CHAPTER 3: CONCLUSIONS
77. In this Chapter we repeat, for ease of reference,
the conclusions which we have reached in our preliminary consideration
of the Commission's proposals. Before doing so, however, we wish
to address the proposals as a package and to make some general
comments.
78. The Commission's proposals appear to us to
point the way to a brighter future for the EU wine industry and
we are prepared therefore to give them as a package our broad
support. They contain however a number of important pluses and
minuses. We strongly support the proposal that subsidised distillation
should cease. Without this fundamental change, reform of the wine
sector has little chance of success. The ending of distillation
also contains the key to the vexed issue of planting bans, on
which we comment below. We are also pleased to see the proposals
that the current restrictions on wine labelling should be lifted
and that the OIV should provide the benchmark for the authorisation
of wine-making practices within the Community.
79. We cannot however support the proposals to
extend the planting ban until 2013 and to prohibit the use of
sucrose in wine making. We recognise that some may see a prima
facie contradiction between launching a subsidised grubbing-up
programme on the one hand and lifting the current ban on new plantings
on the other. However, if subsidised distillation is abolished,
there is no need of planting bans to control production capacity,
as there will then be no incentive for anyone to embark on new
plantings for which a clear market outlet cannot be foreseen.
Nor can we accept the argument which is being advanced in favour
of a ban on the use of sucrose in wine-making—that the removal
of subsidies for grape must requires such a prohibition in order
to remove internal trade distortions. This argument simply does
not hold water. There is a more logical way of removing trade
distortions, and that is to permit the use of sucrose in wine-making
throughout the Community. This would have the added advantage
of levelling the EU wine market not only internally but also in
relation to third countries, who are not subject to such a restriction.
80. Some might perhaps argue that the proposals
to subsidise grubbing-up and to provide retirement aid are not
strictly necessary in order to bring supply and demand into balance,
as the ending of subsidised distillation will of itself achieve
that objective. We are however prepared to support these measures
on the basis that we are dealing here with an industry which is
not evenly spread across the Community, or indeed across individual
wine-producing Member States, and that there is a short-term need
for support to help those whose livelihoods centre on wine-production
to adjust to a new market situation. The problem of displacement
should not be over-stated. Many of the Community's wine-growers
do not rely solely on wine production for a livelihood. We were
told by the French Agriculture Ministry that more than half of
the wine-growing concerns in Languedoc-Roussillon were run by
people who had other jobs but who had inherited vineyards and
who "keep their few hectares alive producing grapes and deliver
their grapes to the cooperative" (Q 754). Nonetheless
we recognise that there will be problems of adjustment and we
concur with the need for transitional measures to help those who
will be displaced from the wine industry. We are clear however
that such support should be carefully defined and time-limited.
81. National envelopes have been presented as
an extension of subsidiarity and as providing Member States with
flexibility to tailor Community support to the particular demands
of their own wine-producing regions. While we have no difficulty
with the principle of such decentralisation, we remain concerned
that the rules governing it should be tightly drawn. Funding from
national envelopes must not become a way of life. In the medium
term the industry itself must take onto its own shoulders responsibility
for restructuring production, for insuring itself against crisis
and for marketing its own products. The reformed Wine CMO must
recognise the interests of consumers and taxpayers as well as
those of producers.
82. We will leave the last words with two wine
growers from France—Jean-Louis Alaux, President of the Independent
Wine Growers Association (FVIA) of the Aude region of Languedoc-Roussillon,
and Alain Vironneau, President of the Inter-Professional Wine
Council of Bordeaux Wine Growers (CVIB). M Alaux told us,
when we took evidence from the FVIA in Narbonne: "This CMO
must be the last but it must be very efficient. We need to stop
this situation, we need to do it once and for all and take a position
on the market as it is in its own reality" (Q 769).
And M Vironneau told us in evidence at CIVB Headquarters in Bordeaux:
"We do not want subsidies, we want to hold our head high"
(Q820). These words eloquently sum up our essential message.
