Examination of Witnesses (Questions 275
- 279)
MONDAY 7 MARCH 2007
MR LARS HOELGAARD, MS LENE NAESAGER, MR EMMANUEL
JACQUIN AND MR DOOLEY
Q275 Chairman:
Good afternoon. We are very grateful to you for making the time
to come and talk to us.
Ms Naesager: Welcome to Brussels and the Cabinet
of Commissioner Fischer Boel. I am a member of the Cabinet who
is responsible for wine reform. It is one of the tasks that I
am dealing with and we have from DG Agriculture also Mr Lars Hoelgaard,
who is the Deputy Director General, Mr Emmanuel Jacquin, who is
the Head of the Wine Unit and Mr Dooley, who is the Deputy Head
of the Wine Unit.
Q276 Chairman: Thank
you very much indeed. I am afraid we are coming to the end of
one of those Brussels days. We have been in meetings and listening
to people for quite a bit of the day. Perhaps it would be useful
if I explained who we are and what we are doing. We are what glories
in the wonderfully romantic title of Sub-Committee D of our European
Union Select Committee. We are responsible for Agriculture, the
Environment and Fisheries and most of us bear the scars of Agriculture,
Environment and Fisheries in various capacities. We are carrying
out an inquiry into the reform of the wine regime. We think it
is a pivotal reform, not just in terms of the amount of money
involved but also basically the nature of the present regime and
the need for change. We have already taken evidence in the United
Kingdom from a number of interest groups. We have spent today,
as I say, listening to people in Brussels, having taken the view
that it is important for us to get close to and hear from the
people who are most directly involved in taking decisions and
influencing decisions. Could I start by asking you how you think
the prospects for significant wine reform have developed and changed
since you published your initial document?
Ms Naesager: As you know, we put on the table
on 22 June last year a Communication on the future of the wine
sector. We put down some ideas that we thought were very interesting
and that we wanted to have tested with Member States and with
the European Parliament, and we then had a debate in the Council
with Member States and got the report from the European Parliament
at the end of February. We have also had plenty of meetings with
the stakeholders, the agricultural organisations. The Commissioner
has been travelling quite a lot in order to meet the wine sector,
wine growers, wine producers. She has so far visited six different
Member States in order to be out there meeting people and listening
to what they think. It is clear that some of our ideas have not
been fully endorsed, if I may say so.
Q277 Chairman:
You must be on the right lines then!
Ms Naesager: Yes. There has been some criticism,
which we need to look at, of course, and this is work that we
are currently carrying out with DG Agriculture. It is too early
to say where we want to go but we are aiming at having a Legal
Proposal adopted by the Commission on 4 July. The Commissioner
is still confident that we will be able to have a kind of "Profound
Reform" but what exactly will be the precise elements of
it I cannot convey to you at this moment.
Chairman: I wonder if we could look at
particular components of the reform, going through distillation,
restructuring, competitiveness, the whole lot.
Q278 Viscount Brookeborough:
Could you, please, take us step by step through the process by
which Community funds are dispersed on distillation and storage?
Your working paper on the CMO says that surpluses are withdrawn
from the market at a guaranteed minimum price and processed into
alcohol for the potable alcohol and fuel market. Who gets the
receipts from these sales? And can you explain to us why and how
the surplus wine is stored?
Mr Jacquin: I can start to reply to this question.
We have noted that you are aware of two documents which were published
by the Commission just before the Reform Communication. These
two documents date from February 2006. One is called Economy
of the Sector and the other one is called Common Market
Organisation. They are available on the website and we know
you are aware of them because they are quoted in your papers,
but they are very big documents and we can help you to understand
what is in them. The distillation system is a complex one, and
in fact there are not only distillations but also other market
instruments such as the private financing of private storage.
Let us concentrate on the distillations. There are four of them
in our system. Two are compulsory and two are optional for producers.
The first one is the compulsory distillation of by-products. The
by-products are the marcs and the lees which are extracted when
the grapes are vinified. These by-products have to be distilled
and the wine grower gets a minimum price for that, and the Community
funds go to the distillers in the form of a subsidy for the distillation
and in the form of public buying-in for the alcohol produced.
This distillation costs us about €200 million per year.
Q279 Viscount Brookeborough:
So, without Community funds being put into it, the end product
would be unsaleable because it would be too expensive?
Mr Jacquin: Yes. The end product is in any case
unsaleable, so it can be composted and put again on the ground.
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