Examination of Witnesses (Questions 340
- 347)
MONDAY 7 MARCH 2007
MR LARS HOELGAARD, MS LENE NAESAGER, MR EMMANUEL
JACQUIN AND MR DOOLEY
Q340 Lord Bach:
I was going to say that this is going to be gentle stuff after
what we have just been through. I have to say that, when I saw
the word "profound" as being the basis, the adjective,
to define Option 2, my heart sank because. I thought it had been
used because it meant exactly the opposite, but in fact, from
what you have said today, I am pretty convinced that you are really
serious as a Commission about doing something fundamental here.
But, by gosh, I think you have got a battle on your hands from
what we heard earlier today. Let us ask you about national funding
"envelopes", which have been described as effectively
nationalising market intervention. This is an Option 2 proposal,
of course, and the quote is to "finance the measures necessary
for the modernisation of the wine sector, taking account of the
different needs of each region". You say that these "envelopes"
would be available to fund an approved menu of measures, including
not only restructuring but also "crisis management measures".
What sort of measures do you have in mind when you write that?
And how would such intervention differ from the present system
of Community-wide action to remove surpluses? It is the criteria
you have in mind for national funding "envelopes" that
would be of particular interest. If they are going to be on some
kind of mere historical basis, then I think it would be much more
objectionable than if they were based on some kind of objective,
up-to-date criteria. I just wonder what your comments are on the
whole issue around that.
Ms Naesager: First of all, I would prefer to
say that we give more subsidiarity to Member States when we talk
about "national envelopes".
Q341 Lord Bach:
I thought you might put it like that.
Ms Naesager: The other point is that, when we
talk about "national envelopes", it is to give the opportunity
to Member States to decide what is best for their wine sector
in this particular Member State, knowing the wine sector better
than we do here in Brussels. We will not provide for open-ended
measures; they will be rather restrictive and we have already
announced in the Communication that we have three different tools.
We have the restructuring that we have just talked about; we have
green harvest—where you go out and pick the grapes which
are not yet mature; and then we have crisis management. We have
indicated in the Communication what we understand by crisis management.
It can be to set up a mutual fund, it can be to pay farmers for
the loss of income, and it can also be insurance against natural
disasters. This is one thing. When we say "crisis management",
we do not talk here about crisis distillation. That is out, even
though some Member States would like to see it in. We have really
tried to make the "national envelopes" restrictive and,
of course, there will be definite criteria that will need to be
respected. Member States will need to make the "national
envelopes". They will have to be communicated to the Commission,
of course, and there will be a check on how they spend the money.
When we come to the money, the big question we will have for negotiations
with Member States will, of course, be the allocation amongst
the Member States, and this is going to be, I think, a huge battle
and very interesting. Some of the Member States will, of course,
say "We want to have exactly the same that we have received
during the last three years", and they will only look at
the money actually received in their pocket. Others will say "This
is simply not feasible because we will receive hardly anything",
so we will come up with a proposal and then we will have to have
the discussion with the Member States in Council.
Mr Hoelgaard: The "national envelope"
has been one of the ideas that has been the most well received,
for the simple fact that, as Lene says, there is a wide degree
of diversity in terms of structure and, "What is the kind
of problem that I have in my area for my wine growers and structural
type of promotion and integration", as we talked about. One
thing which I think is also important is this concept of co-responsibility
because, by providing a certain budget after having the fight
about the size of the distribution, it is no longer easy for a
minister to say, "OK. I go to Brussels and now I ask him
to waste money on crisis distillation", or whatever. "I
have to make up my mind, together with my stakeholders, on a priority
in terms of the most efficient use of the money for the benefit
of the whole sector, and why should I systematically waste my
money on crisis distillation versus something which is much more
future-oriented in terms of competitiveness or investment or whatever?",
so that will discipline also to a high degree the use of the measures,
or at least the concept, which is the concept which we have also
in the case of our policy for the outermost regions. It is this
idea of, "OK, it is subsidiarity", which is not a word
which looks good in English or in any other language but if you
have a better word I think the Commission would welcome it. It
is this notion that, if you do give a degree of devolution (to
use a British expression), then maybe there is a better uptake
in terms of the use of the money instead of just sending the bill
down to Brussels.
Q342 Chairman:
But your example of them not using it for crisis management and
being future-orientated means you have a touching faith in the
rationality of ministers, do you not?
Mr Hoelgaard: No, because they have to justify
it vis-a"-vis their wine growers and their industry—"What
are we using our money for"?
Q343 Chairman:
Yes, exactly, but effectively the pressures are always upon the
immediate rather than the future. That is the difficulty.
Mr Hoelgaard: Sure, but if I say now to my industry,
"I have got €100 million here and I am going to use
it for crisis distillation", I do not think I will have so
much support. I may have some wine growers who say "yes"
and all the others are saying, "That means less money for
whatever other purposes".
Q344 Chairman:
What you are talking about is managing the crisis, not managing
the market, so it is how you cope with these situations. I was
not sure that I properly understood what you said. Did I hear
you say something about mutual involvement in this, so that the
industry and the government and the Community funds might be there
to sort out crisis problems, not crisis in the market but crisis
in the industry? They are slightly different concepts.
