Towards a sustainable European Wine Sector
Summary
 Why a reform ?
 How to reform?
 Which impacts?
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
2
Summary
 Why a reform ?
 How to reform?
 Which impacts?
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
3
CAP reforms
and wine CMO
Productivity
Competitiveness
Sustainability
The Early
Years (1960s)
The Crisis
Years (1980s)
Agenda
2000
The 1992
Reform
Wine CMO
reform
Wine CMO
Food security
Improving
productivity
Marketstabilisation
Income
support
Over
production
Exploding
expenditure
International
friction
Structural
measures
Reduced
surpluses
Deepening the
reform process
Environment
Competitiveness
Income
stabilisation
Budget
stabilisation
Towards a sustainable European Wine Sector
Rural
development
CAP Reform
2003-2005
2006
Market orientation
Consumer Wine
concerns CMO
draft
Farm income
reform
Rural
development
Environment
AGRI – C3 MD
02.06.2006
4
Wine market
challenges
Consumption by type of wine
Consumption by type of wine (EU-15)
160000
140000
120000
TOTAL
80000
table w ine
quality w ine
60000
40000
20000
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
0
1984
1000 hl
100000
Source: DG AGRI C3
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
5
Wine market
challenges
EU 15 Imports and exports (extra)
Source: Comext
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
6
Type of products ?
Range of products
Australia
EU
Picture source: Google image
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
7
Wine market
unbalance
x 1 000 HL
Stocks
Production
Consumption
Export
Import
200.000
160.000
120.000
80.000
40.000
0
1990/91
1993/94
1996/97
1999/00
2002/03
2005/06e
Source: DG AGRI C3
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
8
Pressure on prices
Recent development of table wine price
5,00
4,50
FR red
IT red
ES red
France
3,50
Italy
3,00
2,50
Spain
2,00
21/12/05
23/11/05
26/10/05
28/09/05
31/08/05
3/08/05
6/07/05
8/06/05
11/05/05
13/04/05
16/03/05
16/02/05
19/01/05
22/12/04
24/11/04
27/10/04
29/09/04
1/09/04
4/08/04
5/07/04
7/06/04
10/05/04
12/04/04
15/03/04
16/02/04
19/01/04
22/12/03
24/11/03
27/10/03
29/09/03
1/09/03
1,50
4/08/03
€/Vol./hl
4,00
*) Prix français calculés comme moyenne écrêtée à 10 termes
Sources: Unione Italiana Vini - Onivins - La semana vinicola
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
9
Pressure on income
Farm Income: wine vs. all agricultural sectors
FNVA/AWU of specialised wine farms vs. average agricultural sectors in the EU-15
Years 1990-2003
30000
25000
?
Euros
20000
15000
10000
5000
0
1990
1991
1992
1993
1994
1995
1996
Wine
1997
1998
1999
2000
2001
2002
2003
All Farms
Source: DG AGRI - FADN
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
10
Mid term forecasts
EU27 (status quo)
SURPLUS 1 & 2
40
2010/11
SURPLUS 1
35
SURPLUS 2
30
Mio hl
25
20
15
10
5
0
1999-2003
Source: DG AGRI G2
2003/04
2004/05 (e)
"Average"
"low "
"High"
Surplus 1 = Availabilities (inc imports) – {human consumption (inc exports) & industrial uses}
Surplus 2 = Surplus 1 – Potable alcohol distillation
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
11
Reform objectives
We 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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
12
Summary
 Why a reform ?
 How to reform?
 Which impacts?
