«The London School of Economics and Political Science Wine In Their Veins: France and the European Community’s Common Wine Policy, 1967-1980 Maria ...»
the franc was simply not properly protected by the MCA system from a flood of cheap imports from a country that had an even weaker currency, like Italy. This made Italian goods more competitive in foreign markets and accounts for the considerable flood of Italian wines into the French market. This had serious repercussions for farmers, particularly those involved in table wines, as the majority of the wines in the Midi were. The issue was exacerbated by the experience of overproduction in 1973 and 1974 in the EEC wineproducing countries.
In September 1973, the Commission issued a report to the Council in which it raised concerns about the new common wine policy. This report highlighted that wine production had been increasing steadily since 1959–1960 but claimed consumption in the Community was on the increase.19 It notes that, according to their figures, the Italians saw a steady increase in wine consumption and the French had only had a drop-off in the last year. Thereby, according to the report, there did not seem to be the trend of a decrease in consumption; the major problem was in the increase in the productivity of existing vineyards. But observers would shortly highlight falling consumption levels in much of Western Europe. The Commission characterised this issue as a temporary imbalance, for which their solution was ‘confirm[ing] the importance of business-cycle measures designed to meet such fluctuations’,20 not, as it were, deeper structural changes, like limiting planting or grubbing up vines (known as d’arrachage), despite the French firmly stating one year previously that ‘etant donné le caractère pérenne de la vigne, il paraît indispensable d’éviter une extension du vignole qui conduise à la constitution d’excédents structurels pour de nombreuses années…le problème se présente déjà avec une acuité particulière…’ and accused the Commission and the Council SEC (73) 3079: Commission report to the Council on foreseeable changes in vine planting and replanting in the Community and the ratio between production and utilisation in the vine sector, September 28, 1973 Ibid.
of allowing expansion of planting.21 The French were not against planting entirely however – with the profitable, largely exporting vineyards of Bordeaux and Champagne in mind, their caveat was that ‘les plantation nouvelles devraient être limités aux productions de qualité pour lesquelles les débouches sont en expansion.’22 The French charged the Commission with making the decision they undoubtedly did not want to make at a national level: ‘Il convient que la Communauté manifeste son choix contre une politique de masse et pour une production de qualité.’23 The analysis of consumption patterns made by the Commission was problematic. Looking at the Statistical Office of the European Community reports between 1966–67 and 1971–72 that the Commission used, from year to year, it may not appear there was a marked downward trend. Analysts writing in the early 1970s might be forgiven for using figures running up until the end of the 1960s to suggest there might not be such a trend – and this could explain the Commission’s complacent response if they were responding only to this information. But given the period as a whole from 1966–67 to 1972–73, both the French and the Italians consumed 3% less wine. When placed against the broader context of wine consumption trends, it displayed a downward trend for France, particularly when held constant against population growth from 1968–1972.24 Given the Eurostat-EC Commission’s own statistics for Directorate-General Agriculture showing the average of the past 30 years, pooled in average batches over five-year periods, it appears the French per capita wine consumption had been decreasing quite significantly over that period of time. The Italian per capita wine consumption appears to be fairly stable.
'Memorandum relatif au secteur viti-vinicole.' Memorandom establishing French position on the Community's wine policy. Undated. Forwarded to Council Secretary General Christian Calmes by Emile Cazimajou, Deputy Permanent Representative for France. May 18, 1972, CM2/1972 860.1, CMA.
World Bank, World Development Indicators, Population Growth for France, accessed at http://data.worldbank.org/indicator/SP.POP.GROW.
Table 2.2 Per capita consumption of wine in the EEC, 1951-1975 (litres)
Adapted from Eurostat-EC Commission, Directorate-General for Agriculture, 1983 In light of this, for the Commission report only to concede that the French consumption has ‘declined slightly since 1968–69’25 was to ignore the evidence that the Community had on the decline in consumption. The Commission did warn, however, of ‘an undeniable risk of imbalance between production and domestic consumption in the future.’26 One solution for this issue was the push towards quality wine production, which the Council agreed upon in principal. But the European Economic and Social Committee’s Working Party on Wine surprisingly criticised the hasty appraisal of the wine sector and insisted that ‘fears expressed by the Commission regarding the future imbalance between production and utilisation should be allayed.’27 It also downplayed the concerns about unexpected price increases up until June 1973, which it said were not part of a true trend but rather part of ‘general speculative economic’28 conditions. Taken together, conflicting information led to an environment where it was difficult to ascertain the nature of the problem.
SEC (73) 3079: Commission report to the Council on foreseeable changes in vine planting and replanting in the Community and the ratio between production and utilisation in the vine sector, September 28, 1973 Ibid.
