Examination of Witnesses (Questions 40
- 56)
WEDNESDAY 7 FEBRUARY 2007
MR JEREMY COWPER, MR ROBIN MANNING AND MS SIMONE
PFUDERER
Q40 Chairman:
This has been absolutely fascinating and helpful but I do realise
that time is going on and we still have quite a few questions
to ask. How long do you have available?
Mr Cowper: We are at your disposal.
Mr Manning: We are in your hands.
Chairman: That is very helpful indeed. Lord
Palmer.
Q41 Lord Palmer:
You have mentioned the word "environment" in the last
five minutes and I am aware that this has now becoming a tremendously
key word. I am also aware what a thorn in the side I have seen
for successive Defra Ministers on environmental issues, not least
of all alternative fuels. To what extent do you think that the
EU wine industry does have an impact on environmental issues?
For example, could the distillation of wine into fuel make a significant
contribution to the substitution of, for example, fossil fuels?
Would support for measures leading to good environmental impact
be justified? I realise that in particular that last bit is a
complete subject and debate in its own right.
Mr Cowper: Yes, it is. I will come on, if I
may, to the fossil fuels and I think the answer is that it is
not going to be much of an avenue really. Yes, we have mentioned
the environment and in environmental terms the wine industry in
Europe is hugely significant; it is bound to be, given the area
under viticulture—1.5 million holdings, 16% of all agricultural
farms, 3.4 million hectares, two% of the agricultural area. It
is the primary role of agricultural activity in most of the wine
producing Member States. In some regions wine production is 20%
and even 30% of agricultural production. Of course it varies very
much between different regions but I think it is true to say that
a lot of difficult and sensitive areas are under vines. The Commission
itself has commented on this and said that wine production has
both positive and negative effects on the environment, but it
is hugely important in terms of shaping the landscape, and as
well as our cultural heritage our physical heritage as well. It
is important in tourism. Positively vines on hillsides can limit
soil erosion and rainwater run-off and stabilise hilly terrain
against landslips—it can do. Vines can provide some fire
protection if they have a relatively low density of rootstock,
and there are other positives as well. But there are adverse environmental
impacts: impact on soil erosion if the vines are planted down
the slope instead of across it and the soil is uncovered; mechanisation,
which may not be suitable for all soils; compaction and loss of
organic matter; there can be excessive use of fertiliser or contamination
from plant production products; and there is the disposal of waste
and by-products of vine growing. So it has a big impact. There
are also impacts on irrigation in some areas of excessive specialisation,
and there are risks from grubbing up if it is not managed properly.
Defra, in our life-cycle analysis work, touched slightly on various
products and we have one case study on viticulture, vinification
and bottling. We do not have actual numbers. The most significant
environmental impact is at the agricultural stage and the production
of glass bottles and in this report we said that the agricultural
stage is particularly significant in terms of eutrophication and
toxicity, use and loss of fertilisers and pesticides respectively.
So, yes, there is a big environmental impact and I think that
the CMO is slightly out of touch with the other organisations
in not yet having a strong link with the environment and with
environmental measures, and that is one of the reasons why we
want to move towards a link to the RDR, towards de-coupling from
production and coupling to measures where support from the taxpayer,
is delivered in return for some environmental gains and from some
management of the countryside. So I think that, yes, support for
good environmental measures would be justified. I have already
mentioned the policy for our agriculture, that we should seek
to make a net positive contribution to the environment and that
support should pay for public goods. I think this is something
that consumers of wine have an interest in, as indeed they do
in other food products. People are beginning to ask questions
about the way in which their food and drink has been produced,
and again it is an area where I suspect that Third Country producers
may have a slight edge at the moment, so in market terms as well
this is something we want to encourage.
Q42 Lord Palmer:
Could you envisage the likes of rural strategy schemes coming
into effect across the Europe Community?
Mr Cowper: Some vine producers who are paid
de-coupled support because they have other land and produce vines
do get the support at the moment—they have some cross-compliance
requirements. Yes, I would envisage moving taxpayer support to
a situation in which it delivered some environmental benefits.
Wine as a fuel you asked about—
Q43 Chairman:
We are not topping up our cars with Beaujolais!
Mr Cowper: It is not going to be very viable.
