EU wine reform unlikely to affect Malta

The proposed reform in the EU's wine sector is not expected to impact on Malta because the situation on the island was tackled during accession talks, sources close to the Agriculture Ministry said.

EU agriculture ministers held a preliminary discussion in Brussels yesterday on a Commission proposal meant to reform the industry particularly by curbing over-production and rebuilding a higher quality wine market.

The EU grants about €500 million in subsidies annually for wine that is not consumed and is instead redistilled into industrial alcohol or bio-fuels. The Commission wants the sum to be given out as compensation to farmers who dig up 400,000 hectares of vineyards and start growing other produce in their place.

Sources close to the Ministry of Agriculture told The Times the EU reform should not affect Malta even though the island is adopting a position that seems to be contrary to the EU's by increasing the amount of land under vine.

"This is the position we have negotiated with the EU and the recent Commission proposals are not intended for us. We have been granted the right to increase vineyards up to 1,000 hectares from about 300 hectares we had on membership. This is being done so that Malta will become independent of grape imports. Apart from this, Malta does not have any over-production.

Currently we still produce less than the market demand and that is why so much imported wine is sold locally," the sources said. Significant rifts between producing and consumer oriented countries became evident during discussions in Brussels.

Major winemakers such as Italy, France and Spain have opposed the EU plans and said that digging up vineyards would lead to mass desertification in hot parts of Europe. They viewed the proposals as unacceptable and demanded new initiatives.

On the other hand, consuming countries such as the UK, Denmark and Sweden said they were in favour of stopping EU subsidies on "extra wine" so that the industry becomes more competitive.

The industry in Europe is facing various challenges. Apart from millions of litres of wine produced every year which remain unsold, imports from outside the EU have grown by 10 per cent a year over the last 10 years while exports are on the decline. New World producers such as Australia, Chile, South Africa and the US have increased their global market share nineteen-fold in some cases.

The discussion between EU agricultural ministers is expected to continue in September although many believe it will take years for member states to strike a compromise.

It is estimated that there are more than 1.5 million wine producers in the EU.