Examination of Witnesses (Questions 220
- 239)
MONDAY 7 MARCH 2007
MS EVA CORRAL
Q220 Viscount Brookeborough:
But it has been used every year.
Ms Corral: Yes, it has been used lately every
year and even for quality wines, so I do agree it is a problem
and this has to be resolved. There should be some kind of management
of the vines so that we avoid having to distil all that quantity
of product. Probably a good reform should start by getting out
of the market all that surplus, because I imagine it would not
make sense to have a reform now and apply it when we are having
such a surplus in the European Union; it would probably hinder
the efficacy of the new Common Market Organisation.
Q221 Lord Plumb:
First of all, could I congratulate you on your paper. It is an
excellent paper and it is good to see that COPA-COGECA are on
the offensive, not just the defensive, and you have come forward
with some interesting ideas. How on earth you get farm organisations
and co-operatives from 27 countries to reach an agreement on a
paper is beyond me. I too had a bit of experience in COPA some
years ago and I could not get 12 to agree, so you are doing very
well to get as far as you have. There are three points that I
would like to question you on which are in your Position Paper,
which we find very interesting. First of all, the organisation
of the sector—in the framework of subsidiarity, you say—is
there to achieve better consistency "between plantations,
processing and marketing", in other words bringing the whole
industry hopefully as close together as possible. The second point
is "the strong involvement of the sector in adapting production
to marketing opportunities in terms of quantity and quality".
And the third one is "the linking of a part of the CMO aid
to this commitment". Does this mean a further development
of co-operatives? Can you expand on that a bit because that is
in itself quite interesting? If we see the reform of the wine
regime 10 years hence, it is obvious there has to be a much greater
degree of co-operation than there is at present, with 1.6 million
farmers, as you say, producing wine. If you could expand on that
a bit, it would be helpful to us. You seem to imply that there
should be no aid for excess production. Is this the correct interpretation
of what you are saying, because I think that is rather important
as far as our evidence is concerned? You have already mentioned
the crisis management mechanism. But is the crisis management
mechanism a fairly wide definition of a crisis? What really do
you mean by "crisis"? Is it crisis of surplus? Is it
crisis of management? Is it caused by disasters or whatever? Is
it a combination of these things?
Ms Corral: I will start at the end with crisis.
Crisis will be all extraordinary situations that cause a big problem
in the market. It could be exceptional climatic conditions.
Q222 Lord Plumb:
Drought or whatever?
Ms Corral: Yes. It will be whatever situation
that causes a big surplus in the market and that cannot be managed
by the measures that are already in the Common Market Organisation.
Q223 Lord Plumb:
In other words it could be climate?
Ms Corral: Yes. However, we think that because
of the crop and its high yield variability we have to maintain,
probably in the national envelopes, some measures to address this.
We are proposing, as a type of measure, green harvests because
green harvests can help prevent these surpluses before they are
produced, which is a very good way of dealing with this. However,
can we really manage to produce exactly what the market is asking
for? There are too many variables and agriculture is not a science,
so it seems difficult to produce just the right quantity. Therefore
a number of other mechanisms should be there to deal with these
quantities, that should not be as enormous as is the case now
in normal circumstances. This should be linked to the two first
points, the restructuring and connection of all the sectors and
the involvement of the sector. This is because until now the CMO
has just been addressing the producers but has not been linked
to the market. We have been having a lot of restructuring but
the restructuring is not linked to whether these products or these
varieties have a market. In some places we have found ourselves
with, for example, a lot of white wine because there was a demand
for white wine, and sadly there has been too much reconversion
to white wine and now there is no market. Another thing is that
restructuring has been accompanied by an increase in yields and
this has to be managed. If you restructure, you change the variety,
you have got another variety and then you start to produce more;
and this is, of course, a problem, The idea is that there has
to be a link between all the actors in the sector. In COPA-COGECA
we are working with our colleagues from CEEV, and also at national
level, trying to be consistent with what is produced and what
the market is demanding. That is why we are asking also for a
market observatory. There are very few data on consumer demand.
Because of the nature of the crop (it is not an annual crop),
it is not possible to change from one year to another and say,
"OK, now I grub up my vines and plant something else".
They take three years to produce, so there should be all this
information coming in from the market, from world trends, that
will help the sector to adapt (to it). These are all the changes;
it is what we call verticality of the sector, and of course the
sector has to be involved. But that does not mean that these organisations
and co-operatives are doing on their own what they think is correct.