My understanding is that it is not going to be a good substitute
for fossil fuels. For a start, it has to be processed twice and
turned into wine if we were doing it that way by distillation,
and there are other more starchy crops that will provide a much
better source. And surplus quantities currently are relatively
small in relation to energy requirements and, unless we are going
to encourage people to start growing vines for that purpose, it
would not be sensible, it would not be economic.
Q44 Lord Moynihan:
You gave a very helpful answer to Viscount Brookeborough on the
subject of wine-making practices and production techniques. But
just assist our understanding. The Commission seems now to be
recommending that the OIV practices should be applied to EU producers.
Presumably you would support this? And I wondered if you would
care to comment.
Mr Cowper: Yes, we would support that. We would
support that as an option because it would open up more production
possibilities; it would loosen the EU framework of possibilities
for producers. As I say, I do not think we are envisaging the
OIV enforcing production methodologies on European producers but
just opening up more possibilities through the medium of the Commission.
Yes, we would support it, and I think that is a good idea.
Chairman: Thank you. Baroness Jones.
Q45 Baroness Jones of Whitchurch:
You said at the outset that you supported most of the Commission's
recommendations. But one of the areas that you do not seem to
be supporting is the issue of their proposals to reduce the level
of enrichment and the ban on added sugar. There are two things
about this. Firstly, you say in your evidence to us that it would
have an increased cost, and I wondered if you would like to expand
upon on what you think the cost implications are. The second thing
is: do you think there is a danger if we did end up opposing those
Commission recommendations that we would be seen to be doing it
too much from a position of self-interest and almost falling into
the trap of what we are accusing the southern producers of doing,
which is trying to protect our own producers without looking at
the wider picture? Do you want to comment on that?
Mr Manning: I can start the discussion on that,
and thank you for raising the point. We have said very clearly
that we disagree with the Commission's ideas—there are no
proposals as yet—with the ideas floated in the Communication
Paper on enrichment. Just to recap, what they have suggested is,
firstly, a tightening of the enrichment possibilities, which means
that in northern Member States you would only be able to enrich
up to a maximum of two% rather than up to three and a half% as
you can at the moment. Also, there would be a ban on the use of
sugar as an enrichment agent, and that is sometimes called chaptalisation.
The reason that we are so concerned about that is that the reason
enrichment takes place is largely climatic. So countries which
do not receive the right amount of sunshine or maybe have rain
at the time leading up to harvest can find themselves in the situation
where the grapes do not have the same levels of sugar as they
would do in the sunnier parts of the Community. Enrichment and
chaptalisation have been a central component of wine making in
the northern Member States for many years, probably hundreds of
years.
Mr Cowper: 205 years.
Mr Manning: 205 or so! Our concern about the
tightening of those rules is really on two fronts. Firstly, economic—and
this is the point that you have raised, as to how much would that
cost. Figures which have been produced by the Wine and Spirits
Trade Association indicate that, if the ban on the use of sugar
was implemented and if the maximum enrichment possibility was
reduced, then you are talking about increasing costs by something
like 15 to 25% in northern Community Member States, and that is
quite significant. Our other concern is that in introducing these
restrictions it is going against the whole ethos of the reform,
which is liberalisation—let people produce in the market
and do not tie their hands behind their back when doing so. So
we would be concerned with, on the one hand, saying to everybody,
"We want a much more liberal regime and want people to be
more market focused" but, on the other hand, saying, "By
the way, you cannot do what you have been doing for the last 205
years because new rules have been introduced." We can perfectly
understand why the Commission has floated these ideas because,
if they came in, what it would mean is that more of the surplus
grape juice produced in the Community would be used within the
Community for these enrichment possibilities. But what it would
mean for the northern Member States is that there would be a reliance
upon obtaining grape must from the south of the Community in order
to be able to carry out their processes; and there would be extra
costs, as I said just now. In terms of our overall position on
the dossier, I think that is a very relevant point and relevant
concern, and we need to weigh this against the balance of everything
as negotiation takes place. I think, based on the evidence I have
seen so far, that the UK would not be a lone voice—I think
you could run a map right across Europe from central France all
the way across to the Baltic States and north of that, and I would
suggest there would be a lot of concern about the Commission's
possibilities being implemented as a policy, simply because of
the additional costs and the reduction in flexibility that that
would entail.
