This interesting article appeared about a month ago, and as usual provides an incisive view of an industry dear to many of us. Some extracts:
DO EUROPEAN politicians trust the market? Surely they must. For all the bleating in parts of the continent about the beastliness of capitalism, Europe is good at business, spawning global firms that cut and thrust with the best of them. Yet if you look at an industry that is of special local pride to Europeans, such as wine, you wonder if their leaders truly believe in such concepts as risk and reward or profit and loss.
Next month the European Commission will announce a modest proposal to reform the heavily subsidised, minutely regulated European wine business. Even battle-hardened Brussels officials have been taken aback by the adverse reaction of national governments. Although each has specific gripes, the general response from Europe's wine belt has been to dig in and resist calls for liberalisation, in the name of tradition and high culture. Nor is the opposition about money—not least because the commission has made it clear that it is not cutting a cent from the wine budget. Mariann Fischer Boel, the (Danish) agriculture commissioner, concludes that “there is more tension in wine than I have seen in any other agricultural product.”
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Too many wine subsidies are, moreover, a reward for failure. Currently, about half a billion euros are spent annually distilling unwanted wine and by-products into industrial alcohol, out of a total EU wine budget of €1.3 billion ($1.7 billion) a year. Some wine is produced more or less exclusively for destruction, complains Mrs Fischer Boel (herself a farmer's wife). That is “not sustainable”, she says. Under her plans, the budget would be steered towards promoting European wines in new markets overseas, and fostering a wider range of businesses in winemaking regions (lots of museums and tourist wine routes).
The commission also wants to grub up 200,000 hectares of vines (about 6% of the EU total) and to pay farmers who cannot sell their wine to leave the industry. That done, it plans to lift restrictions on new planting of vines in 2014, to allow successful producers to expand. But there is “huge opposition” to grubbing up. The German farm minister, Horst Seehofer, last month invited Mrs Fischer Boel and his fellow farm ministers to an abbey near Mainz, where he plied them with 50-year-old Riesling and proceeded to describe the commission's grubbing-up plans as “not very reasonable”. Farmers might be paid to pull out their vines—but what would they do then, he wondered, with vocal backing from Portugal and others.
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The odd thing is that France and Luxembourg are both rather good at making money from wine. Growers in both countries already earn more, on average, than any others in Europe. Luxembourg, in particular, is almost never left with unsold wine. Liberalisation could allow the more successful growers to profit handsomely. But something stops European governments from embracing the prospect. Perhaps it is that “soul” inside a bottle of wine. Once something has a spirit of its own, it is hard to trust the market to decide its fate.
June 14, 2007 edition
