towards a sustainable european wine sector. towards a sustainable european wine sector agri – c3...

Towards a sustainable European Wine Sector

Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 2

Summary

Why a reform ? How to reform? Which impacts?


Summary



Reducedsurpluses

Environment

Incomestabilisation

Budgetstabilisation

Food security

Improvingproductivity

Market-stabilisation

Incomesupport

Overproduction

Explodingexpenditure

Internationalfriction

Structuralmeasures

Deepening the reform process

Competitive-ness

Rural development

Market orientation

Consumerconcerns

Farm income

Ruraldevelopment

Environment

The Early Years (1960s)

The Crisis Years (1980s)

The 1992Reform

Agenda 2000

CAP Reform 2003-2005

Productivity

Competitiveness

Sustainability

CAP reformsand wine CMO

Wine CMOWine CMO

reform

2006

WineCMOdraft

reform


Consumption by type of wineConsumption by type of wine (EU-15)

0

20000

40000

60000

80000

100000

120000

140000

160000

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

1000 h

l

TOTAL

table w ine

quality w ine

Wine market challenges

Source: DG AGRI C3


EU 15 Imports and exports (extra)

Wine market challenges

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

Wine trade in volume (1000 hl)

Import

Export

x 1000 hl

0

1.000

2.000

3.000

4.000

5.000

Wine trade in value (Mio €)

Import

Export

Mio €

Source: Comext


Range of products

Australia EU

Type of products ?

Picture source: Google image


0

40.000

80.000

120.000

160.000

200.000

1990/91 1993/94 1996/97 1999/00 2002/03 2005/06e

Stocks Production Consumption Export Importx 1 000 HL

Wine market unbalance

Source: DG AGRI C3


Recent development of table wine price

1,50

2,00

2,50

3,00

3,50

4,00

4,50

5,00

4/08

/03

1/09

/03

29/0

9/03

27/1

0/03

24/1

1/03

22/1

2/03

19/0

1/04

16/0

2/04

15/0

3/04

12/0

4/04

10/0

5/04

7/06

/04

5/07

/04

4/08

/04

1/09

/04

29/0

9/04

27/1

0/04

24/1

1/04

22/1

2/04

19/0

1/05

16/0

2/05

16/0

3/05

13/0

4/05

11/0

5/05

8/06

/05

6/07

/05

3/08

/05

31/0

8/05

28/0

9/05

26/1

0/05

23/1

1/05

21/1

2/05

*) Prix français calculés comme moyenne écrêtée à 10 termesSources: Unione Italiana Vini - Onivins - La semana vinicola

€/V

ol./

hl

FR red

IT red

ES red

France

Italy

Spain

Pressure on prices


Farm Income: wine vs. all agricultural sectorsFNVA/AWU of specialised wine farms vs. average agricultural sectors in the EU-15 Years 1990-2003

0

5000

10000

15000

20000

25000

30000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Eu

ros

Wine All Farms

Source: DG AGRI - FADN

Pressure on income

?


Surplus 1 = Availabilities (inc imports) – {human consumption (inc exports) & industrial uses} Surplus 2 = Surplus 1 – Potable alcohol distillation

Mid term forecastsEU27 (status quo)

SURPLUS 1 & 2

0

5

10

15

20

25

30

35

40

1999-2003 2003/04 2004/05 (e) "Average" "low " "High"

Mio

hl

SURPLUS 1

SURPLUS 2

2010/11

Source: DG AGRI G2


Reform objectivesWe need a wine regime that: Increases the competitiveness of the EU’s wine

producers, strengthens the reputation of EU quality wine as the best in the world, to recover old markets and to win ones in the EU and worldwide

Operates through clear, simple and effective rules to ensure balance between supply and demand.