These are the plans that are drawn up by the Member States with
the involvement of the sector. They will have to consult the sector
and it will be implemented by everybody. The idea is that farmers
are not passive. They will not just stay there and say, "OK,
here is our money", and that is it. They have to engage and
adapt their production to the market and they have to be willing
to focus on producing a product that has an outlet in the market.
I do not know if I have answered all your questions.
Q224 Lord Plumb:
You have. Vertical integration is what I call the relationship
with the trade. To what extent are farmers prepared to accept
contractual arrangements with some of the buyers? Is this not
possibly a progress point where there could be a better relationship
between them if they are related in commercial terms and not just
by agreement on contracts?
Ms Corral: Of course, this is something that
has to be studied in more detail. The characteristic of the European
wine sector is that, contrary to third countries, there are not
really big companies in Europe. Most of the wine is produced by
the producers and marketed by their co-operatives. The co-operatives
play a very important role and it is very interesting to see what
degree of integration they are achieving. Before working in COPA-COGECA
I was working for the Co-operative Association in Spain, which
is the organisation that brings together all the co-operatives
in Spain. I was doing this work on supplies and I had to travel
around Spain and visit different co-operatives, and they were
doing a lot of inter-co-operation. You have one co-operative that
has a lot of members which are producers and another co-operative
and they have got together to buy inputs or to market things.
This inter-co-operation is even going to the point that different
co-operatives from different regions in Spain are working together.
This is very interesting from the point of view of marketing and
management of what is produced.
Lord Plumb: Interesting and encouraging.
Q225 Chairman:
I do get a little bit worried when people talk about managed markets,
quite honestly. Is there not the danger that, if you put so many
mechanisms in place between the producer and the market, you are
actually insulating the producer from the market and they will
carry on acting in a way which is not responsive to the market?
Ms Corral: I am not sure I understand your question.
Q226 Chairman:
You have a producer, and I think we are all agreed that the producer
ought to be more responsive to the market. You say there might
be big fluctuations caused by the market and we have to protect
the producer from some of those impacts?
Ms Corral: We have to protect the producer from
the crises which are caused by those exceptional situations. Otherwise,
it is the producer that is going to see what is going on in the
market, not individually but in these producer organisations or
regions or co-operatives or whatever, and is going to take a decision
to see how they can respond better to those market demands.
Q227 Chairman:
But we have the example of where trying to protect the producer
in terms of crisis has meant that crisis distillation has become
routine distillation. Is that not the danger with any crisis intervention,
that it becomes routine and actually prevents the producer from
having to face up to what the market signals are saying?
Ms Corral: Maybe it should not be a crisis distillation.
Maybe it should be a crisis system. It could work differently.
It could take a different form but it should be a kind of net
in case of those exceptional circumstances. We are totally agreed
that crisis distillation should be only used in a crisis situation
and that we do not have to use it every year and that the present
situation is not normal, so we have to make sure that it really
works. The way to make sure that the producers are not using it
every year is to prevent it, to cover all the possibilities by
all these responsibilities of the producers and all the sector
as a whole so that we do not get to that point.
Q228 Chairman:
I would like to hear you talk a little bit about the relationship
between your net underneath these producers and the need for structural
change in the industry, because the industry you are talking about
is coalescing in quite an important way, whether it is through
co-operatives or other devices. How does this net fit into that?
Would it not prevent it from taking place?
Ms Corral: When I talk about the sector as the
whole sector, it is co-operatives, it is traders, it is retailers,
it is the whole sector from producer to market, but I am always,
of course, talking about producers and co-operatives because they
are the ones I represent.
Q229 Chairman:
But they all have to be changing in relation to a market which
itself is changing.
Ms Corral: Yes.
Q230 Chairman:
And so how does the change take place if you put a network of
protection underneath it?
Ms Corral: But the net is not a net that is
always there. As I said, it is exceptional. Normally that net
will be "under the table" and you will not see it and
you will not use it. It is not necessary and it will not be used
every year. Normally it is not used any year and the sector adapts
itself. In the eventuality that one year happens to have some
extraordinary circumstance that creates a situation which it is
absolutely not possible to deal with in terms of the mechanisms
that are on the table, then we take it out and say "There
is no way we can deal with this situation. It is a very extreme
eventuality".
Q231 Chairman:
And it would be set so low that it normally did not operate?
