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22/06/2006

The Commission proposal for a radical reform of the wine sector

The European Commission unveiled on 22 June its proposal for a reform of the EU wine sector. In this proposal the Commission contemplates four options for reform, and expresses a clear preference for a profound reform specific to the wine sector.

This reform, that will maintain the wine budget at the same level, would involve either a one-step or a two-step approach.

The two-step approach would begin with measures to bring supply and demand back into balance before focusing on improving competitiveness. Reform measures would include:

  • The grubbing-up scheme would be reactivated, with the grubbing-up premium set at an attractive level to encourage uncompetitive producers to leave the sector. The premium would be reduced annually to encourage take-up from year one. The aim is to grub up 400,000 hectares over a five-year period, with a maximum aid of €2.4 billion. Grubbing-up would be voluntary.
  • The system of planting rights would be extended to 2013, when it would expire. The least competitive producers would have a strong incentive to sell their rights, while those staying in the sector would focus more on competitiveness, as the cost of planting rights would no longer hamper their expansion.
  • Areas formerly under vines would qualify for the Single Farm Payment, and minimum environmental requirements would be attached to the payments.
  • Market management tools – such as support for by-product distillation, potable alcohol distillation, private storage aid and must aid – would be abolished. Crisis distillation would be abolished or replaced by an alternative safety net using the national financial envelope that would be allocated to each producer country, to finance measures best suited to each national situation.
  • Money would be transferred to Rural Development for wine-specific measures such as an early retirement scheme.
  • A new quality policy, establishing two classes of wine: wine with Geographical Indication and wine without GI.
  • Simpler labelling rules, which would include allowing the indication of grape variety and vintage on wines without GI status.
  • Transfer of responsibility for approving new wine-making practices to the Commission.
  • Recognition of wine-making practices accepted by the OIV.
  • A ban on the use of sugar for enriching the alcohol content of wine.

The Communication also considers a “one-step” variant of this profound reform approach, which would require very rapid and demanding adjustments in the wine sector. Under this scenario, the system of planting rights restrictions would be either allowed to expire on 1 August 2010, or be abolished immediately. The current grubbing-up scheme would also be abolished at the same time. Each hectare of vineyard grubbed-up at the farmer's expense would become part of the area eligible for the Single Payment Scheme.

The Commission plans to table legislative proposals in December 2006 or January 2007.

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