Examination of Witnesses (Questions 580
- 599)
WEDNESDAY 21 MARCH 2007
MR ROBERT BEARDSMORE, MR ROBERT LINDO, MR MICHAEL
ROBERTS AND MR OWEN ELIAS
Q580 Viscount Brookeborough:
Eligibility and claiming are actually two different things. If
something can be eligible, it depends on whether you are entitled
to claim it?
Mr Lindo: No, not entitled to claim that; you
lose that.
Viscount Brookeborough: You could remain
eligible in case you want to go back.
Chairman: We need to come back to that
later. Lord Plumb.
Q581 Lord Plumb:
Lord Chairman, Lord Bach's question, is a very important one.
You obviously meet with your counterparts in Europe on a fairly
regular basis. If you were to say, "We want minimum regulation",
would you be a lone voice?
Mr Roberts: Inside Europe, inside traditional
France?
Q582 Lord Plumb:
No, not just traditional France; we have other countries in Europe
producing wine—the Hungarians and various other countries.
Mr Roberts: Yes. I take France in particular
because it is seen from the outside as being probably the most
controlled, because of its appellation structure. The successful
bits of France are the development of the Pays d'Oc, for example,
and the Languedoc and the areas where they started to introduce
more novelty in their winemaking. They have actually brought in
New World winemakers to show them some technical differences in
how to make the wine, moving away from tradition. I am sure those
people would love to have more freedom; they certainly would love
to have more freedom to plant more grapes as well, whereas I am
sure that some of the Bordelais would say, "No, we will keep
it as a control." There is a very interesting fact about
champagne-growing, that although champagne is so successful there
are obviously structures inside the tax system in France, which
I do not understand totally, which means that they will not always
sell all their grapes because it puts them into a tax band or
a security payment band, or whatever, which actually reduces their
income. So they actually put those into blocage and the CAP decides,
so it is not actually part of their income. So there are infrastructure
reasons for not changing inside France, which are to do with social
security and taxes.
Q583 Baroness Miller of Chilthorne Domer:
Could you just define "blocage" for us?
Mr Roberts: In champagne in particular there
is a regulation that says you will only grow so many tonnes per
acre. One of the ways of overcoming the planting ban has been
to gradually increase that. Thus, if I talk in tonnes per hectare,
it was in fact 10 tonnes per hectare until about 1999. Then it
moved up to 11. Recently, as of this last harvest, it went up
to 13 and it has now been allowed that they can move it up to
15, but the extra two have to be put into blocage. Blocage means
that you can pick it, you can make the wine, but you have to store
it as bulk or vin clair, ready to be bottled at some point in
the future, when, in this case, it is controlled by the champagne
appellation saying, "We have had a bad year",
like 2003, and they will bring out all the blocage and add it
to this year's harvest to make it back up in body.
Mr Lindo: It is a good example of a successful
region that expanded within the rules by bending them a bit and
increasing their production.
Mr Beardsmore: If I may, in answer to "would
you be a lone voice"? There is an organisation that we are
part of, which is pan-European. It does seem that much of the
discussion that has gone has been about how they are going to
divide up the pool of money, because the Commission has already
indicated that at least in the medium term it is not going to
disappear, it just may be spent differently. Therefore, people
who are used to getting money shared out by different market mechanisms
are now concentrating on how they will get a fair share, as they
see it, from that. If you read through the European regulations,
it is quite clear in the current regulations that much of what
is written is only there because there is money at stake in terms
of how it affects the payouts. So, whilst we may be a reasonably
lone voice in saying that straight away, that is because most
of the argument, certainly from the dealings that I have had,
is that they are worrying about how the money gets sorted out.
If that was out the way and you asked them what level of regulation
they wanted aside from subsidies and market mechanisms, I think
you would get a completely different discussion.
Lord Plumb: It sounds not dissimilar to the
CAP.
Chairman: Let us move on to labelling and
quality. Lord Cameron.
