1. Towards a sustainable European Wine Sector

2. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 2 Summary Why a reform ? How to reform? Which impacts?

3. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 3 Summary Why a reform ? How to reform? Which impacts?

4. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 4 Reduced surpluses Environment Income stabilisation Budget stabilisation Food security Improving productivity Market- stabilisation Income support Over production Exploding expenditure International friction Structural measures Deepening the reform process Competitive- ness Rural development Market orientation Consumer concerns Farm income Rural development Environment The Early Years (1960s) The Crisis Years (1980s) The 1992 Reform Agenda 2000 CAP Reform 2003-2005 Productivity Competitiveness Sustainability CAP reforms and wine CMO Wine CMO reform 2006 Wine CMO draft reform

5. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 5 Consumption by type of wine Wine market challenges Source: DG AGRI C3

6. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 6 EU 15 Imports and exports (extra) Wine market challenges Source: Comext

7. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 7 Range of products AustraliaEU Type of products ? Picture source: Google image

8. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 8 Wine market unbalance Source: DG AGRI C3

9. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 9 Recent development of table wine price Pressure on prices

10. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 10 Farm Income: wine vs. all agricultural sectors Pressure on income ?

11. 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 forecasts EU27 (status quo) Source: DG AGRI G2

12. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 12 Reform objectives We need a wine regime that: Increases the competitiveness of the EUs 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

13. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 13 Summary Why a reform ? How to reform? Which impacts?

14. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 14 Summary of proposed changes One step option Measures deleted Measures kept and/or strengthened Restructuring Distillations and alcohol public storage Private storage Measures added National envelopes Rural development Env. Requirements Promotion/information Planting rights Oenological practicesQuality policy/ GIsLabelling Must aids and sucrose use Grubbing-up Measures simplified

15. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 15 Summary of proposed changes two step option: first period Measures deleted Measures kept and/or strengthened Restructuring Distillations and alcohol public storage Private storage Measures added National envelopes Oenological practicesQuality policy/ GIsLabelling Must aids and sucrose use Planting rights Grubbing-up Measures simplified Rural development Env. Requirements Promotion/information

16. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 16 Summary of proposed changes two step option: first period Measures deleted Measures kept and/or strengthened Restructuring Distillations and alcohol public storage Private storage Measures added National envelopes Oenological practicesQuality policy/ GIsLabelling Must aids and sucrose use Planting rights Grubbing-up Measures simplified Rural development Env. Requirements Promotion/information

17. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 17 Summary of proposed changes two step option: second period Measures deleted Measures kept and/or strengthened Restructuring Distillations and alcohol public storage Private storage Measures added National envelopes Oenological practicesQuality policy/ GIsLabelling Must aids and sucrose use Planting rights Grubbing-up Measures simplified Rural development Env. Requirements Promotion/information

18. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 18 Summary of proposed changes two step option: second period Measures deleted Measures kept and/or strengthened Restructuring Distillations and alcohol public storage Private storage Measures added National envelopes Oenological practicesQuality policy/ GIsLabelling Must aids and sucrose use Planting rights Grubbing-up Measures simplified Rural development Env. Requirements Promotion/information

19. 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.

20. 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

21. 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 orientation Restructuring maintained Modernisation of production structures

22. 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 market Suppression non effective intervention measures > > Funds for higher value for money measures

23. 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

24. 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 labelling Promotion/information Simplified and consumer oriented measures Recover and win market shares

25. 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 labelling Promotion/information Simplified and consumer oriented measures Recover and win market shares Wine without GIs Wine with GIs TW QWpsr TW TW GIs

26. 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 labelling Promotion/information Simplified and consumer oriented measures Recover and win market shares TW QWpsr TW TW GIs Wine without GIs Wine with GIs

27. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 27 Targeted measures Enhance promotion scheme outside theEU Information campaigns inside the EU for a responsible consumption Information related to alcohol harm OPs, Quality and labelling Promotion/information Simplified and consumer oriented measures Recover and win market shares

28. 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

29. 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

30. 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 money OPs, Quality and labelling Promotion/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

31. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 31 Summary Why a reform ? How to reform? Which impacts?

32. 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

33. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 33 Summary of impacts +restrictionsin the useof sucrose+restrictionsin the useof sucrose +restrictionsin the useof sucrose+restrictionsin the useof 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 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 Agricultural incomes Progressive decrease due to unsustainability of the system Decrease in the short term Decrease in the mid term Very sharp decrease in the short and mid term Recovery after achievement of balance Recovery after achievement of balance No safety net mechanism Competiti- veness No improvement Rapid improvement through economic sustainability and 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

34. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 34 Summary of impacts (2) Environment No improvement No easy solution to apply cross- ompliance on all vine area shifts to RD can be used to Encourage More Environmentally- friendly measures Direct applicability of general cross compliance Very difficult to apply cross- compliance No available funds to encourage more environmentally-friendly measures Trade WTO compatible Different measures potentially under attack Most problems solved Most problems solved Wine quality Neutral Increase through better market orientation Increase through better market orientation Health / consumer No improvement Stop to Unacceptable support to distillation into potable alcohol Labelling rules more transparent and consumer oriented Stop to unacceptable support to distillation into potable alcohol Labelling rules more transparent and consumer oriented

35. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 35 Summary of impacts (3) Budget Increasing pressure Neutral Possibility of savings Subsidiarity No improvement Much more flexibility with national envelope and increased RD funds Flexibility in the implementation of the SPS Possibly more flexibility via shift to RD Simplification, applicability controllability No improvement Moderate simplification Strong simplification, but specific operational difficulties in implementing SPS in wine sector Most problem solved

36. Towards a sustainable European Wine Sector AGRI – C3 MD 02.06.2006 36 Impacts on income Source: DG AGRI G3 FADN

37. 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

38. 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