In April 2008, the EU Council of Ministers reformed the Common Market Organization (CMO) for wine.  The reform aimed to reduce overproduction, phase out expensive market intervention measures and to make EU wine more competitive on the world market.  The European Commission claims that EU wine producers are disadvantaged because they are smaller than major competitors’ in other countries and their production is not adequate to the needs of large-scale retailers.  EU wine makes lost market share because of regulatory constraints and ineffective market strategies.  Other issues officials hope the CMO will address: increasing production and competition from the New World, a systematic recourse to crisis distillation, an overly cautious grubbing-up policy, exaggerated use of enrichment practices, confusing labeling rules and rigid oenological practices.

Grubbing-up:  Grubbing up is when grape growers receive a financial incentive to pull up their grape vines. In the wine reform the EU targeted an area of 175,000 hectares to be grubbed up over a three year period.  For 2009, Member States (MS) submitted applications for grubbing up nearly 160,000 hectares, representing 4 percent of the total EU wine grape planted area.  After applying a “reduction coefficient” (to accommodate oversubscription for the scheme), the actual area was scaled down to over 73,000 hectares.  The 2009 budget for Grubbing-up was €464 million.

For 2010 there is again a substantial oversubscription and the Commission expects a coefficient of 45.9.  The budget for 2010 is €334 million.  The budget for 2011 is €276 million. The reason for the oversubscription of the grubbing-up program is expected to be the low wine prices, the labor intensity and financial difficulties.

The sums are allocated to interested Member States (MS), which then decides how to distribute the amount.  For example, a MS could distribute its allocations to all applicants providing only partial compensation or it could prioritize which applicants are accepted.  Last year the two largest priority groups were older people and people who leave the wine production completely.  In order to avoid abandonments, specific areas can be exempted from the grubbing-up scheme for environmental reasons.  The Commission is currently waiting for MS inputs before notifying what applications they have accepted.

Planting rights:  Planting rights is the right for a wine producer to plant vine. There is currently a prohibition of new plantings in place until December 31, 2015, replanting is allowed where producers undertake to grub up equivalent areas planted with vines. This current restrictive planting rights regime in the EU will end on January 1, 2016, however MS are given the possibility to extend the prohibition on their territories until 2018 if they consider doing so necessary.

Single Payment:  In order to bring the sector in line with the reformed Common Agricultural Policy (CAP), all areas formerly under vine can claim the status of areas eligible for decoupled single payments.  One reason for making these areas eligible for the single payment scheme is to gain the beneficial effects on the environment since this would mean the cross-compliance rules would be applicable i.e. keeping them in good agricultural and environmental condition