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
13
Summary
of proposed changes
One step option
Measures kept and/or
strengthened
Measures added
National envelopes
Measures simplified
Restructuring
Rural development
Env. Requirements
Promotion/information
Oenological practices
Quality policy/ GIs
Measures
deleted
Planting rights
Grubbing-up
Distillations and
alcohol public
storage
Private storage
Labelling
Towards a sustainable European Wine Sector
Must aids and
sucrose use
AGRI – C3 MD
02.06.2006
14
Summary
of proposed changes
two step option: first period
Measures kept and/or
strengthened
Measures added
National envelopes
Measures simplified
Restructuring
Rural development
Env. Requirements
Promotion/information
Oenological practices
Quality policy/ GIs
Measures
deleted
Planting rights
Grubbing-up
Distillations and
alcohol public
storage
Private storage
Labelling
Towards a sustainable European Wine Sector
Must aids and
sucrose use
AGRI – C3 MD
02.06.2006
15
Summary
of proposed changes
two step option: first period
Measures kept and/or
strengthened
Planting rights
Grubbing-up
Restructuring
Rural development
Env. Requirements
Promotion/information
Measures added
Measures
deleted
National envelopes
Measures simplified
Oenological practices
Quality policy/ GIs
Distillations and
alcohol public
storage
Private storage
Labelling
Towards a sustainable European Wine Sector
Must aids and
sucrose use
AGRI – C3 MD
02.06.2006
16
Summary
of proposed changes
two step option: second period
Measures kept and/or
strengthened
Planting rights
Grubbing-up
Restructuring
Rural development
Env. Requirements
Promotion/information
Measures added
Measures
deleted
National envelopes
Measures simplified
Oenological practices
Quality policy/ GIs
Distillations and
alcohol public
storage
Private storage
Labelling
Towards a sustainable European Wine Sector
Must aids and
sucrose use
AGRI – C3 MD
02.06.2006
17
Summary
of proposed changes
two step option: second period
Measures kept and/or
strengthened
Measures added
National envelopes
Measures simplified
Restructuring
Rural development
Env. Requirements
Promotion/information
Oenological practices
Quality policy/ GIs
Measures
deleted
Planting rights
Grubbing-up
Distillations and
alcohol public
storage
Private storage
Labelling
Towards a sustainable European Wine Sector
Must aids and
sucrose use
AGRI – C3 MD
02.06.2006
18
Targeted
measures
Abolition of planting rights
Limiting prod. and proc. constraints
Reinforcing competitiveness
• 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.
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
19
Targeted
measures
Grubbing-up (2 step Op.)
Reinforcing farmers’ market orientation
Achieving a balanced market
• 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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
20
Targeted
measures
Restructuring maintained
Reinforcing farmers’ market orientation
Modernisation of production structures
• Current scheme maintained
• Financed through national envelopes
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
21
Targeted
measures
Suppression non effective
intervention measures
Reinforcing farmers’ market orientation
Achieving a balanced market
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
> > Funds for higher value for money measures
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
22
Targeted
measures
More subsidiarity
National enveloppes
Modernisation of structures
• 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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
23
Targeted
measures
OPs, Quality and labelling
Promotion/information
Simplified and consumer oriented
measures
Recover and win market shares
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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
24
Targeted
measures
OPs, Quality and labelling
Promotion/information
Simplified and consumer oriented
measures
Recover and win market shares
Clearer, simpler and more transparent rules as
well as TRIPS compatibility
Simplification of wine classification:
TW
2 categories: wines without GIs and wines with GIs
Wine without GIs
TW
TW GIs
QWpsr
Towards a sustainable European Wine Sector
Wine with GIs
AGRI – C3 MD
02.06.2006
25
Targeted
measures
OPs, Quality and labelling
Promotion/information
TW
Simplified and consumer oriented
measures
Recover and win market shares
TW
TW GIs
Clearer, simpler and more transparent rules
QWpsr
• 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
Wine without GIs
• More WTO compatible
• Commission competence
Wine with GIs
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
26
Targeted
measures
OPs, Quality and labelling
Promotion/information
Simplified and consumer oriented
measures
Recover and win market shares
• Enhance promotion scheme outside the EU
• Information campaigns inside the EU for a
responsible consumption
• Information related to alcohol harm
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
27
Targeted
measures
Modernisation of structures
Funds transferred to
rural development
Safeguarding local economy
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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
28
Targeted
measures
Introduction of
requirements
Reinforcing environment safeguard
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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
29
Targeted
measures
Abolition of planting rights
Reinforcing farmers’ market orientation
Grubbing-up (2 step Op.)
Achieving a balanced market
Restructuring maintained
Limiting prod. and proc. constraints
Reinforcing competitiveness
Suppression non effective
intervention measures
Recover and win market shares
Higher value for money
National enveloppes
More subsidiarity
OPs, Quality and labelling
Promotion/information
Simplified and consumer oriented
measures
Funds transferred to
rural development
Introduction of
requirements
Modernisation of structures
Safeguarding local economy
Reinforcing environment safeguard
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
30
Summary
 Why a reform ?
