Winegrowers are warning that Europe will drown in surplus wine unless the European Union funds the emergency distillation of over a billion bottles into industrial ethanol.
Restaurant closures are decreasing consumer demand for wine, while exports to countries outside the EU are drying up. Winegrowers warn that without emergency help from Brussels their cellars will be too full to store wine from this years harvest.
“Once there is too much stock, prices will fall very, very strongly for wine,” Thomas Montagne, the president of independent winegrowers lobby CEVI, told POLITICO.
The winegrowers predicament is reminiscent of the so-called wine lake crisis of the mid 2000s, which forced the EU to overhaul its farm policy to reduce the massive overproduction of wine being stimulated by its own subsidies, under the Common Agricultural Policy.
Now the coronavirus has put a vintage rescue measure, reluctantly used by the EU to drain the wine lake in 2006, back at the center of the debate.
To the dismay of the wine industry, the EU is insisting distillation will have to be funded from the existing budgets.
France, the EUs largest wine exporter, has been pressing the European Commission to implement a mass distillation scheme.
Didier Guillaume, the countrys farm minister, told French TV Thursday, “French wine growers are being completely asphyxiated.” He said he has made what he called “strong demands” to the EU to fund distillation.
Pau Roca, director general of the International Wine Organisation, said restaurant and hotel closures could lead to a 35 percent drop in the volume of wine sold, and a 50 percent decrease in sales value.
On Tuesday, the European Commission announced it is consulting national capitals on proposed emergency agriculture measures, which — according to an accompanying note to diplomats, seen by POLITICO — would allow EU countries to diverge from the usual competition rules and fund distillation and private storage schemes for wine.
Other Commission proposals under consideration include allowing farmers to destroy their grapevines on the same parcel of land two years running, and giving countries more flexibility to shuffle around funds inside their wine programs.
But to the dismay of the wine industry, the EU is insisting distillation will have to be funded from the existing budgets of countrys wine programs, rather than stumping up new money.
In response, three French, Spanish and Italian wine cooperatives that are responsible for half of Europes wine production sent the Commission a letter, saying the EU should spend €350 million paying growers to distill 10 million hectoliters of wine into pure alcohol in order to boost prices. That would mean destroying over a billion bottles of vino.
European Peoples Party lawmaker Herbert Dorfmann, from Italy, described the Commissions refusal to find fresh money for wine as “not satisfactory at all,” and said it was unfair to countries that have already used up their wine support funds.
The dairy sector, also buffeted by the coronavirus, received €30 million of fresh European money to fund a private storage scheme as part of the same measures.
But some parts of the wine industry say distillation should only be part of the solution.
Ignacio Sánchez Recarte, secretary-general of wine exporters lobby CEEV, told POLITICO, “We need to focus action on rebuilding markets.”
A shopkeeper wearing a protective mask in Paris | Philippe Lopez/AFP via Getty Images
If countries are forced to use all their remaining wine program funds on distillation, there will be no money left to strengthen exports, he said. Sánchez Recarte wants Brussels to change the rules to allow EU money for promoting wine outside the bloc to be used for marketing campaigns on homRead More – Source