Examination of Witnesses (Questions 460
- 479)
THURSDAY 8 MARCH 2007
MR DIETRICH GUTH
Q460 Chairman:
In this context it is?
Mr Guth: No, because we give the farmer the
freedom to do what is better for them or not, so the farmer decides
by himself. We proposed to Commissioner Fischler in 1998, when
we had the BSE crisis and prices went down, that we give the farmers
the money they got the year before in the beef sector, for example,
without the necessity to produce beef. That was a decoupled payment
and that year he said "No, that is too early", and one
and a half years later he proposed that. In Germany our farmers
are quite happy with that system because they can choose the production,
they can produce to the lowest cost. In Germany we had bull premiums,
suckler cow premiums, heifer premiums and so on, and they had
10 riots here, five riots there, 100 riots there, and they could
not choose the production with the lowest cost, and here we do
the same. Now you can argue, "OK, it is just shifting money
from one thing to another". But we are shifting it from a
bad thing to a better thing.
Q461 Lord Moynihan:
What is the rationale of having any subsidy in the European Union
wine regime? What is your rationale, considering that consumers
can buy on the market without subsidy?
Mr Guth: We do not use subsidies in the wine
sector. We only have subsidies for distillation, and we do not
use distillation. We have the same thing in the fruit and vegetable
sector.
Q462 Lord Moynihan:
In Germany, yes. I am talking about the wider context of the European
Commission's proposals. Is there any rationale for subsidising
wine?
Mr Guth: No, I do not think so. There is also
no rationale for subsidising tobacco plantations. If I look at
the direct payments as a whole, I cannot see that after 2013 we
will have the same amount of direct payments because we reformed
that sector 10 years before. We will not have an increase, surely
not. That means that the share of the EU budget will decline and
maybe we will have a reduction of the subsidies over time, so
we are going in the right direction. Now we can argue whether
it should go faster or slower.
Q463 Baroness Miller of Chilthorne Domer:
We had many more discussions yesterday when we were talking to
the Commission and Parliamentary representatives about the issues
relating to the environment and the wine regime and perhaps some
of the effects of grubbing- up and soil and water strategies.
Have you any concerns in Germany about those issues?
Mr Guth: No, not at all. Why should we have
problems with the environment? We can plant trees or something
else. It is a question of economy, not environment. Maybe the
effect on the environment will be even better, because we are
using a huge amount of pesticides in those regions or, if you
look at wine production in Germany in the valleys and the hills,
there we have a problem of soil erosion.
Q464 Baroness Miller of Chilthorne Domer:
Another effect might be that, if production shifts from cultivation
which is less intensive to drip-fed irrigated vines, it is going
to be a draw on water to a much greater extent, which is going
to be more difficult given all of the pressures of climate change
and less predictable water supply. That is one worry?
Mr Guth: No, I do not think so. If I look at
certain regions in Germany where we produce wine, not in the hills
but on the plains, this is a relatively good soil so you can produce
cereals or fruit and vegetables or something like that. So that
is not a problem. It is an argument I always hear from the southern
part of Europe, that it must be right.
Q465 Chairman:
To what extent are you a voice crying in the wilderness?
Mr Guth: Sorry; I do not understand that.
Q466 Chairman:
To what extent do you think that what you are saying is shared
by other Member States?
Mr Guth: I think it is shared by the northern
Member States, and even France—not to that extent, because
the French administration always tries to have the markets in
the hands of civil servants and not the market. But they do not
use distillation to the same extent as others and, if they can
get some more money for promotion or something in the "national
envelope", I think we can persuade them to accept it. Then
we have Spain, Portugal, Greece, Italy, and that is it. That is
not enough for blocking a minority.
Q467 Chairman:
One can only say, "Good".
Mr Guth: I think it will be a really difficult
thing to find a solution.
Baroness Jones of Whitchurch: When I
think of German wine in the past, you thought about it as not
being particularly good quality.
Chairman: It is because they keep their
best!
Q468 Baroness Jones of Whitchurch:
But you have turned that around; you have transformed that over
the years. Where did the drive for that come from? Was it the
producers themselves? Or did the Government, by encouragement,
by financial assistance, do it? Where did that transformation
come from?