Preserves the best traditions of the EU wine production and reinforces the social and environmental fabric of many rural areas


Summary



Summary of proposed changes

One step optionMeasures Measures

deleteddeletedMeasures kept and/or Measures kept and/or

strengthenedstrengthened

Restructuring Distillations and alcohol public

storage

Private storage

Measures addedMeasures added

National envelopes

Rural development Env. Requirements

Promotion/information

Planting rights

Oenological practices

Quality policy/ GIs

LabellingMust aids and

sucrose use

Grubbing-upMeasures simplified



two step option: first periodMeasures Measures




storage

Private storage


National envelopes


Quality policy/ GIs


sucrose use

Planting rights






two step option: second periodMeasures Measures




storage

Private storage


National envelopes


Quality policy/ GIs


sucrose use

Planting rights





Targeted measures

Abolition of planting rights

Reinforcing competitiveness

Limiting prod. and proc. constraints

• Current end of application 01/08/2010

• Could be abolished immediately or at one date before 2010, and, at least, not prolonged (One step option)

• Could be extended until 2013 (two step option) due to the grubbing-up scheme

• Possible provisions for the stakeholders to maintain rules to limit the areas for protected designations.


Targeted measures

• More attractive level

• Decreasing level to speed up the take up

• 400 000 ha over 5 years (2.4 billion €)

• To be decided by the producer (no more subject to current MS restriction)

• Area will qualify as eligible for SPS

• Environmental requirements

• Top up of national envelopes in line with grubbing-up achievements

Grubbing-up (2 step Op.) Reinforcing farmers’ market orientation

Achieving a balanced market


Targeted measures

• Current scheme maintained

• Financed through national envelopes

Reinforcing farmers’ market orientationRestructuring maintained

Modernisation of production structures


Targeted measures

Market management tools abolished from day 1:

• By-product distillation

• Potable alcohol and dual-purpose grape distillation

• Public storage of alcohol

• Private storage support of wine and musts

• Use of musts aid (enrichment and grape juice)

• Crisis distillation abolished or replaced by crisis management measure

Reinforcing farmers’ market orientation

Achieving a balanced marketSuppression non effective

intervention measures

> > > > FundsFunds for higher value for money measures for higher value for money measures


Targeted measures

• Calculated through objective criteria

• Given menu (including restructuring, crisis management measures, green harvesting…)

• Subject to common rules to avoid distortion of competition

• Subject to specific national program to be approved by the Commission

National enveloppes

Modernisation of structures

More subsidiarity


Targeted measures

Clearer, simpler and more transparent rules:

• More flexible wine making practices

• End of sugar use >> only use of musts (without aid) within smaller limits (+2% and +1% in zone C).

WTO compatibility:

• End of ban of imported musts for vinification

• End of ban of EU wine coupage with imported wines

OPs, Quality and labellingPromotion/information

Simplified and consumer oriented measures

Recover and win market shares


Targeted measures

Clearer, simpler and more transparent rules as well as TRIPS compatibility

Simplification of wine classification:

2 categories: wines without GIs and wines with GIs




Wine without GIs

Wine with GIs

TW

QWpsr

TW

TW GIs


Targeted measures

Clearer, simpler and more transparent rules

• Only one sort of labelling (same mandatory and optional mentions for all types of wines)

• Allow wine without GIs to mention the vine variety and harvest year

• More WTO compatible

• Commission competence




TW

QWpsr

TW

TW GIs

Wine without GIs

Wine with GIs


Targeted measures

• Enhance promotion scheme outside the EU

• Information campaigns inside the EU for a responsible consumption

• Information related to alcohol harm





Targeted measures

Currently available measures of RD, for ex:

• Investments on holdings, young farmers

• Early retirement

• Agrienvironment, landscapes protection, organic farming…

• Investments in processing plants (technical and marketing)

• Investments for reconversion in other agricultural activities

Transfer of funds from first to second pillar

Funds transferred to rural development


Safeguarding local economy


Targeted measures

Minimum environment requirements from production to processing (notably soil erosion and contamination, use of plant production products, waste management):

• Requirements for national envelope (ex restructuring scheme)

• Rural development standards

• Cross compliance on grubbed up area introduced in SPS

• Requirements for other grubbed up areas

Introduction of requirements

Reinforcing environment safeguard


Targeted measures

Safeguarding local economy



Reinforcing farmers’ market orientation

Achieving a balanced market

More subsidiarity

Higher value for moneyHigher value for money


Suppression non effective intervention measures

Restructuring maintained

National enveloppes

Grubbing-up (2 step Op.)