Q584 Lord Cameron of Dillington:
On labelling, you say that of course it should be consumer-focused
and, providing no one is telling any lies, that is good enough
and there should be no regulation at all. But, at the same time
you do say, on the question of Geographical Indications—and
I quote your submission—that "where a GI has become
a `brand' with significant value, it should be possible for producers
in that GI area to have more local control over the way that brand
is exploited." It seems to me that to do that you do enter
the realms of state control, and I wonder how you would see this
being implemented?
Mr Roberts: I think the ultimate control is
the brand owner. This commercial thing that we are talking about,
being led by the consumer, means that, if you own a brand, it
is valuable to you, you give the consumer what he wants, unless
you are very silly, otherwise you will lose the quality of that
brand. So you will strive for quality or you will strive for price
values and so on, and the things that that brand means. In fact,
a strong brand does not need more intervention by the state—it
needs less—or does not need it. But what it might well do—and
champagne was a very good example, because they run that appellation
with far more vigour and strength than is imposed by the EU. In
other words, the rules that are applied by champagne are much
deeper and stronger than the European wine regulations. So there
is a set of rules which they can change from time to time, like
the ageing on lees moved from nine months to 12 and on to 15,
because they felt that the quality of the wine was diminishing.
Q585 Lord Cameron of Dillington:
How are these rules actually imposed upon the grower and winemaker?
Mr Roberts: They cannot use the word champagne.
So they have a tasting regime every year. A year after bottling
they take aside bottles with special seals on and in 12 months'
time the committee will come along and taste those wines and,
if they do not meet the approval, they cannot be classed as champagne.
So the brand has a huge value in the sense of, hopefully, protecting
the customer; but it is also making sure that people are adhering
to a quality scenario. Champagne is actually a huge area, of course;
it produces 300 million bottles and it is over a large geographical
area, but it is still imposed by a small set of people, the CIVC.
That is what we are trying to say. Trying to impose a condition
from Brussels, because it is such a huge area—from England
to Bulgaria, to wherever, there will be so many different areas,
and changing conditions because of climates and so on—the
idea that they can impose restrictions which will always add quality
will not be true at all.
Q586 Lord Cameron of Dillington:
So they would say, "We decree that the champagne mafia should
be able to impose their own rules on anyone wishing to call themselves
champagne", i.e. using the GI.
Mr Roberts: One would hope that inside this
mafia organisation there was some democracy of some description
that meant that the growers and the winemakers inside champagne
could make changes that they desired.
Q587 Lord Cameron of Dillington:
So would the EU be justified, therefore, in trying to impose some
sort of democracy so that it is not just the old established growers
who control exactly how it is all done?
Mr Roberts: I am talking about a personal belief
here. I think the trouble is that, if you let natural order prevail,
it may be the strong will out, but sometimes there is a justifiable
reason; and, if you try and impose things, you nearly always get
it wrong.
Q588 Lord Cameron of Dillington:
Can I move on to quality and what you say about quality? Again,
in your submission you say, "Quality would probably be better
delivered at the local/regional level"—which you sort
of answered—"where all producers involved have an interest
in increasing quality, rather than through national or EU regulations."
To some extent we have discovered that not everyone is totally
interested in quality; in other words, there are some producers
who are virtually producing their wine or grape juice for distillation
purposes, because they know that there is no real market for the
wine in their area. I am not certain that everyone is necessarily
as market-orientated as perhaps your submission indicates?
Mr Lindo: Is that not the whole point of market
reforms, that these people will not be doing it any more? We are
talking about how to change this situation, not perpetuate it.
I have been laughing at wine raconteurs for years, talking about
people growing grapes to run buses in Norway—it is ridiculous
really that that is seen as a mechanism of controlling grape production.
