The wine-producing countries of the Northern Hemisphere are facing a whole host of challenges but chief among these is without doubt oversupply. And according to a new report published by Just-Drinks, "Northern Hemisphere Grape Supply and Wine Production - Forecasts to 2011" this is not just an EU problem, with California too wrestling with over-production issues, not least after the mammoth 2005 harvest, which sent grape prices tumbling. Nevertheless, it is in Europe where the long-running problems of over-supply are most acute. The EU produces around 60% of the world's wine, and while it has an annual budget of EUR1.3bn (US$1.75bn) to promote and subsidise the wine sector, in 2005 the EU spent just over EUR500m of that turning wine into industrial alcohol because there was no market for it. At the same time, programmes to encourage growers to exit the wine business, such as Bordeaux's three-year vine-pull scheme, have been unsuccessful. European Agriculture Commissioner Mariann Fischer Boel put forward a drastic change in policy late last year, proposing that rather than paying growers to produce something no-one wants, they should be compensated for digging up their vineyards and doing something else instead. Fischer Boel's plan envisaged ripping out about 400,000ha of vines, about 12% of the total vineyard area of the EU. This may make sense in terms of supply and demand, but for grape growers in countries like France, Italy and Spain, there are often few obvious and profitable alternative crops. Europe's politicians therefore found Fischer Boel's plans unpalatable, and in February voted them down in favour of a report written by Greek MEP Katerina Batzeli, who called for the retention and even expansion of the current subsidy system. However, the Fisher Boel plan isn't altogether dead in the water. Her formal proposals are expected by May 2007, with the aim of a final agreement with the European Parliament and national governments by the end of 2007.