 How to reform?
 Which impacts?
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
31
Impact assessment
on
4 options:
 Option 1: Improved status quo
 Option 2: profound CMO reform
 Option 3: CAP reform (decoupling)
 Option 4: Full deregulation
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
32
Summary
of impacts
SUMMARY of
Impacts
Market
balance
Prices
Agricultural
incomes
Option 1:
Improved status
+ quo
Option 2: Profound
reform of the CMO
r
e
s
t
Increasing
surplus
r
i
c
t
i
Sharp
decrease
o
due to
n
unsustainability
of
s
the
system
i
n
+
r
e
Smoothest
s
achievement
of
t
rbalance
i
c
Decrease
in the
t
short
term
i
o
Recovery
after
n
s
achievement of
i
nbalance
t
h
Progressive
e
Decrease
in the
t
h
short
term
decrease due to
unsustainability
of
u
s
the system
e
o
f
Option 3: Reform along
CAP reform lines
Option 4: Deregulation
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
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
Decrease in the mid term
Very sharp decrease in the
short and mid term
Recovery after
achievement of balance
No safety net mechanism
Recovery after achievement of
balance
No safety net mechanism
e
Recovery after
u
achievement
of
s
ebalance
o
Rapidf improvement
Improvement in the long
Strong improvement in the long
s
through
economic
run
run
s
u
sustainability
u
through
economic
through
economic
c
Competitic
and improved
sustainability
sustainability, freedom to farm
Norimprovement
r
veness
o
and
improved
regulatory
and improved regulatory
regulatory
o
s a sustainable European
Towards
Wine
Sector
AGRI
–
C3
MD
02.06.2006
measures
measures 33
s
measures
e
allowing flexibility and
allowing flexibility and
e
allowing
flexibility
innovation
innovation
Summary
of impacts (2)
Environment
Trade
WTO
compatible
Wine quality
No improvement
Different
measures
potentially
under attack
Neutral
No easy solution
to apply crossompliance on all
vine area
shifts to RD can
be used to
Encourage
More
Environmentallyfriendly measures
Direct applicability of
general cross
compliance
Very difficult to apply crosscompliance
No available funds to
encourage more
environmentally-friendly
measures
Most problems
solved
Most problems solved
Most problems solved
Increase through
better market
orientation
Increase through
better market
orientation
Increase through better market
orientation
Stop to
Stop to unacceptable
Unacceptable
support to
support to
Stop to unacceptable support to
distillation
into
distillation into
distillation into potable alcohol
Health /
potable alcohol
No improvement
Labelling rules more
potable alcohol
Labelling rules
consumer
transparent
Labelling rules
more transparent
and consumer oriented
34
Towards a sustainable European
Wine Sector
more transparent
and consumer AGRI – C3 MD 02.06.2006
oriented
and consumer
oriented
Summary
of impacts (3)
Budget
Subsidiarity
Simplification,
applicability
controllability
Increasing
pressure
Neutral
Neutral
Possibility of savings
No improvement
Much more
flexibility with
national envelope
and increased RD
funds
Flexibility in the
implementation of the
SPS
Possibly more
flexibility via shift to
RD
Moderate
simplification
Strong simplification,
but specific
operational
difficulties in
implementing SPS in
wine sector
Most problem solved
No improvement
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
35
Impacts on income
Variation of agricultural income (FNVA/AWU) in the year 2 of the reform
40%
Option 1
Status quo
20%
Option 2
Profound reform
%
0%
-20%
-40%
Option 3
CAP reform
-60%
Option 4
Deregulation
-80%
Poitou
Charentes Table wine
and cognac
Languedoc
Roussillon Table wine
specialist
Puglia (1) Table wine
specialist
Puglia (2) Mixed table
wine and
olives
Sicilia (1) Table wine
specialist
Sicila (2) Mixed table
wine and
olives
Castilla La
Mancha Table wine
specialist
Source: DG AGRI G3 FADN
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
36
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
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
37
More information
http://ec.europa.eu/comm/agriculture/capreform/wine/index_en.htm
Thank you
Towards a sustainable European Wine Sector
AGRI – C3 MD
02.06.2006
38