Examination of Witnesses (Questions 440
- 459)
THURSDAY 8 MARCH 2007
MR DIETRICH GUTH
Q440 Viscount Ullswater:
They said, "No, you cannot. You have to import the must from
us". That was how the argument was going. You would not agree
with that?
Mr Guth: No. It is not right; it is wrong.
Q441 Viscount Brookeborough:
Does wine have to be of a certain quality in order to produce
must? Or can it be produced from the lowest quality wine?
Mr Guth: That I do not know. The reason you
are using must is to have the sweetener, sugar. The wine for distillation
must not have so much sugar, so there must be a difference in
quality. I think you cannot use it in every wine but that is really
not quality wine.
Q442 Viscount Brookeborough:
It is not a quality wine but it is probably a higher quality wine
than for crisis distillation.
Mr Guth: No, I do not think so.
Q443 Viscount Ullswater:
It just happens to be sweeter and, if it is sweeter, it is more
sunshine producing more alcohol?
Mr Guth: Yes.
Q444 Baroness Jones of Whitchurch:
Do you agree with the Commission's proposals about rural development
programmes—that they have a crucial role to play in terms
of helping countries make the transformation that we are talking
about? If you do, do you think that the funding of it should be
just constrained at Pillar 1 or, as some people have made the
case to us, it could overspill into Pillar 2?
Mr Guth: I am just here to solve that British
problem—voluntary modulation. I am personally not so convinced
that what we are doing in Pillar 2 is the right thing, but this
again is my personal opinion and I will tell you the official
opinion. We have 16 areas in Germany, 16 Länder or regions.
Every region has to draw up a programme, so we deliver 16 programmes
to the Commission. It is a big bureaucracy. Then we have to change
it because the Commission asks us to change something. And then
we spend a small amount of money compared to the First Pillar,
which can be done by 20 people or something like that, and in
the other sector we need—I do not know—1,000 or 2,000.
That is a point of principle but we are speaking also of simplification.
On the other hand, the politicians are eager to have the Second
Pillar bigger than it is now and the official point is that we
should use this also to have it as a help for reforms. But we
do not like it in the wine sector because if we shift, let us
say, the earmarked wine money to the Second Pillar you can use
it everywhere and it is not going to the wine sector. Therefore,
we have made these "national envelopes" in the sugar
sector so that it can be exclusively used in the sugar sector
for restructuring that sector, and we would like to see that in
the wine sector too. Then we have the problem of distributing
the money, so what do we use? Do we use the reference of the cash
flow in the Member States? That we do not like because then we
get nothing, and others too. Can we use the production area? That
might be something, but then we get 3%. It is a little bit too
low a percentage, so we are thinking, for example, of a mixture
between the total yield and the yield of quality production and
then our share would be a little bit better.
Chairman: A bit of special pleading there,
comrade!
Q445 Baroness Jones of Whitchurch:
Whatever criteria you use, and I understand your point about bureaucracy
and we can all imagine how difficult that is, the principle of
putting money to help that transformation through rural development
programmes is not one that you disagree with? It is just how you
calculate it?
Mr Guth: You mean in principle, not the wine
sector?
Q446 Baroness Jones of Whitchurch:
No, I am talking about the wine sector now.
Mr Guth: No. We would like to have it in the
"national envelope", not put in the rural regulation
area, because then it could be spent on whatever you want and
I think that is the point of most Member States.
Q447 Chairman:
If I have got your model right in my mind, you would argue that
we do not need grubbing-up. What we need is to abolish distillation.
That will mean that prices will fall and supply will come into
balance?
Mr Guth: No, not that prices will fall, but
that they do not produce the wine which they have produced only
for distillation.
Q448 Chairman:
No, but why will they not produce it? Because they cannot find
a remunerative market?
Mr Guth: No. I am not convinced that they cannot
find a remunerative market. They do not look for a remunerative
market. They have the distillation and that is it.