What we would like to see in an ideal world—it certainly
happens in this country—is that the smallest possible unit
is the person. For us, we have individual brands and, to be honest,
I do not really mind too much about the odd poor bottle of English
wine under somebody else's brand because it is not my brand. We
have worked totally on building our brand on quality and all the
things we can to maintain our market place and our position in
the pecking order of people who are looking at us. That is a small
issue unit. If in larger grape-growing regions it has to go for
a bigger unit than that, fair enough, but in this country it works
fine with people regulating themselves, although we do have a
quality wine scheme, to which we all submit our wines for tasting
and testing.
Chairman: Competitiveness. Baroness Miller.
Q589 Baroness Miller of Chilthorne Domer:
One of the things in your submission that I do not think anyone
else has raised with us, but it does seem quite a big point, is
the fact that some of the new growing markets, like China and
India, are imposing tariffs now against EU wine because of the
subsidy regime in Europe. I wondered if you would like to expand
on that? Also, it does seem strange that other witnesses we have
talked to have not seen this as an issue when, if it is an expanding
market, it must be quite an issue, must it not?
Mr Roberts: I think it must be, yes. If we are
going to produce five and a half million bottles or if the European
Union as a whole has all this spare, and we have China growing
from a capacity of one litre per person to ten, or something like
that, there is a huge market, and the same in the States. So we
must be able to export there without a disadvantage of cost. I
had not registered the point until we met with Russell Mildon,
who is part of the Agricultural Directorate.
Q590 Lord Palmer:
He is still there.
Mr Roberts: Yes, I am sure he is. He made the
point actually, that I had not registered, and it is a valid point,
that, if you give subsidies to any industry, then it gives an
importing the country the right to impose a tariff to get rid
of the trade advantage you have created by giving that subsidy.
As far as I am aware, those do exist already; there are tariffs
on European imported wine for that reason. But, certainly, accepting
the whole system through the Commission's proposal, if it were
implemented, would prevent any other country under—it used
to be GATT, did it not, but whatever the equivalent of the Tariffs
and Trades Agreement is now—from using that as an excuse
for imposing a tariff. I would have thought that much more than
an excuse to distil wine; an excuse to sell it would be a greater
idea. And, if we do not have the disadvantage of a tariff, we
can. I picked that up from him and I totally understood what he
meant and I can see why.
Q591 Lord Cameron of Dillington:
Is the only real subsidy in the distillation process? If you are
actually growing wine to sell it you do not have any subsidies,
do you?
Mr Lindo: Not in this context, no. We were saying
earlier, and I should have mentioned this, that in fact some of
our wine has been modernised by rural development grants. We put
the current success of the English wine industry down that actually.
But, if anybody wants to aim money at this, aim it on improving
the quality of production, investment in equipment, investment
in training and knowledge and marketing. If money is going to
be spent in making the EU wine sector competitive, that is where
it would make it competitive; just keeping people afloat with
terrible equipment and machinery and bad practices is never going
to work.
Lord Plumb: My Lord Chairman, what Mr
Roberts has said is, I think, very important. We are in the business
of trying to reach a conclusion on how the European regime should
be changed, modified, done away with, whatever. What you have
just said, I think, relates more to WTO than it does to the European
regime. Ought we to be concentrating more on that from a world
point of view rather than just Europe? We have our responsibility
in Europe but the issue can be far greater than that which we
are looking at.
Chairman: This is where I come in and
say that my predecessor always used to point out on occasions
such as this that we are a European Scrutiny Committee!
Q592 Lord Plumb:
I have just said that! But at the same time we are looking at
future trade and we cannot ignore the fact that there are products
that are going to affect the European regulations.
Mr Roberts: That is the point that, I got the
impression Russell Mildon was making. It was a point at a meeting
we had with Defra and it was one of those points that went around
the room and disappeared. But I have to say that I thought it
was extraordinarily important, and I think he felt the same, that
this was probably one of the more significant factors.
Chairman: Lord Plumb. Winemaking practices.