Ms Corral: It is not a mechanism that is put
there to be used. "Crisis" these years has lost a bit
of its meaning. Crisis should be exceptional by definition, so
with all the mechanisms that you have: promotion, research, some
grubbing up, temporary grubbing up, green harvests, you should
be able to manage it. There should not be any problem. We are
trying with this plan[4]
to ensure that this crisis mechanism is something that we are
not going to use.
Q232 Viscount Ullswater:
Earlier on you said that the way to deal with this was at two
levels, at the EU level of reform and then by using the "national
envelopes" to allow the Member States to take on particular
problems in their regions. Obviously, one of the things at the
EU level is adopting the wine making practices which, I note from
your paper, should be governed by the OIV and that any wine making
practice adopted in the EU should be authorised by the OIV. All
of that I think we would agree with, but then you go on to say
that further restrictions could or should be placed on the EU
either by the Member States themselves or by the Council. Is this
not going to make it a very rigid system and rather bureaucratic,
when in fact I believe you are looking for more flexibility, particularly
to take on the mid-price range wines, which are the ones that
are penetrating the European Union, the consumer side, from third
countries, which are not bound by these extra restrictions which
you say could or should be imposed by the EU or the Member States?
How do you see the future of that?
Ms Corral: I think we have to go back to wine
definition, and at present there is no internationally recognised
definition for wine. We are very much attached to a definition
of wine that keeps wine as a natural agricultural product. It
is made by producers, it is regulated by the Common Agricultural
Policy, so it is an agricultural product, which for us makes it
important to have a restricted list of oenological practices.
You are absolutely right when you say that we cannot be very restrictive
and we should allow some evolution of these practices for table
wines. We do agree with that. We have to find an equilibrium between
Geographical Indications and table wines that can, let us say,
adapt to a certain limit without losing the characteristics of
what is a European wine, because this is important for us. They
have to adopt some of the characteristics of these wines coming
from third countries which have been very successful. We have
to adapt this list of oenological practices. What we are saying
is that they have to be recognised by the OIV to be adopted in
Europe, so the OIV is necessary but not a sufficient condition
for oenological practices to be adopted in Europe. We do not want
the Commission to have the competence for this because the quality
policy is something that depends very much on Member States. I
do not think Member States would really agree to give the Commission
those competences. Also, we have had some examples where at international
level we have not had our Geographical Indications protected very
much, and I think you all know about the example of the wine agreement
with the United States. In this wine agreement we were, let us
say, obliged to sign it because there was this exceptional measure
that we would have to comply with (certification) and we have
had 24 oenological practices approved for United States wines
that are not allowed in the European Union. We do attach very
much importance to this list, and the capacity to adopt this and
update this list is should be maintained in the Council. However,
it may be true that there has been a certain rigidity regarding
this but this might be more because Member States have not been
willing to move on that. Maybe they will accept that it is a necessary
flexibility for table wines and that we need to be able to adapt
this list. We are currently doing it. We adopted last December
the regulation on wood chips and the Commission is now considering
some other oenological practices, so this is a process that has
already started and we are discussing it. We have a group of oenological
experts that meets with the Commission and discusses those practices.
Q233 Viscount Ullswater:
Do you think that, if you do not adopt these practices, the third
countries will bypass Europe and compete much more readily in
countries like China and Russia, which is importing a lot of wine,
because of the restrictions that you are imposing on the wine
makers in Europe? They seem to have a freer hand to adapt to what
the market is wanting, what the consumers are wanting, rather
than what you are saying—that is, "We must have this
natural product. This is what we determine is what you want",
rather than other people perhaps saying, "Actually, we want
something different".
Ms Corral: When we talk about consumers, what
it is that they want, I want to be sure that what they want is
that type of wine. I remember that, when this regulation on wood
chips was adopted, there was an incredible problem in all the
producing countries in the European Union where all the consumer
organisations were complaining about how could we put chips in
the wine, that it was absolutely awful and we should under no
circumstances allow this. Immediately a number of regions and
governments in Europe made some legislation to say that that could
not be used in Geographical Indication wines, in quality wines.
Some regions were even saying they were not to use that in their
table wines. What is it really that the consumer wants? We talk
also about Geographical Indication quality wines. If our model
is not working, why is it that new producing countries are using
our Geographical Indications? Why is it that in Canada we can
find one of those powder packs to make "wine" and you
put the powder in water and it is called "Rioja pack"?