Q449 Chairman:
I had assumed that, if you took out a major support item which
underpinned falling prices, the effect would be to lower the revenues
to the sector, particularly those which produce surplus wine.
Mr Guth: That is true.
Q450 Chairman:
That means that some businesses will no longer be profitable.
Mr Guth: Yes.
Q451 Chairman:
Those businesses would be largely wine and wine-related businesses
of one sort or another, so the problems of adjustment originate
in the wine sector. But the solutions to those problems are moving
resources into other sorts of activity. The reason I am asking
this question is that it seems to me that you are saying that
you want this money confined to being spent within, as it were,
the wine sector, whereas the solution lies in spending it in other
sectors, if you follow me.
Mr Guth: No, sorry; then I was not clear. The
monies would go more or less to those regions where they have
problems and then they can use it as they want—put it in
the tourism sector, give it to the farmers to improve their quality
or to bring together producer organisations to promote wine, to
give them help in increasing quality and so on. This should be
decided not even by the national Member States but by the region
where we have the problem, because those people on the spot know
best where they can spend the money most profitably for the region.
Q452 Chairman:
Can I clarify that? It seems to me that what you are saying is
that you do not want this money to become part of the Rural Development
Fund. But you do think it might be spent on things which are rural
development?
Mr Guth: Sure—infrastructure, schools,
tourism.
Q453 Chairman:
That is a much wider view of rural development than Pillar 2 allows
you to have.
Mr Guth: Yes. The positive aspect
of that financial model is that you do not have to co-finance
it. If you give the money in Pillar 2 you are obliged to co-fund
it.
Q454 Chairman:
Do you think this should be a time-limited payment?
Mr Guth: Yes, but I do not think that we will
be successful with that.
Q455 Lord Moynihan:
There is a conflict beginning to emerge between your support for
"national envelopes" allocated to each Member State
and your thesis that, if we focus on distillation and putting
the funds in areas of distillation, they will either, through
regional development or whatever, move on or go to alternative
crops, or potentially look to a market which they do not look
to now in order to compete in that more open market for sales.
Why not get rid of "national envelopes" and simply focus
the resources towards the effects of abolishing distillation?
Why should Germany get any money in this context as opposed to,
say, Italy, in the south east or growers exclusive to distillation?
Mr Guth: That we did in the sugar sector. The
money is going to those regions where they got rid of the production.
So in Germany we get no money from that because we did not give
up any production in the sugar sector, and this would be the case
in the wine sector too. This is one possibility and I think that
is the most realistic possibility. But on the other hand we always
try to get a little bit of money back and that way we always have
some options.
Q456 Lord Moynihan:
So that is the reason you are supporting the "national envelope"
route?
Mr Guth: No, no. You can use the funding of
"national envelopes" in different ways. You give the
money to those regions where they give up their distillation,
for example. Then it is only the southern part of Europe. Again
I repeat: this might be the most realistic distribution, but why
should we not try to make smaller changes?
Q457 Viscount Ullswater:
You have demonstrated rather a liberal approach to the reform
of the wine regime. In effect, you have indicated that you do
not support distillation, you do not support grubbing-up. And
yet the Commission have said that they want this "Profound
Reform" of the wine regime to be budget-neutral. I believe
from what you are saying that you can see it being an opportunity
for saving money.
Mr Guth: Yes.
Q458 Viscount Ullswater:
But they are not taking that route.
Mr Guth: No. That was the question before—whether
we should spend that money for years and years or can we say,
"OK, this is for, say, 10 years or five years and then it
is declining". In the sugar sector they got money for three
or four years, and then the restructuring was almost over. What
are we doing with that money then?
Q459 Lord Moynihan:
Do you really believe this is "Profound Reform"? Or
do you think it is a nice political way of giving a smokescreen
for, frankly, shifting subsidisation of over-supply down through
"national envelopes" to the Member States, who then
in turn can spend it on whatever they wish to within their country?
That was never my understanding of the word "profound".
Is it yours?
Mr Guth: Yes.
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