Ms Naesager: We can, under the "national
envelope", provide for money to set up mutual funds, in other
words, funds set up by the sector, by the government or other
players that could have an interest in that. But what is important
is that Member States become aware that it is important to prevent
crisis, not tackle it when it is there because then it is too
late. The tools that we have provided are really crisis prevention
measures.
Q345 Baroness Jones of Whitchurch:
If I may turn to aid for modernisation, a lot of our discussion
this afternoon, both with yourselves and with your colleagues
earlier, has been about, if you like, the limits of the market—what
constraints and limitations do we have to put in to guarantee
continuous production. And yet you use the phrase "Profound
Reform" in your report and somehow that concept, as Lord
Bach said, is nice to see it, but what does it mean in practice?
Where is the impetus, the real drive and impetus for a positive
reform, not just that kind of protectionism but a positive drive
to reform the industry, going to come from? Objectively, looking
in on this, it has the capacity to compete much better than it
is doing with all the New World. There is nothing inherently wrong
with the wine or the potential of the wine that the EU could produce
in the future, so where is that real drive and impetus going to
come from? Is there the opportunity to use some of the money that
is floating around in this sector at the moment to, as it were,
kick-start some of that impetus so we are not just protecting
people but we are using some of it to give aid for new ideas,
new development, not just by the wine growers but right up the
supply chain to the producers, the labellers, the bottlers, the
market? Is that drive there to achieve that profound change?
Ms Naesager: You are right to ask the question,
because what we basically need in order to make this a success
is competitive drive. It is that the wine producers buy into our
ideas, that they understand that they need to do something, and
the incentive to do something needs to come from them, because
they are the most concerned players; they are the responsible
players. The only thing we can do is provide the tools to ease
their lives in order to become more competitive and to start thinking
differently, so that they do not think, "Now I am producing
the wine because I like to produce my wine like that". They
need to think about what does the consumer outside France—for
instance, in Denmark or in the UK—want to drink? There is
a lack awareness amongst the wine producers today. They are only
thinking about producing their own wines. They do not think, "How
do I really sell my wine? How do I persuade people that they should
buy my wine?" This perception is something that we will not
be able to change from here. What we can do is make the tools
available so they understand "We will be able to do more
on the structural side, we will be able to prevent crisis, we
will be able to do far more on promotion". That is where
we can help the sector to modernise, "We will be able to
put more on our labels, make them more fancy", and not just
stick to old-fashioned labels that people are not interested in
any more and try to give them the tools so that they can adapt
to each and every market, because the producers, for instance,
in the UK think maybe that wine with a label with a kangaroo on
is more fun than something else coming from France, where you
just see the usual label with a chateau which is in green and
grey colours. We try to give the tools to the wine sector to give
them a kind of drive coming from here but we cannot go out and
really stimulate people to do something about it. We hope that
we will be able to do that by introducing ideas that we give them
and the tools that we put on the table, but it is their responsibility.
Mr Hoelgaard: I think in general we can say
that there has been recognition by all that there is a need for
a fundamental reform, but the problem starts immediately when
we start discussing the details or the instruments. There is there,
as I said, a high degree of conservatism. It is always easier
to defend what you have and more difficult to embark on a bold
new future with all the uncertainties and competition that will
be the result. However, we do sense that we get very mixed messages,
but behind the official resistance there is still a lot of thinking
in the sense of, "Yes, we want to go and do a reform".
There has to be this balance between the carrot, which is the
"national envelope", the ability to have more flexibility,
and the stick, which is no more crisis distillation or misuse
of funds, together with the notion of flexibility and competitiveness
in terms of investment. In general, we have to mobilise it in
that sense, that there is a positive for us and that everybody
recognises, or at least assumes, that our wine is the best in
the world. But we just need to prove it, not just to our consumers
but also to our own producers, and then give them a chance to
prove it.
Lord Cameron of Dillington: I have just
one slightly cheeky political question. If we were going to produce
our report, in terms of your negotiations with Member States and
within the sector what would be the most helpful thing we could
say from your perspective? Maybe you have just said it, Lene,
I do not know.
Q346 Chairman:
"Being Anglo-Saxons, we are opposed to this reform"!
Mr Hoelgaard: I would say that, in particular
in the case of the UK, one perhaps needs to start to discover
the fantastic variety, and also in terms of cost price, of what
is coming up from many of those areas which up till now have not
been recognised, like the south of Italy or regions in Spain which
were never recognised but now are coming forward, and also the
improvements taking place in France. There seems to be a very
one-sided orientation.
Q347 Lord Cameron of Dillington:
So what you are saying is that there is still huge potential in
the European wine market and people should get out and market
it?
Mr Hoelgaard: Yes, and I would say that in my
own country there is not this very one-sided orientation; there
is a much more diverse orientation. If you go to a supermarket
here in Belgium, they are very Francophone; it is almost only
French, and then there is a little area where there are some other
EU and third country wines. But if you go to a supermarket in
Denmark, you will have a wide diversity of both EU and third countries,
and that is where there is something to be done in the UK, and
in Ireland perhaps as well, to have a bigger and better degree
of diversity, and I think it is not your responsibility; it is
certainly the responsibility of the sector. That is where we want
to give them the means to go in and compete, so it is not just
three bottles for two, as I saw in Glasgow the other day.
Chairman: Thank you very much indeed
for your evidence, which has been extremely helpful.
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