June 26th, 2006

Wine lake – only Europe could produce something this insane

A surreal return to the public eye for the European Wine Lake [Guardian article]. I presumed this had gone in the 1980s along with that other great icon of European progress, the Butter Mountain. Amazingly, the EU subsidies for wine production in 2005 were €1269 million, of which €791m went to measures to prop up prices by restricting the supply. The system restricts supply mostly by distilling about 15% of European wine output into industrial alcohol or solvents (and no, it isn’t then sold as Blue Nun…). European wine stocks now exceed one year of production, or about 20 billion litres – think of a lake 1Km wide, 2Km long and 10m deep. [more]

Much of the problem lies with uppity New World foreigners, who it seems are unfairly taking the market over by selling us affordable, attractively packaged, good quality wines. Apparently, basing their business on innovation and competition rather than protection and subsidy has made them more successful – and amazingly, they are growing rapidly and, horreur, Europe is shortly to become a net importer. You can sort of see it in the difference in the wine labels… !

The Commissioner, Mrs Fischer Boel, plans to end the funding for distilling excess capacity, and pay growers to tear up their vines instead [release]. The aim is to remove 400,000 hectares (12% of total) over a five-year period, paying farmers up to €2.4 billion to do this voluntarily. She said “This is a ridiculous way to use taxpayers’ money. We must spend our wine budget of around €1.2 billion to €1.3 billion per year more intelligently,”. As so often with top Eurocrats, the idea that there might be no case whatsoever to spend taxpayers’ money and waste consumers’ money on subsidising this industry or paying for its restructuring does not enter the argument.

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