Q46 Baroness Jones of Whitchurch:
Probably, if you asked consumers what they wanted in terms of
wine, they would not want these additions and/or, if they were
going to be added, they would like it clearly put on the label
so that they could see what the production methods were. Do you
have any thoughts on that? Would you expect more honesty about
the production methods were enrichment and added sugar to continue?
Mr Cowper: I think it is a perfectly reasonable
point. We have heard the argument that one of the reasons for
wanting to stop chaptalisation, using sugar, is that wine should
be presented as a whole grape product. But some of the very good
wines from France have, for hundreds of years, been produced by
that and people seem to like those, including some of the best
wines. Probably you would have to let the market decide. If you
labelled it and said what it has in it and people stopped buying
it because it had got sugar in it, then you would have to take
that message. Of course, the southern producers and the New World
ones have to add things as well for acidification, and then there
are other ingredients that are used in wine making. In general
terms, yes, I think we should give the consumer the information
they want.
Q47 Viscount Brookeborough:
To an extent you have almost answered it. But to what extent do
New World countries actually use the same sort of enrichment that
we use?
Mr Cowper: To the extent that they need to in
terms of their climate, I think some of them in New Zealand may.
Q48 Viscount Brookeborough:
But is it common practice throughout the rest of the world?
Mr Manning: No, not with sugar.
Mr Cowper: Not with sugar, no, not chaptalisation
and not enrichment. But they do need to do acidification.
Q49 Viscount Brookeborough:
Because it is not necessary or because they are not permitted?
Mr Manning: Their climatic conditions are more
sunny.
Chairman: No risk of adding antifreeze! Lord
Bach.
Q50 Lord Bach:
Back to the UK wine industry. I know from personal experience
what a champion of UK wine Defra has been over the last few years.
How significant a player are we, how significant player could
we become given climate change and perhaps some of the existing
trends? Do we suffer from excess production as a sector, or could
we in the future? And, of course, not being part of the CMO because
we do not reach the figure that has been mentioned, are the differences
that there obviously are between the UK operations and EU operations
to our advantage? Are there lessons here for the future?
Mr Manning: I will start off. Firstly, in terms
of the profile of the UK industry the UK is, in global terms,
a very small wine producer. Annual production is around 15,000
to 16,000 hectolitres per year, which is about two million bottles
of wine. That can increase to 18,000 hectolitres, maybe, depending
on the weather conditions, the quality of the harvest, et cetera,
but in broad terms around 15,000 to 16,000 hectolitres a year,
but that is increasing. There is significant interest, I think,
in the English and Welsh wine sectors at the moment; we are seeing
some major investment going in in terms of establishing new vineyards,
particularly in the south of England. There are similarities in
terms of topography, soil types between parts of the south of
England and the champagne area in France, and there has been,
as we said earlier on, considerable success by English growers
in international wine competitions, and it has been said that
some of the quality of the English sparkling wines is on a par
with champagne, although obviously they cannot be called champagne—but
in terms of quality they are very good indeed. Climate warming
has in the past been linked with the growth in our industry. I
think the jury is out on whether it is having an impact at the
moment, but in terms of how things look to be developing, if the
warming of the temperature continues, then I would say that it
would be right to be positive about the UK wine industry because
it would give us that extra sunshine and that extra warmth that
we need. Conversely, this could have a negative effect on some
other wine growing areas of the Community of course, as they become
too hot. Most English wine is sold direct, either via mail order,
via farm shops and other outlets; some is sold in supermarkets
but not very much at the moment. Is the industry in excess? No,
it could sell everything that it wants, and if you look at the
prices that English wines can command they actually command a
premium in the market. Could there be an excess in the future?
Theoretically, yes, but we sincerely hope not, and I think we
picked that point up earlier on that we see the English wine industry
as an industry which is adapting to market demands and, provided
we stay outside the CMO, then there is no reason to believe that
that should not continue in the future, and in many ways the English
wine industry is a model for what we would like to see the Community
wine industry develop to in the future.
Chairman: Baroness Jones.
