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Mariann Fischer Boel
Member of the European Commission responsible for agriculture and rural development
A balanced reform for a stronger EU wine sector
Speech at the Agriculture Committee of the EP
Brussels, 4 July 2007

European Commission - SPEECH/07/458   04/07/2007

Other available languages: none

SPEECH/07/458












Mariann Fischer Boel

Member of the European Commission responsible for agriculture and rural development




A balanced reform for a stronger EU wine sector






















Speech at the Agriculture Committee of the EP
Brussels, 4 July 2007

President, Honourable Members, ladies and gentlemen,

As always, it's an honour and a pleasure to address this Committee.

Can it really be only a year ago that I stood here to present the Commission's initial communication on reform of our wine market regime?

It seems like so much longer. Certainly, since then, there has been a very full and enthusiastic debate – which has fired passions and imaginations around Europe.

And I have travelled round quite a number of Europe's wine-producing regions myself, to understand better everyone's very individual concerns. I'm very grateful to each region that invited me for making these experiences not only rather enjoyable but also, of course, genuinely useful in the reform discussion.

I would also like to thank this Committee once again for its thorough and thoughtful input.

This year has been about real consultation, not just going through the motions. So having listened carefully and weighed the arguments, on some points I have shifted my position.

Today, as our time is limited, I don't intend to list the Commission's proposals in full. Rather, I would like to outline the key issues, and highlight some points on which the proposals differ from last year's communication.

We launched the reform process last year because we saw serious problems in the wine sector. All stakeholders, including the Parliament, have recognised that. This means that the process must move forwards, because the problems have certainly not gone away since then.

True, there was an improvement in the trade balance last year. But when I look at the political reasons for this, I see no guarantee that the improvement will last.

We still forecast that, under current policies, in the years ahead we would run an annual surplus of almost 13 million hectolitres.

Therefore, Honourable Members, it's as imperative as ever that we overhaul our wine regime.

The main aims of the reform are:

  • to increase the competitiveness of the EU's wine-producers, strengthen the reputation of EU quality wine as the best in the world, recover old markets and win new ones;
  • to create a wine regime that operates through clear, simple rules – effective rules that balance supply and demand; and
  • to create a wine regime that preserves the best traditions of EU wine production, reinforces the social fabric of many rural areas, and ensures that all wine production respects the environment.

So how should we get there?

In general terms, I am proposing a two-step approach – as the European Parliament recommended in the Batzeli report. In step one, we would help bring about the structural changes which the sector needs. In step two, we would put in place the right framework to make the sector competitive and sustainable in the long term.

What about the detail?

First, Honourable Members, I believe we really must be rid of our distillation schemes, once and for all. This was a central plank of last year's communication, and it has received a lot of support. Distillation schemes are inefficient. They send completely the wrong signals to producers. In relation to our efforts at being competitive, they are a millstone around our neck. There are much better ways of spending €500 million a year!

Therefore, out with the unhelpful, in with the helpful. As previously, I propose that each Member State should have a “national envelope” of funds to spend on a range of possible measures. This could include crisis management tools – something for which the European Parliament has called several times.

National envelopes must surely be an attractive idea. They would allow Member States to cut the cloth to their own measurements – creating solution to their problems, not someone else's. Oversight within a Community framework would prevent distortions of competition.

It's entirely natural that there has been a warm debate about how to divide up the funds for national envelopes in a fair and appropriate way. The Commission has taken great care over this. We think that the method proposed will indeed be fair, and will result in national envelopes which can do what they are intended to do.

In addition, I propose extra funding for rural development policy – to be ring-fenced for wine regions.

Let's not underestimate how useful this policy could be for many in the sector. So many measures are on offer: to improve production and processing structures; to set up new farmers; to support training and agri-environment schemes; and many other things.

As indicated in our communication, agri-environment schemes to cover the maintenance of vineyard landscapes can be worth up to €900 per hectare per year, for 5 to 7 years. And the early retirement measure is worth up to €18 000 per year, up to a ceiling of €180  000 over a maximum of 15 years.

Honourable Members,

With this revised approach to support in place, we should do everything we can to let our wine-producers get out there and compete around the world, with all the flair and the energy which are theirs.

Certainly, the sector needs a certain level of management. But we must not micro-manage it into slow decline.

Therefore, I firmly believe that we must drop the system of planting rights – which we might also call "planting restrictions". So I propose to extend it to the end of 2013, then let it expire – as was set out in the "two-step variant" of a fundamental reform in last year's communication.

I have chosen my words carefully here: "let it expire". The fact is that the planting rights system is already due to end in 2010 under the current Council Regulation. So in suggesting an end date of 31 December 2013, I’m really not saying anything very novel. I’m offering more time for the sector to adjust.

The case for abolishing planting rights is strong. Many parts of the world are growing richer. Markets are unfolding, especially in emerging economies – as I saw myself during a visit to India earlier this year. A prosperous European wine sector will be a responsive sector. There must be room for energetic new entrants, and room for existing competitive producers to do more. The planting rights system gives us no space to breathe. It keeps things static in a dynamic world.

I understand the anxieties about a world without planting rights, but I think they can be answered.

Without the artificial outlets provided by distillation schemes, producers will plant more vines only if they think the market will reward them for doing so.

Furthermore, Member States will still have adequate powers to control the use of Geographical Indications (GIs). We’re not talking about a free-for-all.

When planting rights ended, the market would have to balance itself. And let's be honest: some of our producers have not made a profit for years, and will leave the sector at some point even without a reform. But this exit process can be a dignified transition rather than a rout.

