towards a sustainable european wine sector. towards a sustainable european wine sector agri – c3...
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Towards a sustainable European Wine Sector
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
Summary
Why a reform ? How to reform? Which impacts?
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 4
Reducedsurpluses
Environment
Incomestabilisation
Budgetstabilisation
Food security
Improvingproductivity
Market-stabilisation
Incomesupport
Overproduction
Explodingexpenditure
Internationalfriction
Structuralmeasures
Deepening the reform process
Competitive-ness
Rural development
Market orientation
Consumerconcerns
Farm income
Ruraldevelopment
Environment
The Early Years (1960s)
The Crisis Years (1980s)
The 1992Reform
Agenda 2000
CAP Reform 2003-2005
Productivity
Competitiveness
Sustainability
CAP reformsand wine CMO
Wine CMOWine CMO
reform
2006
WineCMOdraft
reform
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 5
Consumption by type of wineConsumption by type of wine (EU-15)
0
20000
40000
60000
80000
100000
120000
140000
160000
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
1000 h
l
TOTAL
table w ine
quality w ine
Wine market challenges
Source: DG AGRI C3
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 6
EU 15 Imports and exports (extra)
Wine market challenges
0
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
Wine trade in volume (1000 hl)
Import
Export
x 1000 hl
0
1.000
2.000
3.000
4.000
5.000
Wine trade in value (Mio €)
Import
Export
Mio €
Source: Comext
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 7
Range of products
Australia EU
Type of products ?
Picture source: Google image
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 8
0
40.000
80.000
120.000
160.000
200.000
1990/91 1993/94 1996/97 1999/00 2002/03 2005/06e
Stocks Production Consumption Export Importx 1 000 HL
Wine market unbalance
Source: DG AGRI C3
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 9
Recent development of table wine price
1,50
2,00
2,50
3,00
3,50
4,00
4,50
5,00
4/08
/03
1/09
/03
29/0
9/03
27/1
0/03
24/1
1/03
22/1
2/03
19/0
1/04
16/0
2/04
15/0
3/04
12/0
4/04
10/0
5/04
7/06
/04
5/07
/04
4/08
/04
1/09
/04
29/0
9/04
27/1
0/04
24/1
1/04
22/1
2/04
19/0
1/05
16/0
2/05
16/0
3/05
13/0
4/05
11/0
5/05
8/06
/05
6/07
/05
3/08
/05
31/0
8/05
28/0
9/05
26/1
0/05
23/1
1/05
21/1
2/05
*) Prix français calculés comme moyenne écrêtée à 10 termesSources: Unione Italiana Vini - Onivins - La semana vinicola
€/V
ol./
hl
FR red
IT red
ES red
France
Italy
Spain
Pressure on prices
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 10
Farm Income: wine vs. all agricultural sectorsFNVA/AWU of specialised wine farms vs. average agricultural sectors in the EU-15 Years 1990-2003
0
5000
10000
15000
20000
25000
30000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Eu
ros
Wine All Farms
Source: DG AGRI - FADN
Pressure on income
?
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 11
Surplus 1 = Availabilities (inc imports) – {human consumption (inc exports) & industrial uses} Surplus 2 = Surplus 1 – Potable alcohol distillation
Mid term forecastsEU27 (status quo)
SURPLUS 1 & 2
0
5
10
15
20
25
30
35
40
1999-2003 2003/04 2004/05 (e) "Average" "low " "High"
Mio
hl
SURPLUS 1
SURPLUS 2
2010/11
Source: DG AGRI G2
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 12
Reform objectivesWe 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 13
Summary
Why a reform ? How to reform? Which impacts?