Abolition of planting rights

Funds transferred to rural development

Introduction of requirements Reinforcing environment safeguard

Reinforcing competitiveness

Limiting prod. and proc. constraints



Summary



Impact assessment on

4 options:

Option 1: Improved status quo Option 2: profound CMO reform Option 3: CAP reform (decoupling) Option 4: Full deregulation


Summary of impacts

+

restrictions

in the use

of sucrose

+

restrictions

in the use

of sucrose

SUMMARY of Impacts

Option 1: Improved status

quo

Option 2: Profound reform of the CMO

Option 3: Reform along CAP reform lines

Option 4: Deregulation

Market balance

Increasing surplus Smoothest

achievement of balance

Increasing surplus in the short and mid term

Increasing surplus in the short and mid term

Market equilibrium in the long term

Market equilibrium in the long term

Prices

Sharp decrease due to

unsustainability of the system

Decrease in the short term

Sharp decrease in the short and mid term

Very sharp decrease in the short and mid term

Recovery after achievement of

balance

Recovery after achievement of balance


Agricultural incomes

Progressive decrease due to

unsustainability of the system

Decrease in the short term

Decrease in the mid termVery sharp decrease in the

short and mid term

Recovery after achievement of

balance


No safety net mechanism


No safety net mechanism

Competiti-veness No improvement

Rapid improvementthrough economic

sustainabilityand improved

regulatory measures

allowing flexibility and innovation

Improvement in the long run

through economic sustainability

and improved regulatory measures


Strong improvement in the long run

through economic sustainability, freedom to farm

and improved regulatory measures



Summary of impacts (2)

Environment No improvement

No easy solutionto apply cross-

ompliance on allvine area

shifts to RD canbe used toEncourage

MoreEnvironmentally-friendly measures

Direct applicability ofgeneral cross compliance

Very difficult to apply cross-compliance

No available funds to encourage more

environmentally-friendly measures

TradeWTO

compatible

Different measurespotentially

under attack

Most problemssolved

Most problems solved Most problems solved

Wine quality NeutralIncrease through

better marketorientation

Increase through better market

orientation

Increase through better market orientation

Health / consumer

No improvement

Stop toUnacceptable

support todistillation intopotable alcoholLabelling rules

more transparentand consumer

oriented

Stop to unacceptable support to

distillation into potable alcoholLabelling rules

more transparentand consumer

oriented

Stop to unacceptable support todistillation into potable alcohol

Labelling rules more transparent

and consumer oriented


Summary of impacts (3)

Budget Increasing pressure Neutral Neutral Possibility of savings

Subsidiarity No improvement

Much more flexibility with

national envelopeand increased RD

funds

Flexibility in the implementation of the

SPS

Possibly more flexibility via shift to

RD

Simplification,applicability

controllabilityNo improvement

Moderate simplification

Strong simplification, but specific operationaldifficulties in

implementing SPS in wine sector

Most problem solved


Impacts on income

Variation of agricultural income (FNVA/AWU) in the year 2 of the reform

-80%

-60%

-40%

-20%

0%

20%

40%

PoitouCharentes -Table wineand cognac

LanguedocRoussillon -Table winespecialist

Puglia (1) -Table winespecialist

Puglia (2) -Mixed table

wine andolives

Sicilia (1) -Table winespecialist

Sicila (2) -Mixed table

wine andolives

Castilla LaMancha -

Table winespecialist

%

Option 1Status quo

Option 2Profound reform

Option 3CAP reform

Option 4Deregulation

Source: DG AGRI G3 FADN


Reform agenda

16/02/2006: Stakeholders wine seminar 22/06/2006 : Commission Communication

to the Council and the Parliament and Impact assessment report.

End 2006: draft legal proposal First semester 2007: negotiations 2008/2009? application


More information

http://ec.europa.eu/comm/agriculture/capreform/wine/index_en.htm

Thank you

http://ec.europa.eu/comm/agriculture/capreform/wine/index_en.htm

towards a sustainable european wine sector. towards a sustainable european wine sector agri – c3...

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