EU backs crisis action to avoid new wine lake

7th June 2006, Comments 0 comments

BRUSSELS, June 7, 2006 (AFP) - The European Commission approved crisis action Wednesday to curb overproduction of French and Italian wine, warning that Europe risks creating a new wine lake unless it takes urgent steps.

BRUSSELS, June 7, 2006 (AFP) - The European Commission approved crisis action Wednesday to curb overproduction of French and Italian wine, warning that Europe risks creating a new wine lake unless it takes urgent steps.

The European Union's executive arm gave the green light for millions of bottles' worth to be distilled into industrial-type alcohol, to prevent a tidal wave of surplus wine sending prices going into free fall.

Specifically experts voted to let 1.5 million hectolitres of French table wine and 1.5 million of quality wine to undergo "crisis distillation," along with 2.5 million hectolitres of cheap and 100,000 of quality wine in Italy.

But EU Agriculture Commissioner Mariann Fischer Boel warned that such measures were being taken too frequently.

"Crisis distillation is becoming a depressingly regular feature of our common market organisation for wine," she said after a meeting of the EU's Wine Management Committee.

"While it offers temporary assistance to producers, it does not deal with the core of the problem -- that Europe is producing too much wine for which there is no market."

European wines have increasingly seen their market share eroded by competition from cheaper New World wines from countries and regions such as Australia, Chile, California and even China.

France and Italy are among the biggest European and world producers, with some 45 million hectolitres produced annually each, according to the International Organization of Vine and Wine's latest data.

This is way ahead in production terms of other countries: the United States is less than half that of France, and Australia's production is barely 10 million hectolitres.

But the issue is not production capacity, it is securing markets for the wine.

And the EU farm chief said deep-rooted reform of the sector is needed urgently. Without changes, the EU could face "lakes" of surplus wine akin to "butter mountains" and other areas of overproduction seen in the past.

"We must increase the competitiveness of the EU's wine producers, strengthen the reputation of EU quality wine as the best in the world, recover old markets and win new ones," said Fischer Boel.

"Considerable surpluses have been recorded on the wine markets in different (EU) member states, resulting in a fall in prices and a worrying rise in stocks," added the commission.

EU rules allow for crisis distillation in the case of "exceptional market disturbances due to major surpluses."

Under the process, producers receive 1.914 euros per hectolitre for table wine in both France and Italy and 3.00 euros for quality wine. The total cost for the EU budget is 131 million euros. The raw alcohol resulting from this distillation can only be used for industrial purposes or as biofuel.

As well as the French and Italian decisions, further demands for crisis distillation from Spain and Greece are still under examination, the commission said.

Fischer-Boel is expected to present detailed proposals for dealing with the problem on June 22.

Copyright AFP

Subject: French news

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