Examination of Witnesses (Questions 320
- 339)
MONDAY 7 MARCH 2007
MR LARS HOELGAARD, MS LENE NAESAGER, MR EMMANUEL
JACQUIN AND MR DOOLEY
Q320 Baroness Miller of Chilthorne Domer:
There was tremendous fear amongst, for instance, the livestock
sector as they began to look at reform, yet now they find that
there is life after reform. Do you think that the wine sector
needs to go and have a look at some of what is happening in other
sectors, because from what we have heard they do seem really pessimistic
about the afterlife, if I can put it that way?
Ms Naesager: It is clear that, if they could
have a look at what has happened beforehand with the 2003 reform
and how it is working today, it will be useful. One of the reasons
why we do not in our Communication buy fully into Option 3, the
Single Farm Payment Scheme, is that the payment per hectare might
not be big enough. In some cases you have big chateaux which are
producing extremely well and you have regions which might not
be helped by or interested in such a payment. We need to take
into account that there are huge differences in Europe between
the wine-growing regions. There are some which are asking for
the Single Farm Payment Scheme but there are others who are definitely
not interested. Our difficulty is to find a balance in our proposals
so that we can come forward with something that will be considered
as a basis for negotiation with Member States.
Q321 Baroness Miller of Chilthorne Domer:
There are obviously several environmental benefits to areas that
are devoted to vines, but I wanted to explore where the balance
is between the benefits and the disbenefits in terms of any analysis
you have done of grubbing-up and alternative crops and so on?
Mr Jacquin: Wine-growing brings environmental
benefits for the landscape but it can also bring environmental
problems, mainly with the use of pesticides, and erosion problems,
so it is a double-sided situation. We want to improve the positive
side of the environmental benefits brought by vineyards by introducing
environmental conditions and by using cross-compliance more and
more. It has to be noted, by the way, that already at the moment
about half of the vine areas are subject to cross-compliance because
the farmers who grow vines also grow cereals or have livestock,
so they are subject to cross-compliance for the whole farm. We
want to enhance the environmental benefits of vines, and this
can be attained with the rural development measures, for example,
agri-environment. We can also improve the application of the environmental
directives and the application of good agricultural practice with
this instrument of the 2003 reform of cross-compliance for other
crops, so that this is also for vineyards. When the vineyards
ask to be grubbed up, we can check whether this will cause environmental
damage and we can oblige the farmers to respect a certain number
of conditions to ensure that we take care of the soil. The main
instrument that we will use for this is to grant a Single Farm
Payment to the grubbed-up area so that it will become automatically
subject to cross-compliance for the whole farm, even if the farmer
has only grubbed up one hectare. If he wants to use it on his
farm to grow cereals or something else, for instance fruit and
vegetables, he will have to respect the conditionality of the
whole farm and good agricultural practice.
Q322 Lord Plumb:
We have read that you envisage extending the planting ban until
2013. Of course, the grouse from growers is "You are telling
us to grub out what we have got and you will not let us plant.
Meanwhile, of course, wine is coming in which is in competition
with us. How are we to be recompensed for that situation?".
Do you not think it is an interference in the market to continue
for that period of time, because I am sure at the end of the day
that is going to be one of the major issues?
Ms Naesager: If you have a look in the Communication
at the "Profound Reform", we have two variants: an A
and a B. What you have referred to now is the first one, Variant
A, where we go for strong adaptation here and now because for
wine growers, we say that the ban on new planting will run out,
as it is foreseen today, in the year 2010. We have seen with Member
States that this is not something that the wine-growing Member
States would like to buy into. There is a lot of hesitation there,
so the tendency has been that they go more for the scenario of
the year 2013. This having been said, most of them do not like
to hear about abolishing the ban on planting at all. They are
strongly against it. What we say in our variant B is that our
idea of having a grubbing-up system, where we allow the market
to find a balance, where we allow the non-competitive producers
to get out, can only work if we have a period of time, five years,
where the grubbing-up premium can be paid and then can be scaled
down, and we hope that by that time the market will be ready for
an abolition of the ban on planting.
