Examination of Witnesses (Questions 482
- 499)
THURSDAY 8 MARCH 2007
MR BERTRAND GUILLOU
Q482 Chairman:
Good afternoon. Thank you very much for taking the time to come
and speak to us. We are at the end of two days in Brussels and
you are the last person we are seeing. So, as we say in the context
of wine, we have left the best till last.
Mr Guillou: Thank you.
Q483 Chairman:
Let me explain what we are and what we are doing. We are a Sub-Committee
of the House of Lords EU Select Committee on the European Union.
Our little Sub-Committee has responsibility for Agriculture, the
Environment and Fisheries and we have started an inquiry into
the reform of the wine regime following the Commission's Communication.
We have already spoken to people in the United Kingdom and we
thought two things would be sensible: first of all, to come to
Brussels and speak directly to people who are more immediately
involved in the process of policy development; and, secondly,
we are going to France to have a look at some wine-growing areas
and find out what their concerns, and perhaps fears, are about
what impact a reformed regime may have on them. I wonder if I
could start from the point of view of the Commission in that they
say there is a need for "Profound Reform" of the regime,
that the regime is not sustainable at the moment, that we have
a context of declining incomes for wine growers, we have increased
third country import penetration, we have structural surpluses
and the whole situation looks pretty difficult. I would like to
know whether you think that is a fair assessment of where the
wine regime is and of the difficulties it faces; and, secondly,
what is your country's view of the initial Communication from
the Commission. We have, of course, seen the motion that went
through the National Assembly, although we are not quite sure
whether they are for or against reform. Really what I am inviting
you to do is give us your general view at this stage.
Mr Guillou: I think that the report of the Commission
about the situation of the wine sector is rather good. I think
that it is not possible to continue with the CMO. There was a
reform in 1999, just before 2000. It was not a very real reform.
It was just a modification of the CMO which had been in place
for 25 years, when there was no world trade in wine. The only
countries which produced in this period were France, Italy and
Spain. Now that is not the case; it is very different and the
production from the US and Australia is rather important so it
is not possible to continue with the same rules; it is necessary
to modify them. From the French point of view it is necessary
to modify these different provisions of the present regulation.
That is the first point: how can we modify these regulations?
It is not easy to sure that it is a real problem. If Australian
or US wines are good, it is a good thing to drink them. Our problem
is to find a structure for European viticulture which corresponds
with the new situation. In France, for example, more than in Italy
we continue to produce table wine. I do not know if you understand
what I mean by "table wine". It is common wine. It is
not very expensive, it is quite cheap, but it is not good wine
which has found consumers, so what do we do? It is not possible
to transform all the table wines in Europe into quality wines
in volume. It is necessary to decrease the production of Europe
but in what way is it possible? The Commission says it is necessary
to grub up 400,000 hectares. Why not, but where? The European
wine sector is not one region but different regions, where we
produce wines in great competition. The competition between France,
Italy and Spain is, I think, the most important competition in
the world wine sector, more than the competition between European
production and Australian or US production, so it is very difficult
to find a good balance between each country in one regulation.
Therefore, when the Commission proposed grubbing and the share
between the different countries of this area. That is the most
important issue of the reform. It is necessary to decrease the
area of vines in Europe but it is necessary to find a good key
to share this grubbing-up among different countries.
Q484 Chairman:
You could do it by saying "We are stopping distillation".
Mr Guillou: No. It is not possible to resolve
the wine problem through the market, because it is a sector which
produces for the long term. When you plant vines, it is for 30
or 50 years. It is not the market which is the main instrument
for modifying the sector. It is not cereals. It is not wheat.
It is very different. In the vegetable sector, although not in
fruit, it is possible to modify production from one year to another.
In wines it is not possible. It is not the problem of distillation.
The problem of distillation is the use of the Community wine budget.
It is not an instrument for modifying the sector in the long term.
Q485 Viscount Ullswater:
I do not understand why, if you withdraw a very considerable market
support mechanism, which is the money given to distillation, the
wine producers who produce the wine which goes to distillation
will not have to cease production altogether. Is that a wrong
assumption?
Mr Guillou: Yes. The French position is not
to maintain distillation. It is not necessary to maintain a permanent
instrument of distillation, but we think it is not the main problem
of the present scenario. It is a budgetary problem, because we
have put a lot of money into this measure. It is a budgetary problem
but it is not an economic problem.
Q486 Viscount Ullswater:
I am surprised.
Mr Guillou: You are surprised; I understand,
but if we always have surpluses it is not because there is distillation.
That is our point of view.
