EU:The European Union unveiled plans yesterday to boost its wine industry and drain its so-called wine lakes, offering its least competitive vineyards subsidies to quit in the face of mounting New World competition.
The plan has sparked criticism from many winemakers, particularly of quality European labels such as Chianti, Rioja and Chablis, who fear centuries of winemaking traditions will be put at risk as consumers turn to rival wines from countries such as Australia, Argentina, Canada, Chile, New Zealand, South Africa and the US.
The 27-country EU is the world's largest producer, consumer, exporter and importer of wine. But in recent years it has lost part of its traditional export markets to cheaper New World wines, and seen a surge in imports.
Under a scheme to start in August 2008, if EU farm ministers agree, subsidies to abandon vineyards would fall gradually each year in a carrot-and-stick approach to promote early "take-up".
Apart from fending off competition by focusing more on quality than quantity, the idea is to divert subsidies to discourage large unwanted surpluses that usually end up being turned into industrial alcohol or biofuel.
For the first time cheaper table wines could be labelled with their grape variety and vintage, something previously confined to controlled denominations such as Rioja in Spain and Pouilly-Fumé in France. This would allow them to compete with heavily branded New World imports.
Devised by EU agriculture commissioner Mariann Fischer Boel, the plan would scrap crisis distillation - an emergency subsidy used to correct market imbalances and a huge drain on the EU wine budget of €1.3 billion a year. "We can spend this money in a much more intelligent way," she said. "I believe my proposal will restore the European wine sector to where it should be - on top of the world.
"I realise the wine sector is very emotional. Many will have objections to my ideas. But this should not deflect us from the fact that reform is crucial," she said.
Ms Fischer Boel's ideas have annoyed several EU governments, especially the main wine countries of southern Europe such as France, Spain and Italy - the world's top three producers. Together, the trio accounts for 80 per cent of the EU vine area.
EU farm union Copa-Cogeca weighed in against much of the plan, saying Europe should keep its best wine-making traditions without resorting to a root-and-branch overhaul based on the "New World" model.
A cornerstone of the plan is to remove the least competitive producers from the market and help them start other activities, by offering them a large amount of cash whose level would fall gradually through the five years of the reform.
Winemakers who wish to quit will be offered a subsidy if they dig up their vines, with a target of 200,000 hectares as the total vine area to be removed from production.
Ms Fischer Boel also wants to extend an existing ban in new vine plantings until 2013 - but then scrap it altogether. Vine planting is strictly controlled in the EU and new plantings are not allowed until mid-2010 except under particular conditions.
That idea has incensed producers of some of Europe's most famous wines, who say Ms Fischer Boel's plans jeopardise centuries of winemaking tradition and expertise, particularly in smaller vineyards.