Mr Hoelgaard: I think this is Number seven which
I forgot in my list of competitiveness strategies. The ban on
plantings is just like milk and sugar quotas. It is a question
of capitalisation into landowners, so many of the producers would
be hesitant about and against giving up this capitalisation. It
is in a way like people who hurry to retire, "Why did I give
up my pension on that?". But on the other hand the purpose
of the CMO, whether it is sugar or wine or milk, is not to derive
a pension for farmers who want to get out in order for the newcomers
to pay a high price for getting in, and this is, of course, one
of the main obstacles. What we have said at the same time, in
the same sense of a GI, the same sense of having oenological practices,
is that if, because of reputation or whatever, a regional area
which has a protected denomination wants to restrict the number
of growers because this is a way of protecting a reputation or
enhancing a certain value-added, fine, it can do so. This is exactly
what is happening, for example, in the area of Parma ham. There
is a restricted number of producers who can use this denomination.
They get a higher price on the value of their market. If you as
a wine grower believe this is the way forward, you can decide
amongst yourselves; it is not for the Community to implement or
continue to impose on top a limit on how much wine or how much
milk can be produced because, as the Commission has clearly announced,
that this will be done away with in 2014/2015. Clearly there will
be a loss of value of the land to a certain extent and that is
why there is a strong resistance to it. There is certainly also
the element, and this is more the traditional thinking, of, "Let
us regulate the market. Let us intervene. Let us make sure that
there is not too much wine produced. Let us make sure that we
get rid of it by way of distillation." This is the more interventionist
approach, of course. Those are the two elements, and the second
one, of course, hangs together with our wish to abolish distillation
as a permanent outlet. It has to be market orientation, so this
is Number seven on the list.
Q323 Chairman:
This is again one of the problems, is it not, that the way forward
for the industry is to become more market—sensitive, and
yet we keep on running up against criticisms of your Communication
which actually are deeply anti-market and in some ways it is almost
either a lack of knowledge of how markets operate or a hostility
towards markets.
Mr Hoelgaard: Certainly.
Ms Naesager: There is a kind of unwillingness
to take responsibility for decisions. When we cope towards the
end on the ban on planting, I do not think there will be a completely
uncontrollable market situation. People who want to plant new
vines will have to decide whether or not this is economically
feasible. In addition to that, as Lars has mentioned, there is
the whole situation with the different GIs, where there are limitations
within different zones as to what you can still plant. Some regions
have almost reached their ceilings; others have stopped. It will
not be a kind of anarchy situation but a situation whereby wine
growers will need to make their economic assessments, "Do
we want to do it or do we not want to enter into business?".
Q324 Lord Plumb:
Do you not agree that there might be an element of flexibility
here? You say this is Number seven on your list and I understand
that.
Mr Hoelgaard: I did not order the priorities.
Lord Plumb: I know that, but an order
of priority is one thing when you are setting it down on paper
now, but it may be that one in seven is a good year and this is
a problem that faces everybody when you are dealing with living
and growing things. If you get four bad years, you have got a
problem. If you get four good years, maybe there will be more
grubbing-up and maybe then you could be a little more flexible
in the planting. It is a situation which I do not think you can
set down in black and white at the moment and say "This is
exactly how I see the situation and what is going to happen",
because you do not know from year to year what is going to happen.
Q325 Viscount Ullswater:
Are you not handing your competitors so much on a plate, grubbing
up, reducing the area of wine in Europe, planting bans, when none
of them has any of those restraints in what we call the New World
wines? When you are looking at the export markets around the world,
I just wonder whether they are saying "That increases our
opportunity to export and bypass Europe because Europe is restraining
us".
Ms Naesager: I absolutely agree, and that is
the reason why at the latest in 2013 we need to give up the ban
on plantings.
Viscount Ullswater: But that is miles
away.
Q326 Chairman:
Would it be a good idea if you kept to 2010?
Ms Naesager: That will not really work that
well. This is the problem: everything is linked in the Communication.
It is completely linked.
Q327 Lord Cameron of Dillington:
Could I change the subject and talk about enrichment? Lars, you
were talking about freeing up or having the same possibilities
in terms of methods and creating a level playing field with New
World wines. But on the issue of chaptalisation there seems to
be a divergence from that approach. I think most of us would agree
that there should not be any subsidy for the creation of must,
either in Sicily or, for that matter, coming in from outside.