Mr Guth: It was more or less a discussion among
the farmers themselves in the different wine regions. We have
had regions in the past where they always produced wine at 70-80
hectolitres per hectare. This is a figure where you really have
quality wine, and then more and more of those farmers said "If
I do not produce quality wine, I have problems selling it or I
have to sell it at lower prices". I know several farmers
who sell their whole harvest the year before. They sell it directly
to consumers without retail prices, without anything, and this
selling of wine in Germany is increasing. The farms are pretty
small—let us say 10, 20 hectares of vineyards or even lower—and
they are selling more and more and combining it with tourist things,
and they are ding pretty well.
Q469 Baroness Jones of Whitchurch:
So why did that happen in Germany when that same process has not
happened in some of the other sister countries?
Mr Guth: Because we have always had small farms
compared with Spain. We have had small farms, small amounts, and
the consumer buys it outside the door of the farm. That is an
advantage, to do it like that. You cannot sell the wine like that
if you have, let us say, 200 hectares of wine or if you are in
a really rural area where you do not have big cities. Then you
have to use another method.
Q470 Viscount Brookeborough:
It is not just locally. People come from other parts of Germany
to go to those farms. When I was in Germany in the army, we used
to send a couple of people down for a week to go round and they
just bought it at the door. It is a recognised trade. It goes
on the whole time.
Mr Guth: Yes. You do it at the weekend by driving,
let us say, from Berlin to the western part of Germany. You have
a nice weekend trip and buy your wine. That is quite common.
Q471 Viscount Ullswater:
Is the 80-85 hectolitres per hectare limit imposed voluntarily
by the wine producers of the area?
Mr Guth: Yes.
Q472 Viscount Ullswater:
How is that policed? Is that policed voluntarily?
Mr Guth: No. They just checked out that, when
they had, say, 120 hectolitres per hectare, the wine was not so
good. Then they had the lower yield because the wine picks up
the flavours of the soil. That is a part of the wine, and if you
have too high a yield per hectare it is not enough, so therefore
they cut the plants in order to have only between 70 and 80 or
60 to 90 hectolitres or something like that.
Q473 Viscount Ullswater:
And that will obviously vary with different years because of yields?
Mr Guth: No. It varies between different areas.
Q474 Viscount Brookeborough:
Then what you do is that, as the grapes are growing, you reduce
the number of grapes? You merely take some of them off? Is that
how you keep it down?
Mr Guth: No, before the grapes come.
Q475 Chairman:
I have been playing around with "national envelopes"
in my mind. I can see exactly the argument you are using for "national
envelopes" in that it gives you much greater flexibility,
it is more responsive to particular needs and you can do much
broader things than you could if it went in through Pillar 2.
The counter to that, is that if you are a country that really
wants to keep inefficient production going, you can get away with
it more easily by using money in a "national envelope"
to fund a bit of crisis distillation here, a bit of other production
support there, can you not?
Mr Guth: Yes, because you spend it on the infrastructure,
for example, to get more tourism in that region. You can do it
with a restaurant or even invest it in wine production, in the
marketing of quality wine which you can drink. That wine which
is produced for distillation you cannot drink.
Chairman: But that is because you are
using the "national envelope" in a very good way.
Lord Moynihan: And it is market-driven.
Q476 Chairman:
I was interested in two things that you said. You mentioned the
possibility of "regional envelopes".
Mr Guth: No, not regional envelopes. These are
"national envelopes" but the using of the money should
be decided in the region.
Q477 Chairman:
That is fine; I understand that. What I was also thinking was
that with these "national envelopes" presumably comes
a menu of things that you can do with them, and that menu could
effectively consist of things which were decoupled from direct
production, and in that context the problem which you have raised
should not arise. You could put a barrier up, could you not?
Mr Guth: Yes.
Q478 Chairman:
Thank you very much indeed. It has been absolutely wonderful to
hear you, actually, very refreshing.
Mr Guth: Thank you so much.
Q479 Lord Plumb:
Do you think you will really get it through during this Council?
Mr Guth: The wine reform?
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