83. Our conclusions, as recorded in Chapter Two,
are:
(a) We strongly support the Commission's
proposal to end all subsidies for distillation and for its associated
storage. (Paragraph 26)
(b) We support the inclusion of vine-growing
areas and of land withdrawn from vine-growing within the ambit
of the Single Farm Payment and its rules concerning cross compliance.
(Paragraph 29)
(c) We support the transfer of funding from the
Wine CMO Budget to provide for a range of Rural Development schemes
on the basis of co-financing by Member States, but we do not support
the employment of Rural Development funds to compensate for changes
in the rules governing wine enrichment. (Paragraph 31)
(d) We support the Commission's proposed grubbing-up
programme but we consider that there is a need for tight definition
of the exemptions from it which Member States may invoke. (Paragraph
38)
(e) We do not support the proposal to extend
the ban on new plantings beyond 2010. We consider that, with the
removal of subsidised distillation, production capacity will adjust
itself to demand as the result of market forces, especially if
the subsidised grubbing-up programme proposed by the Commission
goes ahead. (Paragraph 42)
(f) We welcome the proposed relaxation in the
current regulations on wine labelling. While we also regard the
proposed new rules governing the registration of wines with a
geographical indication as a step in the right direction, we do
not believe that the proposed changes will be effective in raising
the market profile of EU wines vis-à-vis their New World
counterparts. (Paragraph 47)
(g) We support the Commission's proposal that
the OIV list of recommended wine-making practices (WMP) should
be adopted as the benchmark for EU oenological practices and that
the filtering of individual WMP into EU regulations should be
the responsibility of the Commission. We suggest also that consideration
should be given to the establishment of reciprocal arrangements
between the EU and the WWTG. (Paragraph 53)
(h) We do not support the Commission's proposals
on enrichment. We agree that the existing subsidies for concentrated
grape must should be removed but we consider that a requirement
on producers to use grape must rather than sucrose will unnecessarily
increase production costs and at the same time create a distortion
in the market vis-à-vis non-EU producers. (Paragraph 58)
(i) We support the concept of national envelopes,
but we consider that there is a need for care to ensure that the
size of the dividend and the formula for its allocation among
Member States reflect the objectives of the reform process and
do not result in a perpetuation of either the current Wine CMO
Budget or the current pattern of subsidies across Member States
and wine regions. We would wish to see spending on the wine sector
reduced over the medium term. To achieve this, both the overall
sum and the individual allocations to Member States should be
reviewed prior to the adoption of the EU's multi-annual financial
perspectives in order to audit the results which have been obtained
from the funds provided and to determine what, if any, further
EU funding may be needed in order to revitalise the wine industry.
(Paragraph 63)
(j) On the understanding that it is focused on
harvest insurance and will not allow the reintroduction of subsidised
distillation through the back door, we support the use of national
envelopes for crisis management measures. We urge the Commission,
however, to stand fast on this restriction and to ensure that
the new regulations make clear that the purpose of crisis management
support is to help the industry to manage its own crises, not
to remove the risk from commercial decisions. Wine sector funding
for this purpose should be regarded as a short term measure. (Paragraph
65)
(k) We do not support the use of national
envelopes for "Green Harvest" measures. (Paragraph
66)
(l) We support the continuation of grants for
restructuring of the wine industry, but we would wish to see such
assistance restricted to projects for which a sound business case
can be made and robust arrangements made for audit of the results.
(Paragraph 70)
(m) We support the inclusion, as an eligible
measure for funding from national envelopes, of activities designed
to boost the sales of EU wines, but we do so on the basis that
promotion is interpreted as marketing, that it covers more than
simply advertising and that it includes action to promote vertical
integration between producers and buyers and the creation of proactive
marketing networks. Marketing should be targeted at consumers
within as well as outside the Community, especially in those Member
States where wine consumption is increasing. Support for promotion
from national envelopes should be a short-term measure and should
be designed to enable the industry to market itself rather than
to have an ongoing subsidy from the EU taxpayer for the purpose.
(Paragraph 76)
84. We will review these conclusions in the light
of evidence which we shall be taking from UK Agriculture Ministers
on 25 July. Our final report will be made to the House after the
Summer recess.
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