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The announcement yesterday (22 June) that the European Commission is opening dialogue on reforming the continent's wine sector may be a desperate measure for desperate times, but it's clear to all that something - anything - must be done.

As Europe's wine consumption heads south, production passes in the opposite direction. At the same time exports for the continent's winemakers have reached a plateau, imports from the New World countries rise. Forget desperate times, this is a perfect storm scenario.

The Commission has considered four possible scenarios, three of which lead towards a Doomsday situation. The status quo is not an option, the Commission says, either economically or politically. Complete deregulation of the market is also dismissed as being too drastic in its negative economic and social impacts on the regions concerned. Reforming along the lines of the Common Agricultural Policy for other sectors, meanwhile, would not provide enough payments to compensate many producers for the loss of market support.

Measures included in the 'best-case' scenario, then, include:
· Reactivating the grubbing-up scheme, with the aim of pulling 400,000 hectares of vines voluntarily, with a maximum aid of EUR2.4bn (US$3bn).
· Extending the current system of planting rights intended to limit production to 2013.
· Abolishing market management tools, including by-product distillation and potable alcohol distillation aid.
· Introducing simpler labelling rules, allowing grape variety to be indicated, and
· Transferring responsibility for approving new wine-making practices to the Commission.

"We know there are some things that are controversial (in the communication)," John Bensted Smith, the Commission's DG for Agriculture, said in London yesterday, "but we think this is a reasonable basis for negotiation."

Bensted Smith concedes that member states will have many secondary questions to the proposal, but is optimistic that, at very least, the lines of dialogue are now open. He remains realistic, however, to the potential perils that await the communication. "To imagine member states will commonly agree on all of these proposed changes is probably unreasonable," he said.

The legal proposal will be tabled by the EU's Agriculture Commissioner, Mariann Fischer Boel, in January next year, giving all interested parties six months to make their voices heard. "This is a great opportunity to put the EU wine sector back at the top where it belongs," Fischer Boel said yesterday. "We must not waste it."

Whether Europe takes this opportunity to herald a bright new dawn - placing what are undoubtedly great wines in the minds of the world's consumers - or return to the dark ages - where internal squabbling drowns out the continent's potential - will dominate industry discussion for the rest of this year.

For full details on the communication, click here.

Sectors: Wine

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