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 14
Summary of proposed changes
One step optionMeasures Measures
deleteddeletedMeasures kept and/or Measures kept and/or
strengthenedstrengthened
Restructuring Distillations and alcohol public
storage
Private storage
Measures addedMeasures added
National envelopes
Rural development Env. Requirements
Promotion/information
Planting rights
Oenological practices
Quality policy/ GIs
LabellingMust aids and
sucrose use
Grubbing-upMeasures simplified
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 15
Summary of proposed changes
two step option: first periodMeasures Measures
deleteddeletedMeasures kept and/or Measures kept and/or
strengthenedstrengthened
Restructuring Distillations and alcohol public
storage
Private storage
Measures addedMeasures added
National envelopes
Oenological practices
Quality policy/ GIs
LabellingMust aids and
sucrose use
Planting rights
Grubbing-upMeasures simplified
Rural development Env. Requirements
Promotion/information
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 16
Summary of proposed changes
two step option: first periodMeasures Measures
deleteddeletedMeasures kept and/or Measures kept and/or
strengthenedstrengthened
Restructuring Distillations and alcohol public
storage
Private storage
Measures addedMeasures added
National envelopes
Oenological practices
Quality policy/ GIs
LabellingMust aids and
sucrose use
Planting rights
Grubbing-upMeasures simplified
Rural development Env. Requirements
Promotion/information
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 17
Summary of proposed changes
two step option: second periodMeasures Measures
deleteddeletedMeasures kept and/or Measures kept and/or
strengthenedstrengthened
Restructuring Distillations and alcohol public
storage
Private storage
Measures addedMeasures added
National envelopes
Oenological practices
Quality policy/ GIs
LabellingMust aids and
sucrose use
Planting rights
Grubbing-upMeasures simplified
Rural development Env. Requirements
Promotion/information
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 18
Summary of proposed changes
two step option: second periodMeasures Measures
deleteddeletedMeasures kept and/or Measures kept and/or
strengthenedstrengthened
Restructuring Distillations and alcohol public
storage
Private storage
Measures addedMeasures added
National envelopes
Oenological practices
Quality policy/ GIs
LabellingMust aids and
sucrose use
Planting rights
Grubbing-upMeasures simplified
Rural development Env. Requirements
Promotion/information
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 19
Targeted measures
Abolition of planting rights
Reinforcing competitiveness
Limiting prod. and proc. constraints
• 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 20
Targeted measures
• 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
Grubbing-up (2 step Op.) Reinforcing farmers’ market orientation
Achieving a balanced market
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 21
Targeted measures
• Current scheme maintained
• Financed through national envelopes
Reinforcing farmers’ market orientationRestructuring maintained
Modernisation of production structures
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 22
Targeted measures
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
Reinforcing farmers’ market orientation
Achieving a balanced marketSuppression non effective
intervention measures
> > > > FundsFunds for higher value for money measures for higher value for money measures
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 23
Targeted measures
• 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
National enveloppes
Modernisation of structures
More subsidiarity
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 24
Targeted measures
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
OPs, Quality and labellingPromotion/information
Simplified and consumer oriented measures
Recover and win market shares
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 25
Targeted measures
Clearer, simpler and more transparent rules as well as TRIPS compatibility
Simplification of wine classification:
2 categories: wines without GIs and wines with GIs
OPs, Quality and labellingPromotion/information
Simplified and consumer oriented measures
Recover and win market shares
Wine without GIs
Wine with GIs
TW
QWpsr
TW
TW GIs
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 26
Targeted measures
Clearer, simpler and more transparent rules
• 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
• More WTO compatible
• Commission competence
OPs, Quality and labellingPromotion/information
Simplified and consumer oriented measures
Recover and win market shares
TW
QWpsr
TW
TW GIs
Wine without GIs
Wine with GIs
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 27
Targeted measures
• Enhance promotion scheme outside the EU
• Information campaigns inside the EU for a responsible consumption
• Information related to alcohol harm
OPs, Quality and labellingPromotion/information
Simplified and consumer oriented measures
Recover and win market shares
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 28
Targeted measures
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
Funds transferred to rural development
Modernisation of structures
Safeguarding local economy
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 29
Targeted measures
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
Introduction of requirements
Reinforcing environment safeguard
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 30
Targeted measures
Safeguarding local economy
Simplified and consumer oriented measures
Recover and win market shares
Reinforcing farmers’ market orientation
Achieving a balanced market
More subsidiarity
Higher value for moneyHigher value for money
OPs, Quality and labellingPromotion/information
Suppression non effective intervention measures
Restructuring maintained
National enveloppes
Grubbing-up (2 step Op.)