Q487 Chairman:
I accept that annual fluctuations occur in the wine sector and
that people growing wine will not respond immediately to a particular
signal in one particular year because they have committed resources
for a long time. But they will continue to use those resources
in that way until they see some better alternative for the use
of those resources. Part of the reason that it is at the moment
convenient for them to continue to produce wine for which there
is no natural market is that they do have a crisis intervention
system that makes it possible for them to retain a reasonable
standard of living. If you put it the other way round, and instead
of spending money in the short term on intervening to support
collapsing markets you spent money in order to create alternative
uses for these resources in these areas, so that people were in
a sense choosing to move their resources elsewhere, that seems
to me to be a bundle of activities that are necessary in order
to achieve the adjustment you are looking for. It gets away from
the issue of deciding where you are going to do this because the
individuals then make the decisions for themselves, so the distribution
would depend on what were the real alternatives for those resources
in the various parts of the Community which were affected. In
a sense I am saying you do not need grubbing-up in that context.
Mr Guillou: Yes, I agree, the problem of grubbing-up
is also a social problem. Most producers are rather old and we
cannot consider that the premium for grubbing-up is like a retirement
pension, so it is necessary to find different criteria by which
to distribute this premium. In France we have about 800,000 hectares
of wine. I am sure it is too much. We think it is interesting
to put the money for the grubbing-up in different areas of France
to facilitate the departure of the old producers. Our problem
is finding an agreement between different regions in France. It
is not easy to do that because, as I say, there is great competition
between France, Italy and Spain, but there is also great competition
between different regions in France. I do not know the prices
of wine in the UK, but in France there is not a great difference
between a bottle of basic Bordeaux wine and a bottle of table
wine from Languedoc/Roussillon. It is a real problem for us.
Q488 Lord Plumb:
I wonder if we might come back to the 400,000 hectares area to
grub up, but I have to say first of all that I am still reeling
from your comment earlier. I do not think I have ever heard a
Frenchman say before that either Australian or American wine was
even drinkable. It is perhaps worth coming to Brussels just to
hear that. You jest and we understand. The grubbing-up programme
that we have been hearing much about during the last couple of
days seems to generate the general opinion that this has to be
done at the initiative of the grower and not dictated nation by
nation. But nevertheless it is that sort of area that should be
covered. I think you make a very valid point when you say this
is a matter that has to be shared. One understands that very clearly,
and so your question "Where?" is the problem. If in
the final round of the Council it is agreed that that amount should
be taken and they start trying to divide this up, it then, of
course, becomes a very difficult political issue for any country,
particularly France, when you have elections taking place and
all this sort of thing.
Mr Guillou: It will be after the elections.
It is easier.
Q489 Lord Plumb:
Probably well after. Nevertheless, it becomes a political issue.
Do you not think that this is an issue that could be settled,
since the initiative is to be taken by growers themselves, by
COPA and COGECA? They are the farm organisations for all the countries,
and particularly for the three countries mostly affected. Do you
not think that this is a matter where you say "OK, let the
farmers decide. Initially it is going to be taken by the individual.
Let the farmers themselves decide now how best they can share
it out"? It is a challenge, I think, that they frankly ought
to take on board and deal with, by saying "We recognise this
and we shall benefit at the end of the day from this". The
second part of this, of course, is the replanting. We are told
at the moment that the intention is to continue the ban for replanting
until 2013. Earlier on, your Italian colleague said they would
like the ban to continue for another 10 years. What is your opinion
on this, because I can almost hear growers now saying "We
will take this out of production and you will not let us plant
again", and it is a big problem when that good, drinkable
wine you talked about can still be coming into the whole of Europe?
Mr Guillou: Yes, perhaps. I think it is important
to bear in mind the history of grubbing-up in the European scenario.
Before 1999 there was a great programme of grubbing-up and about
500,000 hectares were grubbed up during the previous 10 years.
In the present situation it is not a free decision for the producers.
It is Member States which decide if it is possible to grub up
or not. Italy, Spain, Greece and Portugal have decided not to
allow the producers to benefit from the premium for grubbing-up.
During the past seven years only in France was it possible to
use this premium, and not everywhere but only in particular areas,
like Charente, where we produce the wine which is at the basis
of cognac, so it is necessary to open up the opportunity for the
producers. If we continue with the present rules, I suppose that
Greece or Portugal or Spain or Italy may decide, "No, it
is not possible", because it is necessary to maintain wine
because of the landscape or whatever. It is necessary to decrease
production but, if in five years it is possible to plant as we
want, then it is paradoxical to pay for grubbing-up now, you are
right. So in France we are not very much in favour of the abolition
of the ban on planting.
