Mariann Fischer Boel
Member of the European Commission responsible for Agriculture and Rural
“EU wine sector: the need for urgent reform”
Brussels, 22 June 2006
Ladies and gentlemen.
It’s my great pleasure to tell you that the College today endorsed our Communication on reforming the Common Market Organisation for wine.
My starting point for this reform is my firm conviction that European wine is the best in the world.
Our wine sector has huge potential for further growth, but we must act urgently to exploit this potential.
The EU produces and consumes 60 percent of the world’s wine. It is the biggest exporter and the biggest import market.
Our wines are famous all over the world. They are associated with centuries of tradition and expertise and are produced in some of the continent’s most beautiful landscapes.
But despite all our natural advantages, we are heading for a crisis.
EU wine consumption is falling by about 750,000 hectolitres a year.
While we have increased our exports by 20 percent over the last 15 years, exports from our main competitors have exploded.
US exports have risen 4-fold and those from Chile and Australia 19-fold!
In those countries where people are drinking more wine, the New World producers are snapping up a growing share of the market.
At this rate, the EU could soon become a net importer!
We are producing too much wine for which there is no market.
Unless we make urgent changes, excess production is forecast to reach 15 percent of output by 2011.
Stocks are already the equivalent of a year’s production – I’m afraid to say that the “wine lake” is very much a reality!
Last week, we agreed to spend €131 million on crisis distillation. A further decision on this is due tomorrow.
As its name suggests, this is supposed to be for crises – instead it’s become a regular market management tool.
Today we spend as much as half a billion euros a year to distil wine, store it and turn it into ethanol for cars and factories.
This is a ridiculous way to use taxpayers’ money.
We must spend our wine budget – around €1.2 to €1.3 billion per year - more intelligently.
Our competitiveness is undermined by an approach to wine-making practices which is too rigid.
Our labelling rules are inflexible for producers, confusing for consumers and not fully in line with international rules.
For example, a table wine without a Geographical Indication may not carry the vine variety and vintage on its label.
How are we supposed to compete with the entrepreneurs of the New World if we continue to shoot ourselves in the foot?
The Communication we have just adopted presents four options for the future – but comes out clearly in favour of a fundamental reform specific to the wine sector.
The Status Quo is unsustainable.
Total liberalisation would cause untold short-term disruption to the market and would be rejected out of hand by producer countries.
An approach based on previous reforms – based around the decoupled “Single Farm Payment” has its attractions.
But it would be difficult to apply to the wine sector and would provide very small amounts of aid in many regions.
Instead, our favoured concept aims to return the market to balance before focusing on a more market-orientated and competitive wine sector.
This option comes in two variants; a single-step version and a two-step version.
Under both variants, we would abolish restrictions on planting rights.
The key difference between the two is whether we let the market balance itself or whether we help the process.
In the two-step approach, we suggest providing a generous incentive for the least competitive producers to step out of wine production.
This is similar to the approach we took in our very successful sugar reform.
We would make available €2.4 billion over five years for a grubbing-up scheme which would be entirely voluntary.
The payment would be higher at the beginning to encourage early take-up.
We believe that grubbing-up around 400,000 of the current 3.4 million hectares of vines in the EU would get rid of surplus production and restore market balance.
Once balance was achieved, the planting rights restrictions – which are such a financial burden on producers – would be ended.
At this stage, we would only be producing wine for which there is a market – rather than producing for distillation.
Producers could focus on quality.
Grubbed-up areas would become eligible for the Single Farm Payment, which would be linked to the respect of strict environmental standards.
We would also abolish the current distillation programmes and aid for private storage.
Some of the budget could then be transferred to Rural Development programmes specifically for the wine sector.
These would include early retirement schemes, start-up assistance and agri-environmental programmes to preserve the unique landscapes of our wine-growing regions.
Some of the budget could also be put into national envelopes to allow Member States to take measures best suited to their own situations.
We need a simpler and clearer labelling system and we need to consider adopting wine-making practices accepted internationally by the OIV.
I am not talking here about a free-for-all in which anything goes, but a sensible initiative to allow our producers to compete better in an increasing tough global market.
Finally, we would develop a straightforward quality system, based on two basic categories – wines with GI and those without.
This Communication is the result of months of consultations and hard work.
Now we want to intensify this consultation.
We need to be bold and creative if we are to reinvigorate our wine sector.
Only after a thorough debate will I return with legislative proposals – probably in January next year.
Reform is urgent.
This is a great opportunity – we must not waste it.