Abolition of planting rights
Funds transferred to rural development
Introduction of requirements Reinforcing environment safeguard
Reinforcing competitiveness
Limiting prod. and proc. constraints
Modernisation of structures
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 31
Summary
Why a reform ? How to reform? Which impacts?
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 32
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 33
Summary of impacts
+
restrictions
in the use
of sucrose
+
restrictions
in the use
of sucrose
SUMMARY of Impacts
Option 1: Improved status
quo
Option 2: Profound reform of the CMO
Option 3: Reform along CAP reform lines
Option 4: Deregulation
Market balance
Increasing surplus Smoothest
achievement of balance
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
Prices
Sharp decrease due to
unsustainability of the system
Decrease in the short 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
Recovery after achievement of balance
Agricultural incomes
Progressive decrease due to
unsustainability of the system
Decrease in the short term
Decrease in the mid termVery sharp decrease in the
short and mid term
Recovery after achievement of
balance
Recovery after achievement of balance
No safety net mechanism
Recovery after achievement of balance
No safety net mechanism
Competiti-veness No improvement
Rapid improvementthrough economic
sustainabilityand improved
regulatory measures
allowing flexibility and innovation
Improvement in the long run
through economic sustainability
and improved regulatory measures
allowing flexibility and innovation
Strong improvement in the long run
through economic sustainability, freedom to farm
and improved regulatory measures
allowing flexibility and innovation
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 34
Summary of impacts (2)
Environment No improvement
No easy solutionto apply cross-
ompliance on allvine area
shifts to RD canbe used toEncourage
MoreEnvironmentally-friendly measures
Direct applicability ofgeneral cross compliance
Very difficult to apply cross-compliance
No available funds to encourage more
environmentally-friendly measures
TradeWTO
compatible
Different measurespotentially
under attack
Most problemssolved
Most problems solved Most problems solved
Wine quality NeutralIncrease through
better marketorientation
Increase through better market
orientation
Increase through better market orientation
Health / consumer
No improvement
Stop toUnacceptable
support todistillation intopotable alcoholLabelling rules
more transparentand consumer
oriented
Stop to unacceptable support to
distillation into potable alcoholLabelling rules
more transparentand consumer
oriented
Stop to unacceptable support todistillation into potable alcohol
Labelling rules more transparent
and consumer oriented
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 35
Summary of impacts (3)
Budget Increasing pressure Neutral Neutral Possibility of savings
Subsidiarity No improvement
Much more flexibility with
national envelopeand increased RD
funds
Flexibility in the implementation of the
SPS
Possibly more flexibility via shift to
RD
Simplification,applicability
controllabilityNo improvement
Moderate simplification
Strong simplification, but specific operationaldifficulties in
implementing SPS in wine sector
Most problem solved
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 36
Impacts on income
Variation of agricultural income (FNVA/AWU) in the year 2 of the reform
-80%
-60%
-40%
-20%
0%
20%
40%
PoitouCharentes -Table wineand cognac
LanguedocRoussillon -Table winespecialist
Puglia (1) -Table winespecialist
Puglia (2) -Mixed table
wine andolives
Sicilia (1) -Table winespecialist
Sicila (2) -Mixed table
wine andolives
Castilla LaMancha -
Table winespecialist
%
Option 1Status quo
Option 2Profound reform
Option 3CAP reform
Option 4Deregulation
Source: DG AGRI G3 FADN
Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 37
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 38
More information
http://ec.europa.eu/comm/agriculture/capreform/wine/index_en.htm
Thank you