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EC hints at big vineyard pull to deal with surplus

Published:  23 July, 2008

By Jack Hibberd
The European Commission (EC) has agreed to Spain and France's applications for the crisis distillation' of millions of hectolitres of wine - but has strongly hinted that the current situation is unsustainable and a massive uprooting programme is the only option to deal with oversupply.

The EC will propose a new organisation' for the common market for wine next week, although it has stressed that the 1.2 billion wine budget' will not be reduced just spent more effectively'.

Last week the EC's Wine Management Committee agreed to allow France to distil a maximum of 1.5 million hectolitres (hl) of table wine and 1.5 million hl of quality wine. For Italy the figures are 2.5 million hl of table wine and 100,000 hl of quality wine. Further demands from Spain and Greece are still under examination.

The price paid to the grower for the wine to be distilled is 1.914 per %ABV and per hl for table wine and 3.00 per %ABV per hl for quality wine, in both France and Italy. A producer in Bordeaux distilling an AOC wine at 12% alcohol would receive 0.36 per litre, for example. The raw alcohol resulting from the distillation can only be used for industrial purposes in order not to disturb the market for potable alcohol. The total cost for the EU budget is 131 million.

Mariann Fischer Boel, Commissioner for Agriculture and Rural development, said: Crisis distillation is becoming a depressingly regular feature of our common market organisation for wine. While it offers temporary assistance to producers, it does not deal with the core of the problem - that Europe is producing too much wine for which there is no market. That is why a deep-rooted reform of the sector is needed urgently. We must increase the competitiveness of the EU's wine producers, strengthen the reputation of EU quality wine as the best in the world, recover old markets and win new ones. We must create a wine regime that operates through clear, simple rules and ensures balance between supply and demand. And we must create a system that preserves the best traditions of EU wine production and reinforces the social and environmental fabric of wine-producing regions. I will be coming forward on 22 June with proposals to do just that.'

The Australian Government has refused to provide help for Australian grape growers to depart the industry or leave grapes on the vines to deal with the oversupply problem.

Wine Grape Growers Australia had asked for up to AUS$60 million over two years in both payments and loans.

The Australian government offered AUS$50,000 to help with market intelligence.