Between 2008 and 2014, I would like to help smooth a path towards market balance. I would also like to offer something to producers who felt they could not profitably stay in the sector.

This is what the grubbing-up scheme is about. Producers who wished to leave would receive a payment for every hectare of vines dug up – conditional on the respect of environmental criteria. So they would have money in the bank to invest in a more viable activity.

I know that grubbing-up has touched more nerves than anything else in the reform discussions. And the debate surrounding it has been a good one. So although I think the basic principle is sound, I have tried to address the anxieties expressed.

It's essential to understand that the scheme would be voluntary. Not one single producer would be obliged to use it. There would be no army of bulldozers waiting on the horizon to move into action on day 1 of the reform's implementation.

I see this in terms of calculators rather than bulldozers: individuals would do their sums, and make a choice about what was in their best interests.

The figure of 200 000 hectares, which the media have mentioned so often, must be understood in this light. Originally, we estimated that about 400 000 hectares would have to be dug up to bring the market back to balance. Now, having listened to further arguments, we have halved that figure. But in any case, I say again: this is an estimate of a desirable result – not a binding target.

On the other hand, although this is essentially about individual choice, I have taken very seriously the concerns of Member States and the Parliament about the possible economic, social and environmental impact if too many producers in a given area chose to grub up. This is why I am proposing the following safeguards:

  • First, a Member State could declare that vineyards on mountains and steep slopes were ineligible for the grubbing-up scheme.
  • Secondly, it could invoke environmental reasons to declare other areas ineligible – up to 2 per cent of its total national planted vine area.
  • Thirdly, it could discontinue access to the scheme once the area grubbed up reached 10 per cent of its total planted vine area.

With these safeguards, I believe the grubbing-up scheme would do its work of smoothing out economic adjustment – while doing full justice to broader concerns.

Honourable Members,

As you know from last year's communication, I would like to integrate grubbed-up hectares into the Single Payment Scheme (SPS). They would thus become "eligible hectares", to use SPS terminology; we would also give them SPS "entitlements"; and they would be covered by the environmental disciplines of cross-compliance.

But now I have an extra point to propose. All hectares under vines should become "eligible hectares" within the SPS. This would give farmers who have some vine area greater flexibility in their land use, and would bring the wine sector more closely into line with the rest of the CAP.

What would distinguish grubbed-up hectares from the area which remained under vines would be the allocation of SPS entitlements.

With regard to quality policy and labelling, I stand by what was set out in last year's communication.

It's time to bring our quality policy more clearly into line with WTO provisions under the TRIPS agreement, and to make it more consistent with our policy on Geographical Indications (GIs).

In particular, we should do our wine sector a favour by allowing table wines not covered by a GI to display their vine variety and harvest year.

There has been huge support for allowing "vins de cépage". Producers elsewhere in the world make money from them, and some European producers think they could do the same. Why not let them do so? As long as the labelling is clear and there is sufficient control, why not let the consumer decide?

With regard to wine-making practices: I still believe that we should align our list of permitted practices with those accepted by the OIV – in which European countries speak with a strong voice.

But the Commission would filter those practices, so that any new permitted techniques would create new opportunities, not new problems.

Also, Member States would still be able to restrict the range of permitted practices in the case of quality wines, as they can today – to avoid any confusion for the consumer.

The most controversial wine-making practice is, of course, chaptalisation. I have paid very close attention to all the arguments presented. But I have to say that, in my view, the logic set out in last year's communication remains sound.

We have to keep our traditional balance in the European Union wine sector. Therefore, if we abolish must aid, we must also abolish chaptalisation. I know this compromise would be unwelcome in some parts of the Union; but without give and take, reform will be impossible.

When I say "give and take", I do mean "give" as well as "take". If we abolish enrichment with sugar, some wine-producers will have to switch to enriching with must instead. That will mean making investments. Under rural development policy, Member States would be able to give investment support to wine-producers who made the switch from sugar to must.

Another aspect of "give and take" is that I too have shifted my ground in some cases. And with regard to wine-making practices, I have done so in connection with the import of must for vinification in the European Union, and the blending of imported wines with European wines. In last year's communication, I proposed to end the bans on these practices. In response to the comments I have heard, I have now dropped this proposal. The bans will stay.

Finally, let me say a word about promotion.

While I've been listening to the European Parliament, to governments and to wine sector representatives around Europe, the need for a new push on promotion has been almost shouted at me. And I've got the message loud and clear.

Therefore, I propose to make available an extra €120 million per year – so, nearly 10 per cent of the total wine budget - for promoting European wines in third countries. The co-financing rate would be 50 per cent.

I also propose that we conduct new information campaigns on responsible wine consumption within the European Union under our current rules – with extra money, and with an increased co-financing rate of 60 per cent.

I would just say to the sector: if I produce the money, the ball is in your court! It's up to you to get results.

Honourable Members,

Let me conclude by putting across to you some of the optimism that I feel about our wine sector.

Certainly, there are anxieties about change, and I want to take these into account in a balanced reform.

But essentially, the world lies open to us.

When I look at our wine sector, I see a coiled spring, full of pent-up force. I want to release that force. I want all the expertise and the excellence, matured over so many centuries, to make itself felt even more in growing markets around the globe. With just a drop of courage, we can achieve that.

And now, I feel like echoing a comment from one of the plays of the Greek comedy-writer Aristophanes:

"Quickly, bring me a beaker of wine, so that I may wet my mind and say something clever!"

But in fact, President, I've come to the end of what I had to say. I truly believe that my proposals will be good for European wine, and I commend them to this Committee.

Thank you.


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