kieran dooley the reform of the common organisation of the market in wine

Kieran Dooley

The Reform of the

Common Organisation of the Market in Wine

The Reform of Wine CMO Osijek, 14.03.2008 2

Biggest producer in the world Biggest consumer in the world Biggest exporter in the world

(5.5 billion € in 2006) Biggest importer in the world

Net exporter (3 billion €)


Reform of Wine CMOWhy a Reform? Decrease of the consumption in the EU Increase of imports from Third Countries Unbalance in the wine market Unfavourable medium term forecast for EU-27

Which are the objectives? Higher competitivity Simpler rules To preserve the wine producing traditions in EU


Reform objectivesWe need a wine CMO 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 new ones in the EU and worldwide

Operates through clear, simple and effective rules and ensures 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


Reform of Wine CMOHow to reform?

Abolition market measures– Crisis distillation– Potable alcohol distillation– Distillation of by-products– Alcohol Storage– Use of concentrated must

Encouraging non competitive producers to leave the sector Simplifying and improving labelling rules


Reform of Wine CMOHow to reform?

National envelopes– Promotion on Third Countries markets– Restructuring and conversion of vineyards– Green harvesting– Mutual funds– Harvest insurance

Information campaigns on responsible consumption

Transfer of funds to Rural Development


Main changes to the Commission proposal

Commission proposal

July 2007

Political agreement

December 2007

Budget foreseen for grubbing-up max 200 000 ha over 5 years

Budget foreseen for grubbing-up max 175 000 ha over 3 years with lower increase of current premium level

5 measures in national envelope menu New measures in the national envelope menu and transitional measures

120 mio € earmarked for third markets promotion

No more earmarked budget

Ban of sugar for enrichment and lower margins for enrichment with must

Enrichment with sugar maintained but with lower margins (applicable also to enrichment with must)

End of planting rights: end 2013 End of planting rights:-end 2015 at EU level -end 2018 at MS level


Eligibility of vine areas for SPS

Reinforcing environment protection

More flexibility for producers

• All vines become eligible = complete freedom to farm

• Producers can activate single payment entitlements they already have or can buy.

• MS may allocate entitlements notably by transferring funds from national envelopes

• Cross compliance applicable on the whole holding

From 01/01/2009


Abolition of planting rights

Reinforcing competitiveness

Limiting production constraints

• Planting rights will be extended until end 2015 (1/8/210 under current CMO)

• Option for a Member State to maintain them up to end 2018

From 01/01/2016 at EU level

• In the meantime, planting rights remain applicable. • Current regularization procedure is extended to 31/07/2008• New regularization procedure from 01/08/2008 to 31/12/2009 with a penalty = x 2 the value of planting right in the region


• To be decided by the producer (except limited restrictions by MS)

• More attractive level but decreasing over time to speed up the take up

• 175 000 ha over 3 years

• Area will qualify as eligible for SPS and receive a new entitlement

• Environmental requirements

Grubbing-up Providing alternative to less competitive producers

Achieving a balanced marketFrom 01/08/2008

to 31/07/2011


• Export refunds• Private storage support of wine and musts• Must aid for grape juice • Dual-purpose grape distillation

• Public alcohol storage

Reinforcing farmers’ market orientation

Achieving a balanced market

Suppression ineffective intervention measures

From 01/08/2012 at the latest

From 01/08/2008

• Must aid for enrichment • Potable alcohol distillation

• Crisis distillation (replaced by crisis management measures) phased down


Given menu:• restructuring and conversion scheme vineyard • investment and innovation in processing• promotion in third countries • harvest insurance• mutual funds• green harvesting measure• transitional measures (aid for potable alcohol, crisis distillations, must for enrichment)• support for disposal of by-products In addition, funds may be transferred to grant entitlements to the decoupled direct payments to producers under the single payment scheme

National envelopesModernisation of structures, income

support

More subsidiarity

From 01/08/2008


Clearer, simpler and more transparent rules:

• More flexible wine making practices (quicker adoption after approval by MS in OIV)

• Reduced limits for enrichment:

- 3% in zone A- 2% in zone B- 0.5% in zone C

In case of exceptional climatic conditions the limit may be increased by 0.5%

• Decisions taken through Regulatory Committee

Oenological practices, Simplified and consumer oriented measures

From 01/08/2009


• Clearer, simpler and more transparent rules as well as WTO-TRIPS compatibility

• Simplification of wine classification:

wines without GIs and wines with GIs

• Implementing rules by Regulatory Committee

Simplified and consumer oriented measuresGIs / Quality

PGI = Protected Geographical Indication PDO = Protected Denomination of Origin

From 01/08/2009


Clearer, simpler and more transparent rules

• Similar mandatory and optional mentions for all categories of wines

• Allow, under conditions to be defined, wine without GIs to mention the vine variety and harvest year

• Fully WTO compatible

• Commission competence

Simplified and consumer oriented measuresLabelling

From 01/08/2009


• Enhance promotion scheme outside the EU (national envelopes)

- for wines with Geographical indications and single variety wines,

• Information/education campaigns inside the EU:

- on responsible drinking and harmful alcohol consumption (60% EU cofinancing).

Simplified and consumer oriented measuresPromotion/information

From 01/08/2008


Currently available measures of RD, for ex:• Investments on holdings, young farmers• Early retirement• Agri-environment, landscapes protection, organic farming…• Investments for reconversion to other agricultural activities

Transfer of funds from first to second pillar (optional for MS with a transfer lower than 2.5 Mio € in 2009)

Funds transferred to rural development

Modernisation of structures

Safeguarding local economy

From 01/08/2008


Environmental requirements for production and processing (soil erosion and contamination by use of plant protection products, waste management):

• Cross compliance applicable on all “activated” vine area or on mixed farms.

• Vines to be kept in good agricultural and environmental conditions (GAEC)

Cross compliance on : • restructuring scheme payments• green harvesting payments• grubbing-up premium

• Rural development standards

Environmental requirements Reinforcing environment safeguard


Budget evolution by measures

0

200

400

600

800

1.000

1.200

1.400

1.600

2009 2010 2011 2012 2013 2014 2015

Mio

€

Transfer to RuralDevelopment

National envelope

Residual Old CMO

Transfer to Annex VIII (SPS)

Grubbing-up


0

50

100

150

200

250

BG CZ DE EL ES FR IT CY LU HU MT AT PT RO SI SK UK

Mio

€

National Envelope Rural Development

National envelope and Rural Development

transfer by MS

2009

LU, MT, UK (and LT) cannot be seen due to the scale used


National envelope and Rural Development

transfer by MS

2015

0

100

200

300

400

500

BG CZ DE EL ES FR IT CY LU HU MT AT PT RO SI SK UK

Mio

€

National Envelope Rural Development

LU, MT, UK (and LT) cannot be seen due to the scale used


Reform agenda

19/12/2007: political agreement in the Council

First semester 2008: Implementing regulations (first phase)

01/08/2008 application (first phase)

End 2012: Commission report


More information

http://ec.europa.eu/comm/agriculture/capreform/wine/index_en.htm

Thank you













kieran dooley the reform of the common organisation of the market in wine

Documents

reform of wine cmo osijek

wine slide

eu wine production

reform objectives

eu slide

eus wine producers

reputation of eu quality

current cmo option