Position Paper of the Deutscher Weinbauverband (DWV)/ German Wine-growers’ Association on the Reform of the Common Market Organization (CMO) for Wine

Preliminary remarks: As far as we know, the European Commission is currently preparing a Commission communiqué about the reform of the Common Market Organization (CMO) for wine that is to be passed on to the Council and the European Parliament on 21 June 2006. The Commission is considering four possible options for a reform of the CMO for wine as follows: Option 1: Retention of the status quo with a few changes here and there. Option 2: Fundamental reform of the CMO for wine. Option 3: Incorporation of the reform of the CMO for wine into the general agricultural reform. Option 4: Complete deregulation of the wine market

With regard to the four options mentioned above, the DWV – that considers the retention of a specific CMO for wine to be indispensable – feels that only option two can be seriously considered as a basis for further deliberations, whereby the DWV explicitly objects to two recommendations in this option:

 

·The expected comprehensive reduction of EU production potential through permanent abandonment of areas planted with vines (FAP, or Final Abandonment Premium). The funding needed to implement this would create a shortage of funds for other, more sensible measures (see below, recommendation regarding subsidiary budget distribution).

·Restrictions related to and/or prohibition of chaptalization, a procedure traditionally practiced in Germany.

 

In view of the preliminary remarks above, and in accordance with the positions of COPA/COGECA (Committee of Professional Agricultural Organizations in the EU/Confederation of Agricultural Co-operatives in the EU) and AREV (Assembly of European Viticultural Regions), the DWV’s position on the forthcoming reform of the CMO for wine is outlined below.

 

In their statement on the deliberations on the reform of the CMO for wine, COPA/COGECA (the European trade associations of wine producers) call for a redistribution of EU funds for the wine sector more strongly based on the principle of subsidiarity. In practice, this would mean that the target budget of 1,500 million Euros would finance measures undertaken by both the EU and the Member States. The DWV foresees the division as follows: one third (500 million Euros) for EU measures and two thirds (1,000 million Euros) for subsidiary measures, to be allocated according to the surface area devoted to vines in the respective Member States.

 

Specifically, the DWV sees the breakdown as follows:

 

 

1. “Horizontal” EU measures – implementation and financing

 

The EU Commission should be permitted to implement the following measures:

 

Market Mechanisms

 

·Coordination of Member States’ marketing research data

·Retention of distillation to supply the potable alcohol sector

·Retention of “crisis distillation” as a necessary social net; yet there should be a modification of current regulations: obligatory implementation by Member States who apply for it

·Retention of subsidies for the production of grape juice

·Retention of subsidies for RTK (rectified, concentrated grape juice) to compensate for the difference in cost for sucrose (political compromise to ensure ongoing permission for chaptalization)

·Retention of the possibility granted to Germany and other Member States to eliminate by-products of wine production “via controlled methods.”

 

Furthermore, the following measures should be supported:

 

·Measures to promote products and information about wine, as well as to support research, advisory service and innovation (technology, marketing, etc.)

·Measures to support the sales of European wines in third countries

 

 

2.“Vertical” or “subsidiary” member-state measures – implementation and financing

 

“Structural improvement measures” and “market mechanisms” should be financed from the budget for subsidiary measures, to be allocated according to the surface area devoted to vines in the respective Member States.

 

 

 

Regulation of production potential

 

·Particularly with regard to the high financial burden, it is worth examining whether a temporary abandonment of areas planted with vines (TAP, or Temporary Abandonment Premium) merits a place in the overall list of subsidiary measures to be supported. (rejected for Germany)

·Henceforth, granting premiums for permanent abandonment of viticulture should still be able to be offered to interested Member States. (for the German wine-growing regions rather a negative attitude)

 

Structural improvement measures

 

Thus far, the program to restructure/convert vineyards has been exclusively geared to vineyard potential (grubbing, grape varieties, cultivation techniques, land transfers). This package is viewed as insufficient since changes to cultivation potential have impacts on processing and marketing. A comprehensive restructuring program is required, from cultivation to processing and marketing.

 

As such, the restructuring program should be expanded to include the following measures:

 

·Promotion of common cultivation measures, such as the establishment of irrigation systems as well as the construction of vineyard walls

·Programs to promote viticulture in steep sites

·Promotion of vineyard consolidation measures

·Promotion of improved cellar technology

·Marketing research: analyze producer and consumer markets

·Measures to stimulate demand in the internal market and in non-member countries

          m collective measures to inform consumers

          m measures to promote exports

          m research and innovation

          m support joint trade fair participation

·Promotion of joint marketing strategies and measures

·Promotion of quality management concepts that take into consideration all necessary parameters for success, from production to marketing

·Promotion of cooperative efforts and/or mergers among producers as well as those who market wine.

 

The promotion of structural improvement measures should be reserved exclusively to producers/producer associations.

 

As in the past, the decision regarding the relevant package will continue to be made by the Member States in compliance with the principle of subsidiarity. A stronger co-responsibility of the trade should be made possible through EC-authorized establishment of branch associations that have the competence to enact generally binding regulations.

 

Note: This package of incentive measures should enable Member States to offer programs geared to local needs and to be financed from the budget for subsidiary measures. The decision regarding which measures of the total package to offer is to be made on national/regional levels.

 

Market mechanisms

 

·Private storage aid will be retained, but financed by the respective Member State from the budget for subsidiary measures.

·Rejection of the introduction of a so-called “green harvest.”

 

 

3. Reform of regulations of the CMO for wine irrespective of measures of support

 

Regulation of production potential

 

In order to preclude a shifting of production potential within the EU, the current controls on vineyard areas are to be adhered to by retaining the ban on new plantings of grapes to produce wine. Considering the sufficient production potential on hand in the EU, the granting of new planting rights should be renounced. If planting rights are needed, this can be achieved in a flexible manner through replanting or reserves. The limited duration of replanting rights should be abolished in order to preclude the expiration of these rights.

 

Oenological practices

 

·Retention of the current system in which the overall viticultural area is divided into seven wine-growing zones (which, among other things, is closely tied to the determination of minimum starting must weights and the approval of certain oenological practices).

·Retention of the practice of chaptalization with sucrose as well as the current legal limits for chaptalization.

·In the future, the only new oenological practices that the EU should permit are those that are in the OIV codex.

·The EU Commmission’s proposed liberalization of oenological practices should be fundamentally valid for all EU wines, whereby the Member States have the authority to impose stricter regulations for quality wines from a specified region and table wines.

·Retention of the ban on producing wine from musts that have been imported into the EU as well as the prohibition of blending EU wines with wines of non-member countries.

 

 

Future development of labelling regulations

 

·Key requirement: retention of the specificity of the EC wine labelling law – no integration into the general law governing labelling of foodstuffs!

·Rejection of labelling law betterment (among other things, indication of grape variety or vintage) for simple table wines that lack a specific geographical designation.

 

4.Deregulation

 

The DWV feels that in the course of the proposed reform, it is necessary to consider measures of deregulation that would make the work of wine-growers easier. For example:

 

·Postponing the deadline for submission of the harvest and production report from 10 December to 15 January of the following year due to the stress many estate managers must cope with during Christmas business.

 

5.Harmonization of excise duties

 

The DWV strongly emphasizes the need to retain the zero minimum tax rate for still and sparkling wine. In view of the extremely difficult structural and economic situation of the European wine industry, raising minimum excise duties would have grave consequences. Declining demand due to price increases would diametrically run counter to the proposed objective of the reform of the CMO for wine, namely, to establish a balance between supply and demand.