Brussels, 23 June - Crisis distillation of wine in the EU has spread to Spain and Greece.  The Wine Management Committee voted today on proposals from the European Commission which will make it mandatory for Spain to distill 300,000 hectolitres of quality wine into fuel ethanol. For Greece the crisis distillation has been mandated for a quantity of 370,000 hectolitres of table wine and 130,000 hectolitres of quality wine.

 

Commenting on the opening of distillation Mariann Fischer Boel, Commissioner for Agriculture and Rural development, said: "Once again we are spending large amounts of money on getting rid of surplus wine, when we should be spending it on improving our competitiveness. What’s worse, both countries are distilling ‘quality’ wine. This is exactly why we are calling for an urgent and profound reform of our wine market.”

Considerable surpluses have been recorded on the wine markets in different Member States resulting in a fall in prices and a worrying rise in stocks. The existing wine Common Market Organisation (CMO) provides for the possibility of a crisis distillation in the event of exceptional market disturbances due to major surpluses.

At the beginning of June, the Commission already opened distillation for France and Italy for a total quantity of 5.6 million hectolitres (see previous article on this site: France, Italy support farm prices by turning fine wine into biofuel: http://www.biofuelreview.com/content/view/89/2/ ).

 

Today, crisis distillation has also been opened for Spain and Greece. The price paid for the wine to be distilled is € 1.914 per %vol and per hl for table wine and € 3.00 per % vol per hl for quality wine.

 

The total cost for the EU budget is € 22.2 million.

 

The raw alcohol resulting from this distillation can only be used for industrial purposes or as biofuel in order not to disturb the market for potable alcohol, which is supplied largely by another distillation system also foreseen in the CMO.

 

The proposals still have to be formally adopted by the Commission and will apply from 18 July 2006.

 

Editorial comment: I'm supposed to maintain an air of detachment in these posts, and you won't find a bigger fan of biofuels than me. But turning millions of litres of fine wine (much of it is "Denominacion Controllee", costing up to £45 a bottle in the UK) into ethanol is madness.

 

Dumping this amount of ethanol onto the European market every year distorts prices. Investors considering putting money into biofuel ventures need to know that the normal mechanisms of supply and demand will apply. 

 

It has to be said that the main culprit here is France.  In an effort to placate it's mollycoddled farming lobby, France consistently vetos European efforts to reduce subsidies to the small-scale, innefficient, but noisy minority of the population who continue to make 3 times as much (often mediocre) wine as anybody can drink, and who are paid to do so by every citizen in the Union through their taxes.

 

European consumers increasingly buy wines from the 'New World' (Chile, Australia, California etc), which offer better value.

 

Greece and Spain, the two countries mentioned in the report above, both have unemployment rates pushing 15% in some areas. It makes more sense to encourage the growth of a future industry which can employ some of those people, rather than propping up a picturesque but anachronistic cottage industry from Europe's past.

 

It is no surprise that the Dutch vetoed the still-born European Constitution. Every Dutch person I have met is a committed European, but perhaps it is because they are so committed that they feel the need to give their political leaders a message.  I can guess what that message might be, but decorum prevents me from reproducing it here.

 

See previous article on wine-into-ethanol:

 

France, Italy support farm prices by turning fine wine into biofuel

http://www.biofuelreview.com/content/view/89/2/ 

 

David Smith, Singapore