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Last Updated: Thursday, 22 June 2006, 17:38 GMT 18:38 UK
Q&A: EU wine reform
Hermitage grapes
About 1.5m people are employed full-time on Europe's vineyards
The European Commission has unveiled proposals for reform of the EU wine sector, designed to eliminate overproduction and make better use of subsidies.

The move represents the latest phase of a shake-up of the Common Agricultural Policy.

It has been prompted by falling levels of wine consumption, and intense competition from the New World.

What is the goal of the reform?

Europe is the world's largest producer and exporter of wine. But imports have been growing strongly, and could soon exceed exports, the European Commission warns. It wants to halt this trend by spending more on "building quality and competitiveness" and less on storage of wine lakes and distillation of surplus wine into industrial alcohol.

How does the Commission plan to do it?

It proposes:

  • introducing incentives for wine makers to grub up vineyards
  • abolishing subsidies for distillation of surplus wine
  • making labelling systems more user-friendly
  • modernising wine-making practices

The aim would be for one-eighth of Europe's vineyards to be dug up over five years, at a cost of 2.4bn euros.

Will the changes reduce the cost to taxpayers?

No. The idea is to spend the annual subsidy of 1.3bn euros (0.89bn) more wisely, not to change the overall figure.

Is this the Commission's final proposal?

No, it is just a start. The Commission proposes to produce draft legislation in December 2006 or January 2007, after several months of debate.

What trends does the EU find most worrying?

Mariann Fischer-Boel
Agriculture Commissioner Mariann Fischer-Boel tells of rising imports
Over the last 10 years, imports have grown by 10% per year, far outstripping growth in exports. In 2005, exports of 13m hectolitres only narrowly exceeded imports (12m hl).

Meanwhile, the amount of wine produced but not sold has been steadily growing. It could reach 15% of the EU's total output by 2010/11. The EU wine lake is already more than one year's production.

Wine consumption in the EU - which drinks about 60% of the world's wine - is falling by about 0.65% per year.

Revenues per farm declined by 12%, on average, between 1999 and 2003.

Would the same reforms be carried out in each member state?

No, under the Commission's proposal, each state would receive a certain quantity of funding, based on its production of wine over a particular period.

Each would then draw up a package of measures, from a common menu. Some could even opt to continue funding the distillation of surplus wine into industrial alcohol, despite the halting of the programme at EU level.

Other changes, such as a simplification of quality levels and labelling, would apply across the board. There would just be two quality levels, and lower quality wines would be allowed, for the first time, to indicate grape variety and vintage.

How important is wine to the EU economy?

In 2004, it accounted for 5.4% of agricultural output and employed about 1.5m people. Average production over the past five years was about 178hl, worth about 16bn euros.

Which are the main wine-producing countries?

France, Italy and Spain are not only the EU's but the world's top producers by volume.

The list of EU producers continues with Germany in fourth place, followed by Portugal, Hungary, Greece, Austria, Slovenia, the Czech Republic, Slovakia and Cyprus.

chart showing world's main importers and exporters of wine

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