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EU says wine surplus must be phased out or scrapped 'abruptly'

The European Union, the world's biggest wine consumer and producer, must phase out its surplus production or end it „abruptly” and cut costs for new growers by scrapping planting rights, the bloc's farm chief said. While governments and growers agree on the problem, „they have not yet produced a consensus,” EU Agriculture Commissioner Mariann Fischer Boel told parliamentarians in Brussels yesterday. „Vine growers who have restructured and managed quality vineyards will benefit substantially from a market environment free of surpluses and stocks.” The recipe for boosting the industry is to reduce the surplus and then lower costs by ending producers' rights to plant new vines, Fischer Boel said. Unless the EU acts, the bloc will create a surplus wine „lake” equal to 15% of production in 2010, almost doubling the current waste and compounding the problem of falling consumption and rising imports from the US, Australia and Chile.

Fischer Boel wants EU governments including France, Italy and Spain, the world's biggest winemakers, to back plans to overhaul the region's €1.3 billion wine budget, including paying farmers €2.4 billion over five years to destroy 400,000 hectares (988,000 acres) of vines. The commission, the EU's executive, plans to present formal proposals to overhaul the industry in January. In the meantime, governments will discuss the commission's report outlining possible options on September 18. To prop up growers' incomes, the EU has distilled an average of 10% of its annual production since 2000 into industrial alcohol or disinfectant. It's also compensated farmers for pulling up half a million hectares of vines over the past 15 years. The bloc makes and drinks about 60% of the world's wine. The commission also wants the EU's labeling rules improved to permit the grape variety and year of harvest to be indicated on bottles of lower-quality table wines that don't have a geographically recognized link. That practice is common on wines from other parts of the world. (Bloomberg)