s area under vines. The total amount of grubbing-up should be about 200,000 hectares. The budget for this will fall from €430 million in year one to €59 million in the fifth and final year, and the average premium will decrease from €7,174/hectare in year one to €2,938/ha in year five.

Single Farm Payment: all areas under vines will be eligible for entitlements for the Single Farm Payment, and those that are grubbed up will automatically qualify for the payment, thus ensuring that they are maintained in good agricultural and environmental condition.

Ending planting restrictions: the system of planting rights will be extended until the end of the transitional period in 2013 and then abolished from 1 January 2014, to allow competitive wine producers to expand their production. The decision to increase production will depend on the producers’ ability to sell what they produce.

Oenological practices: responsibility for approving new or modifying existing oenological practices will be transferred to the Commission, which will assess the oenological practices accepted by the OIV and incorporate them into the list of accepted EU practices. The EU will authorise practices agreed internationally for making wine for export to those destinations. Bans on imports of musts for vinification and on blending EU wines with imported wines will be maintained.

Better labelling rules: The concept of EU quality wines will be based on geographical origins (quality wine produced in a specified region). Wines with Geographical Indications will be divided into wines with Protected Geographical Indications and those with Protected Designation of Origin. Labelling will respond to consumers’ needs by being simpler and, in particular, for the first time allowing EU wines without GIs to indicate variety and vintage on the label to answer consumer demand for single variety wines.

National financial envelopes: these will allow Member States to adapt measures to their particular situation. The overall budget will vary from €634 million in 2009 to €850 million from 2015. The amount available for each country will be calculated according to vine area, production and historical expenditure. Possible measures include: promotion in third countries, vineyard restructuring/conversion, support for green harvest, new crisis management measures i.e. insurance against natural disasters and the administrative costs of setting-up a sector-specific mutual fund.

Rural Development measures: many measures in the RD regulation could be of interest to the wine sector, not least setting-up young farmers, improving marketing, vocational training, support for producers’ organisations, support to cover additional costs and income foregone in maintaining cultural landscapes, early retirement. To allow this, money would be transferred to the RD budget, rising from €100 million in 2009 to €400 million from 2014. This money would be ring-fenced for wine-producing regions.

Promotion and information: the Commission intends to pursue with rigour a responsible promotion and information campaign. This will include a budget of €120 million out of the national envelopes for promotion measures outside the EU, 50 percent co-financed by the EU. There will be new information campaigns within the EU on wines with Geographical Indications and responsible/moderate wine consumption, with an increased co-financing rate of 60 percent for the latter.

Environmental protection: the eligibility of all wine-growing areas to qualify for the Single Payment Scheme means that environmental standards under Cross Compliance will be applied more widely. Cross Compliance will apply for all grubbed-up areas. There will be minimum environmental requirements for grubbing-up, restructuring and green harvesting, and increased funds for agri-environmental schemes in Rural Development programmes.

Personally I think it is an important change in how to market european wine. I am european and I believe that if we want to face the competitors coming from Usa, Australia, … we need to change something. We just have to wait to understand if these changes are good to reach our goals.

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Reader Comments

Instead of fighting change if the wineries embraced it we might move forward in a constructive manner. So frustrating to see people fighting to stay in the past. Change is inevitable, and could help to save some of the old ways while creating new opportunities.