But I cannot quite see why the Commission should interfere in
the adding of sugar if a wine maker, particularly in northern
climes, wishes to do that. For that matter, if you are going to
interfere there, why do you not interfere in the addition of SO2,
as you were talking about, Lene, in the southern states, which
is absolutely crucial to wine making in hotter climes?
Mr Hoelgaard: You just shocked us by telling
us, those of us who were not aware, and I certainly was not, that
port in the old days was based on alcohol from charcoal.
Q328 Lord Cameron of Dillington:
Coal alcohol, that is right. It was only one year, when the Communist
regime was in—a particularly corrupt regime.
Mr Hoelgaard: Had we known, we would not have
bought it. If that is the case, equally what is it that should
be natural in producing wine from sugar?
Q329 Lord Cameron of Dillington:
You are not producing wine from sugar; you are producing it from
grapes. But you are adding a bit of sugar, and what is wrong with
that? And what is right about adding SO2 in that case? If you
are going to ban one, you have to ban acidification as well, in
which case most of the southern states would not be able to produce
wine either.
Mr Hoelgaard: The main reason is basically one
of making sure that there is a degree of a level playing field,
because our primary objective is to get rid of the subsidy for
must.
Q330 Lord Cameron of Dillington:
We would support you on that.
Mr Hoelgaard: The subsidy for must is there
only because some are using methods in terms of producing wine
on the basis of sugar, for good old reasons. And, of course, the
Germans would argue that this is certainly not an aberration;
it is part of their normal, natural wine-making practice—and,
by the way, it was invented in Bordeaux and so what is wrong with
that! The main reason is that, if we want to get rid of the subsidy
for must, then we have to ban the use of sugar because otherwise
there will be a distortion of competition between those who use
sugar and those who use must and, since sugar prices are going
down, this distortion will be even greater.
Q331 Chairman:
That is not a distortion of the market. Come on! You know that
as well as I do. You have had a good chance. It does not work.
Ms Naesager: We have a nice definition of wine
in our wine regulation. It is in Annex 1 point 10. There it says
that wine is "a product obtained exclusively from the total
or partial alcoholic fermentation of fresh grapes, whether or
not crushed, or of grape must". There is no sugar here.
Q332 Chairman:
Except in wine.
Ms Naesager: No, the natural sugar from the
grapes.
Q333 Chairman:
And you cannot add SO2.
Ms Naesager: But this is the wine-making practice.
Mr Hoelgaard: This is subsequent.
Ms Naesager: This is the wine-making practice.
This is the definition of wine. If we look abroad, most of the
New World wine countries are not allowed to use sugar.
Lord Plumb: They do not want to.
Q334 Lord Cameron of Dillington:
You are quite right.
Ms Naesager: It is not recommended either.
Lord Cameron of Dillington: They have
no rules on it either.
Q335 Viscount Brookeborough:
But sugar is a totally natural product from farms.
Mr Hoelgaard: Our model third country, California,
does not use it either.
Q336 Lord Cameron of Dillington:
But California adds wood chips, of course.
Ms Naesager: But we can do it as well now.
Q337 Chairman:
I think we all know what this is.
Mr Hoelgaard: I will take note of that: you
are not convinced!
Q338 Lord Cameron of Dillington:
On a serious point, is there a compromise position of saying that
certain areas which do not have enough sunshine, above a certain
latitude perhaps, could use a certain amount, a limited amount,
of sugar? You could limit it down. Would that be a good compromise
position?
Mr Hoelgaard: What we have said is that we want
to limit the degree of enrichment as such, because we do not want
to produce wine from 5% basic raw material up to nine minimum
(or nine and a half, whatever the minimum is), so we are saying
2% maximum in areas which are not so well equipped with sun and
1% which are, but sugar as such, no.
Q339 Chairman:
It does seem to me that the solution is to ban the subsidy on
must and, seeing that sugar prices are going down, get everybody
to use sugar.
Mr Hoelgaard: Yes, but that would, of course,
have the result that there would be an excess of wine on the market
which would otherwise have been produced into must.
Chairman: We have another dodgy one from
Lord Bach on national funding "envelopes".
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