Q593 Lord Plumb:
My knowledge of the practice of winemaking is fairly limited,
but I have had the privilege of seeing it made at "Three
Choirs" on a number of occasions, and indeed enjoyed the
visits. In fact, as part of that I think I managed to get quite
a bit of wine out to Strasburg, which goes back a bit. You say
in your evidence that, whilst there are wine producers in other
parts of Europe who operate profitably under the current restrictive
practices—something we discussed and questioned a number
of people on from other European countries—there are others
who are fettered by the present regulations and prevented from
developing their business in a way as to compete with New World
products. That may be so, but are there not also producers who
may qualify, for subsidies for distillation. I think it is answering
the question that the chairman raised earlier on the point of
over production and therefore crisis distillation. But some would
see that as providing a haven rather than a straitjacket. Would
you see it that way or is that not so?
Mr Beardsmore: I think there are undoubtedly
producers that have that as a comfort zone. Primarily it is the
money side, so it is the market support measures as opposed to
necessarily the oenological practices themselves. So that helps
them on one side to actually receive money. There is also, of
course, the second issue that it is not a competitive market;
effectively it is like a quota system because of the planting
bans in place. So I think it is undoubtedly the case, and it is
why we accept there may be some pain if things do become more
deregulated, as we certainly hope they will do. But, again, in
terms of the sustainability of the European wine industry, we
think it has to go that route at some point. I do not think there
is any doubt that what you are saying is correct.
Q594 Viscount Ullswater:
I presume that Britain is a member of the OIV?
Mr Roberts: No.
Mr Lindo: Sadly, no.
Q595 Viscount Ullswater:
Would you consider that the OIV is a reference body for oenological
practices? And would you be content—obviously you would
want to sit at their table—to see them as being the gatekeeper
for the practices of winemaking, either new ones or restricting
old ones or getting away with perhaps some practices?
Mr Beardsmore: I think most people would be
very comfortable with that. It would help if it became totally
global—it would help to have the USA in there as well, for
example—but it includes most of the New World countries
which are applying a lot of the techniques to which we would like
access. So I think the general answer is yes.
Q596 Lord Plumb:
Why are we not included in OIV?
Mr Lindo: Defra cannot afford it. I asked the
question this week because we are trying to get a grape variety
properly named, and one of the things that is holding us back
is that we used to be members but that was cut as part of a costings
review.
Q597 Lord Greaves:
How much are we talking about?
Mr Lindo: I do not know how much it costs, but
it is a handicap that we are not a member of that body; we are
wine producers and we are trying to negotiate things and we are
not even there.
Mr Beardsmore: It is an issue that we have to
go through another trade body to get access to the OIV to get
an answer on something.
Q598 Chairman:
So, if the Department were interested in securing an entrepreneurial
regime for wine and within that a strong representation of English
winemakers, then there would be a very strong case to be made
that we ought to be members?
Mr Lindo: Absolutely.
Mr Beardsmore: I believe there would be a very
strong case, and, not only that. There is this idea mooted, particularly
if the Commission goes down the line that the OIV is the gatekeeper
of oenological practices, that the European Union might sign up
as a member. Whether the OIV would accept that or not is in question
anyway. But, even if they did, I still think we would want to
see—and obviously the individual countries, like France,
Spain and Italy would be there individually—us there individually
as well, because we know that there are the discussions that we
are talking about now, which are across Europe, and we do not
necessarily just want Europe as the one representative.
Q599 Viscount Brookeborough:
Enrichment and acidification. You point out that some maximum
needs to be set for enrichment. If enrichment is a natural additive,
why does that maximum not occur when the wine becomes of the right
quality?
Mr Lindo: Personally, I happen to agree with
you. If you look at the practice in New Zealand, there is no limit
on sugar, there is no limit on the additions of red and white
grape must. That does not mean that people are going to add vast
quantities of sugar, because the quality of the wine would suffer.
So setting an arbitrary limit is not realistic. It is just that
you have a whole range of wine-making practices that are open
to you. You do not have to use the limit of every one of them
but it gives the wine-maker the freedom to make it taste as nice
as it can, not make as much as you can, which would be the result
of unlimited sugar additions.
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