I would never buy something like that. But why is it that they
are using our name if this system is not working? It is clear
that third countries have a certain type of product which is a
very standardised product and which is, let us say, correct. It
is a correct standard wine. It is not a bad wine but it is not
a wine that is going to give you something special, even if they
also have wonderful wines. Because of the structure of production
in the European Union, is it logical to think we can fully compete
with Australia where they have an average of 50 hectares against
five hectares in the European Union? Even if we do some merging
and increase the size of our farms, can we really compete with
those other countries? Or maybe the way to compete is, as the
Commissioner was saying, to use our model, to be flexible about
the number of things that are not currently working but to, let
us say, attack with all those things that we have and they do
not have? That is more the approach we (COPA/COGECA) would have,
and perhaps for table wines we can try to make a product that
will be a little more similar to what third countries are doing
without losing our identity.
Q234 Baroness Miller of Chilthorne Domer:
You were just speaking about a five-hectare producer here competing
with a 50-hectare producer in Australia. But, of course, as you
said much earlier, a lot of your producers are organised into
caves coopératives, so they are not really five
hectares; they are effectively producers with a much larger area
through the means of the co-operative?
Ms Corral: Yes, that is so, but when we talk
with the wine producers they say that wine is a product that is
alive and that you will make one wine one year which is linked
with the land and you will have a flavour this year and you will
have another flavour next year.
Q235 Baroness Miller of Chilthorne Domer:
I agree if they are marketing it as their own five-hectare wine,
but perhaps you would tell me if many caves coopératives
are marketing the wine and selling it as that cave coopérative's
wine that has received, for example, a gold medal at the Paris
show. It is promoted as the whole coopérative's
wine, not as the product of one producer with just the five hectares?
Ms Corral: There is some of that, and that can
certainly be developed and that would be a plus if that happened.
But I wonder if it would be exactly the same as one producer having
this big exploitation. The case now is that we have big companies
that have vines in a number of continents and they put them together
and mix them so that they can get the same flavour every year
and have a standard product, whereas our concept of the product
and its characteristics is that we cannot do that and I do not
think we want to do exactly that.
Q236 Lord Cameron of Dillington:
I think you have already said that the most sustainable way of
sustaining the wine sector in the long term is to ensure that
the consumer buys more wine and is encouraged to buy more wine?
Ms Corral: More European wine!
Q237 Lord Cameron of Dillington:
Exactly, which I totally endorse. I want to talk to you about
labelling. It seems to me that the more you can encourage the
producer to have entrepreneurial ideas, to have flair and enterprise
and marketing and to try to relate to the consumer, sometimes
they will succeed, sometimes they will not. But the more you can
try to encourage them to market their wine in their own way, to
encourage independence rather than being controlled either by
the EU or by the Member State or even by the current local appellation
contrôlée, the better it will be for them. Why,
like with other food, should people not be able to put on their
labels what they want providing it is true and correct?
Ms Corral: To put something on the label that
is true you have to be able to demonstrate that it is true, and
this goes to the question of the year and the variety of table
wines, and there are 8,000—
Q238 Lord Cameron of Dillington:
There are 10,000 Geographical Indications in Europe, of which
the consumer probably recognises 50 at the most.
Ms Corral: The case for Geographical Indications
is very particular because for the quality wines there is no European
legislation. It is each Member State that is dealing with this
and this has caused many Member States to create many Geographical
Indications and even different categories in the quality wines.
Of course, this makes the system enormously complicated but this
does not mean that the concept of quality wine is not a good one,
because it is very much linked to what we have always been producing
in this region.
Q239 Lord Cameron of Dillington:
But the only good one is the one the consumer understands.
Ms Corral: Absolutely, but we consider that
we need some simplification in the labels. That is absolutely
necessary because, if we compare our European wine with another
wine from a third country, the way it is labelled is very complicated.
There are a number of items on the label which are compulsory
indications and a number which are voluntary. There are indications
for quality wine, there are indications for table wines, so we
have to do something about that—for example, traditional
mentions like "chateau" or "clos",
et cetera. There is no European legislation on this. There is
no legislation that says that in every European country we have
the same definition of this, so we would say that we need to revise
this and we need to see how we can simplify the labelling without
misleading consumers and without putting something on the label
that we cannot control. Going back to the Geographical Indications
and the wine variety and year, the Geographical Indications do
have a cahier des charges. They are certified, so that
what is on the label is what is inside the bottle. If we are to
allow those Indications in table wines, that is going to be very
difficult because we cannot demonstrate what is inside the bottle.
4 Note by Witness: Refers to COPA and COGECA
position paper. Back
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