EU rebuff for France and Italy over draining of wine lakes
By Raphael Minder in Brussels
Published: June 5 2006 03:00 | Last updated: June 5 2006 03:00

France and Italy, Europe's two leading wine producers, face a rebuff from Brussels this week over their demands for EU subsidies to turn surplus wine "lakes" into fuel or industrial alcohol.

France has asked for the European Union's executive to subsidise the so-called "crisis distillation" of 2m hectolitres of table wine and 2m hectolitres of quality wine, while Italy is seeking similarly to transform 3m hectolitres of table wine and 100,000 hectolitres of quality wine. However, despite recent lobbying by Dominique Bussereau, French agriculture minister, the European Commission is set on Wednesday to approve distillation of lower quantities and at lower prices than the two countries demanded.

The stand-off is expected just before Mariann Fischer Boel, the EU's agriculture commissioner, unveils her ideas for reform of EU wine subsidies. She said last month she would try to push through a "bold reform" to force the European wine sector to reduce capacity and help it regain market share from New World competitors such as Australia and Chile. The controversial system of crisis distillation, which cost the EU €180m ($233m, £123m) last year, will be one of the main reform targets.

A spokeswoman for Ms Fischer Boel said the high distillation demands made by France and Italy "merely reinforce why a radical reform is so important. It is a tool that was meant to be there for crisis but has become a depressingly regular feature of the regime over the last two years."

In coming weeks, Brussels will also review separate demands made by Greece and Spain for crisis distillation, although the quantities of wine involved are substantially lower.

The EU spends €1.2bn a year subsiding the wine sector, €500m of which cover different distillation practices. The wine reform is part of an attempt by Brussels to overhaul, sector by sector, some of the most inefficient and controversial aspects of the EU's common agricultural policy. Last year, EU ministers agreed to a cut in sugar subsidies, after the EU sugar regime was declared illegal by the World Trade Organisation.

Ms Fischer Boel recently forecast that the political wrangling over wine would be even more difficult than the debate over sugar, given the importance of wine in the economy and cultural heritage of France and other large member states. Fearful of the reform, the EU's four largest producers had published in April a joint memorandum arguing that crisis distillation should not only be kept but also made compulsory in some instances.

quelle: ft.com

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