Q490 Chairman:
What is the solution? Come on, tell us. You are against this,
against that. What are you for?
Mr Guillou: It is difficult. There is not at
this time a French proposal for reform. There are two different
points of view in France on the modification of the CMO. It is
for us a good thing that the Commission has not put a new regulation
proposal on the table too quickly.
Lord Moynihan: It is quite difficult
to get to the detail before we have got past some of your opening
comments and fully understood them. Can you help me with what
seem to me conflicting principles? First, you recognise the importance
of the market place, and I took it seriously when you recognised
the popularity of Australian, American and New Zealand wines in
Europe. Secondly, you recognise the importance of the market place
in the context of grubbing-up and 400,000 hectares, when you recognise
that there needs to be a reduction, but the real key to that,
which is to be searched for, is the mechanism by which to achieve
it, so another recognition of the market place. Thirdly, you recognise
that 800,000 hectares in France was too much and that is a recognition
of the market place, because if the market demanded more wine
from France you would say "It is not enough. We need another
200,000 hectares to meet the demand". Then you came out with
the most interesting argument, which was that the one area where
there is greatest agreement is removing distillation because there
you do not have a market, and your argument in that context was,
"No, we cannot address distillation because vines last 50
years and the market may change". We heard that argument
from a famous coalminer called Arthur Scargill, who took the view
that you should continue to mine very expensive, deep-mined coal
irrespective of the market because that coal was going to be there
for hundreds of years and was going to provide security of energy
supply.
Baroness Miller of Chilthorne Domer: He
might be proved right.
Q491 Lord Moynihan:
He will not; he will be proved horribly wrong. But on the distillation
point, surely that is one area where you can match the argument
that you have put forward on France responding to the market place,
which you have argued very clearly, with a recognition that the
best possible way to respond to that market place is to address
distillation, not least because distillation is not as big a problem
in France as it is, for example, in Italy. Why the outright opposition
to the proposals on distillation from the French Government at
the moment?
Mr Guillou: You know there are different distillations
in the present scenario?
Q492 Chairman:
Yes, four types.
Mr Guillou: Exactly. The most important of them
is the distillation to produce potable alcohol. In France it is
not used. It has been used a little this year, but it is not generally
used. It is used by Spain and by Italy, but in France not a lot.
It is not important for us if this distillation is abolished.
There is a specific distillation for Charente. If this distillation
is abolished, it is not a problem for us. There are two others.
First, there is crisis distillation. In France we think it is
necessary to have this instrument, not to be used every year but
to destroy sometimes the conjunctional surplus. We think it is
necessary to have this measure, but it is not very important.
The other is the distillation of the by-products of vinification.
We think it is necessary not to oblige all countries to use this
measure, but in France we think it is necessary to have good wine.
It is a quality measure, and we think it is necessary to maintain
this distillation probably in "national envelopes".
It is not necessary to have a strict common regulation in Europe
about that. In Germany it is not used, in Austria also, in new
Member States also. It is a historic tradition in France and in
Spain, so we think it is necessary to maintain this measure in
the "national envelopes". Distillation is not for us
a regulated market measure. It is not only about crisis distillation.
Q493 Chairman:
That can be contained.
Mr Guillou: Yes, within very strict limits.
It is necessary but it is not a good line for the market.
Q494 Chairman:
But you are in agreement, are you not, with the view that you
should not be in a position where wine is being produced regularly,
year in, year out, knowing that its only destination is crisis
distillation?
Mr Guillou: No. I am not sure that there is
a lot of wine in Europe which is only produced for crisis distillation.
In the past it was true.
Q495 Viscount Ullswater:
But is the wine produced for potable alcohol drinking wine?
Mr Guillou: Yes.
Q496 Viscount Ullswater:
It can be used for drinking or for distillation into potable alcohol?
Mr Guillou: The problem is that it is possible
to drink this wine.
Q497 Viscount Ullswater:
But it is not advised?
Mr Guillou: It is not a good wine. The main
part of wine which is used for distillation for potable alcohol
is in La Mancha, in the centre of Spain, but we have something
like that in Charente. The wine which is used for cognac is not
a good wine to drink but it is possible to drink it. It is table
wine.
Q498 Chairman:
But it makes good cognac?
Mr Guillou: It makes good cognac but it is not
in the distillation regime of the CMO.
Q499 Chairman:
But you are not too far away from the Commission on this, are
you?
Mr Guillou: At the beginning of the story we
were very much against them. Now it is a little different.
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