Baroness Jones of Whitchurch: Could I
raise with you the issue of public health, which some of these
discussions raise? Presumably Defra takes some responsibility
for the public health issues that are linked with, obviously,
food consumption, but in this case consumption of wine. You said
at the outset that our consumption is going up, whereas in a lot
of other European countries wine consumption is going down, and
I think you also said that, if we did have more liberalisation,
there could be a reduction of wine costs of something in the region
of 30%. So that, along with the fact that alcohol levels in wines
are going up, means that there is a potential danger to public
health, and I wondered if you had any thoughts on it—is
this something that we should be concerned about? You did say
in your evidence that you thought that better market orientation
of the production would have a positive rather than a negative
impact on public health. I was not quite sure how you squared
that, really; it seems to me that we are in danger of increasing
the consumption of better quality wine in England, which is potentially
going to have an adverse effect on public health. Do you have
any comments on that?
Q51 Chairman:
The answer is, you are in consultations with the Treasury!
Mr Cowper: They could certainly, no doubt, solve
the problem of wine being too cheap if they chose to tax it. We
said in our evidence that ,generally speaking, the Government
is of course working with the Commission on its alcohol strategy
and is very aware of the issues of harm caused by alcohol, and
we are in touch with both the Food Standards Agency and the Department
of Health itself, which is leading those issues. Health, per
se, is not a Defra responsibility, although I do not want
you to think that government works in silos. Of course, we talk
to the Department of Health about that and, yes, we are very conscious
of that as an issue. What we want to do is to ensure that wine
producers are producing wine that people want to drink for positive
reasons, if I can put it like that. I think that we have quoted
from the Commission's impact assessment indicating the abolition
of the subsidised potable alcohol distillation and reducing surpluses
through better market orientation. What they are saying, I think,
is that they would hope that the reforms would steer producers
to producing better quality wines rather than artificially enhanced
alcoholic products that are at a very low level in terms of quality,
but, none the less, can cause ill health. That is a slightly confused
answer. Simone?
Ms Pfuderer: I think one other aspect was that
the distillation of wine for alcohol would go which would have
some kind of offsetting impact as well. In the longer term one
would expect, if supply and demand were in balance, that the price
would go up again, so in the shorter term there would be an issue
with the over-supply if that all came on to the market. But over
the longer term prices would possibly go up again.
Q52 Baroness Jones of Whitchurch:
As you said, you do not work in silos, so presumably you are in
contact with organisations like the FSA.
Mr Cowper: Yes.
Q53 Baroness Jones of Whitchurch:
What we do not want to do, on this Committee or indeed whoever
deals with the Commission, is to create an increased public health
problem inadvertently by some of the measures that we could agree
in terms of wine production which could, for example, increase
the alcohol levels in an individual bottle which people inadvertently
then would be drinking thinking that it was the same as it had
been previously.
Mr Cowper: I cannot cite you where but I think
I have read something—maybe it is a Commission document—saying
that the taste for more alcoholic wine had now peaked and was
beginning to come down and people were looking for lower alcoholic
wines, and that is precisely because of health and lifestyle issues,
that there was a niche developing or a bit of a market route for
lower alcoholic wines. We have talked to the Department of Health
about the possibility of doing a health impact assessment on the
wine reforms and we will have another conversation with the department
about that. I think it is an important aspect of it. In general
terms I think the Commission's point was, to go back to that,
about a more market orientated regime that did not just produce
unwanted wine, unsought after wine that nevertheless got on to
the market and encouraged lower prices for binge drinking. I think
we need to bear that in mind in looking at the reforms and looking
at the regime. We certainly do not want to bring that about.
Q54 Chairman:
Before we finish, for my own information, crisis distillation
will go effectively but there will still be distillation for top
mark brands, will there not?
Mr Manning: That would still happen but the
taxpayer will not pay for it.
Q55 Chairman:
We still want our brandies and our cognacs, do we not!
Mr Cowper: Exactly, and for fortified wines
distillation into potable alcohol is very important for sherry
and port and cognac, indeed. Fortified wines is an important sector
and one that is part of this regime and certainly the Iberian
colleagues will want to make sure that the reforms address their
needs as well.
Q56 Chairman:
Thank you very much indeed for the thoroughness of your answers.
Mr Cowper: Thank you very much for inviting
us to contribute.
Chairman: You may have guessed, our message
to you is "All power to your elbow and victory goes to the
brave!" On the other hand, "Brave decision, Minister"!
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