Should we open the EU wine market?

wine vineyard grapes producing wine bottles vine planting european union
Numéro 1

Learn the ropes

What does the EU regulate on the European wine market?
Wine regulations are part of the Common Agricultural Policy (CAP) of the European Union. The European law regulates this sector in order to prevent an overproduction of wine and deliver labels. They define the maximum vineyard surface allowed in each EU Member State, the permitted techniques of wine-producing and the principles of labelling and classification of different types of wine.

The wine policy became more interventionist in 1978, when the EU (or the European Economic Community at the time) was facing a surplus of wine production. These regulations set up a system of planting rights for vines delivered by the EU.

Source: European Commission

How does the scheme of authorisations for vine plantings work?
One of the most salient issues of the EU regulation of wine production and wine trade is the scheme of authorizations for vine plantings. The new rules of this scheme entered into force in 2016. They set up a system of authorizations delivered on national level (so, by Member States) to wine producers in the country. Member States can apply to increase their vine surface quota, in the limit of 1% growth per year and per Member State.

Source: europa.eu

Why do we talk about it today?
The scheme of authorisations for vine plantings is one of the last protectionists policies in the European agriculture. The current scheme is supposed to end in 2030, although the European institutions work on the CAP reform, which will enter into force in 2020.

Moreover, in April, the agricultural committee of the European Parliament proposed to extend the current vine planting scheme until 2050.

Source: EURACTIV

Numéro 2

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The idea behind the Rift is simple: for each topic of debate, we provide you with an expertise based on a pro-con approach, written by competent and legitimate experts. We want to help you make your own opinion, and guide you on first steps to civic engagement.
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FOR

The EU planting rights scheme: a rigid corset confining the EU wine sector



ignacio sanchez recarte

Ignacio Sánchez Recarte

Secretary General, CEEV (Comité européen des entreprises vins)

www.ceev.eu



As the voice of the EU wine companies, CEEV is not in favour of the planting authorization system as it currently stands mainly because of its rigidity and its lack of capacity to adapt to regional/local realities. Indeed, a few years after its entry into force, the new system is not considered satisfactory by the EU wine industry and does not meet the sector’s expectations.

Bigger surface and production allow economies of scale and lead to positive synergies

The 1% annual threshold, decided by Member States, is too low to curb the decline that the EU-28 vine-growing area has been experiencing for the past few years. In the absence of measures able to compensate for such decline, the sector will suffer a decrease in production and will eventually be unable to meet the demand from external markets.

Also, the current planting authorization scheme reduces the possibilities for EU wine companies to adapt and expand. The average size of EU wine companies is already very small compared to its third-country competitors – for example, the average size of an Italian vineyard is 1,8 ha, compared to 36 ha for Californian vineyards. And when it comes to competitiveness, size matters: bigger surface and production allow economies of scale and lead to positive synergies. Therefore, an increase of EU wine companies’ size would be welcome.

In order to increase the production potential of wine areas and to avoid losing international markets to our competitors, the planting authorization system should allow adapting the authorisation scheme (including the 1% threshold) to the reality of each wine-growing area, without being capped by default values.

The 5-year timeframe is too short for operators

Another possible solution would be to set up national reserves for planting authorizations, as existed until the 2013 reform. Under the current regulation, planting rights that have not been converted into authorizations by 2020 are lost. However, this 5-year timeframe is too short for operators to use their rights. By setting up national reserves managed by each Member States, planting rights still to be converted by 2020 could be accumulated and allocated to wine producers after the 2020 deadline.

AGAINST

The management of plant vines plays a key role in EU quality wines’ success

EFOW

Bernard Farges

President, European Federation of Origin Wines (EFOW)

www.efow.eu



For generations, European wine makers have produced quality wines which have become the envy of the world.

European viticulture and more particularly wines with a geographical indications (GIs), i.e. wines that have unique qualities linked to their geographical origin, are doing well. The EU wine sector continues to thrive despite a difficult economic and trade context for many EU agricultural products.

The authorisations scheme ensures a balance between supply and demand

The EU is the world’s leading producer of wine with more than 180 million hl, representing over 61% of the world production. 2.5 million agricultural holdings grow vines in the EU on 3.2 million ha (45% of the world’s total ha). Up to 83% of the EU vine area are dedicated to the production of quality GI wines; one could say that without GI wines there is no European viticulture. European wine is also by far the largest EU agricultural export with nearly 10 billion euros of export outside the EU and a very important contribution to the EU trade balance (over 6 billion euros).

The current EU wine policy contains specific instruments for the sector that are embedded in the Common Agricultural Policy (CAP) and delivering positive results. This is particularly true when it comes to the authorisations of planting scheme which ensures a balance between supply and demand of wine. This scheme is the last supply management tool left in the CAP. Thanks to it, the wine sector has been able to grow steadily and to improve the quality of its wines. The EU wine sector has avoided the terrible crises that the end of quotas has brought to the EU milk and sugar sectors. The elimination of these quotas triggered extreme crisis in these two sectors bringing over-production, stark fall in prices, loss of competitiveness and jobs as well as many company closures.

A dynamic tool that provides flexibility for the European wine sector

The implementation of the authorisation of vine planting has been very positive. It is a key pillar of the European wine sector. New planting authorisations are limited to 1% growth per year at the national level but Member States can apply different growth limit at national or regional level. This is a dynamic tool that provides flexibility for the European wine sector to expand to respond to demand. Furthermore, the scheme which is crucial to maintain the growth, competitiveness and quality of EU wines on the world market does not cost anything to the EU budget. EFOW is calling for the extension of the regime after 2030.

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