But how could this have been so? The concerns about overproduction seemed to have been noticed a while earlier. In the 1962 regulation, the Council claimed in one of the preambles that the wine market was necessary to deal with the ‘permanent character of the surpluses which were the cause of great difficulties’29 to the economies of producer countries and that these surpluses existed. However, Regulation 24/62 did not make measures to address the surplus problem, which accounted for its lack of impact.30 In 1969, a third party, the United Nations Food and Agriculture Organisation, remarked even then that for the upcoming period 1970–1975, given projections on import and export data in Europe, that its producer countries would face ‘excess of supply over demand at constant prices.’31 It lamented that the largest surpluses would likely be in the European Community, which the FAO predicted, with what would become great prescience, the intensification of protective measures under the CAP for fruit and vegetables.
The FAO report was particularly critical of the wine market in France, which it used as a prime example of a country that had still not produced proper ‘control measures and limitation of production.’32 It charged France with chronic overproduction and the steady decline in the quality of vineyards in the Languedoc area.33 According to the statistics the FAO compiled, it was clear that in France ‘consumption has constantly decreased’,34 taking data spanning from the beginning of the century. The French themselves certainly knew that 'Regulation (EEC) No 24/62 on the progressive establishment of a common organisation of the market in wine.' It was hardly mentioned in the context of the start of a common wine policy.
Food and Agricultural Organisation of the United Nations, 'The World Wine and Vine Products Economy: A study of trends and problems,' 1.
This was largely a result of viticulture shifting from hillsides to plains in the Languedoc as vineyards were hastily replanted after the phylloxera crisis of the late nineteenth century which destroyed many French vineyards.
Food and Agricultural Organisation of the United Nations, 'The World Wine and Vine Products Economy: A study of trends and problems.' This was certainly interesting, given that in the Community and Council press releases, for instance, there was often confusing and sometimes contradictory information about the levels of consumption. Some suggested that wine consumption increased in the early 1970s.
overproduction was a serious and systemic – this was clear during the CWP negotiations. At the announcement that agreement had been reached by the Six on the wine policy, François Seydoux, the French Ambassador to Germany, commented, ‘La Commauté va-t-elle se noyer dans une mer de vin?’35 In 1970, as a result of serious negotiations over the previous three years, Regulation 816/70 came into effect. But it no longer mentioned anywhere, even in the ample three-page preamble, the necessity of combating overproduction,36 which was, after the generic mention of the need to create a common market for agricultural goods, the first justification listed by its predecessor Regulation 24/62.37 Why was this no longer mentioned? Though the regulation itself contains mechanisms on price interventions and on distillation and stocking procedures, clearly aimed at the issue of overproduction, the preamble now claimed the policy’s goal was to deal with rationalising the market and helping it achieve balance.
Member States, in negotiating such a regulation, seemingly changed tack on the perception of the problem. If they genuinely believed that rationalising and balancing the market was the new and true goal of a common wine policy, they made no attempt to respond to the fairly widespread data which at the time seemed to clearly point to continuing increases in production and stable or declining consumption levels. The more likely explanation, given that the FAO was able to garner data through a variety of reliable and public sources, through its own statistical office, the bulletin of the International Vine and Wine Office (OIV), and Telegram 2901/03, report from François Seydoux to Dipomatie Paris, Ministry of Foreign Affairs. April 23, 1970. 19971469/131, AN.
'Regulation (EEC) No 816/70 of the Council of 28 April 1970 laying down additional provisions for the common organisation of the market in wine,' in L99/1, 1-19: Official Journal of the European Communities, 1970.
'Regulation (EEC) No 24/62 on the progressive establishment of a common organisation of the market in wine.' the Statistical Office of the European Communities in the areas of agriculture and trade, was that Member States were uncertain how to deal with the issue but recognised that a common market for each of the key goods produced in the EEC required a common political and market structure.38 Indeed, up until 1969 during negotiations, the Council members held ‘very diverging views’ on whether or not equilibrium could be reached without serious policies aimed at the control of production.
The positions they had held during the negotiations, as established in the previous chapter, were still the positions they held to now – the French wanted strong control of production and the curbing of planting rights and the Italians wanted a policy permitted unrestricted planting, though all parties wanted intervention measures if prices fell below a rate which would endanger the incomes of farmers. The issued was repackaged as a problem of resolving an imbalance, and the solution was the emphasis on a set of short-term solutions, like distillation and stockpiling, though long-term solutions like the grubbing up of vines and financial incentives for relinquishing vine-farming were introduced but much less seriously implemented.
This later became the crux of the problem. The policy used short-term measures which were to fix a temporary imbalance, but which could not properly address the continuing overproduction, which required substantial structural reorganisation. One such structural change would be more flexible pricing policies. This would seem to make more sense, as it could better reflect the rather inherently more volatile and riskier-than-average market of wine production. But this could not have been a real option to the policy’s architects and Preambles of Regulations 24/62 and 816/70.
executors. The CWP, under the umbrella of the CAP, was still about maintaining parity in farmers’ incomes.39 The issue of decreasing consumption was an important factor to examine and account for.
The CWP, in attending to the welfare of wine growers and introducing aspects of farm modernisation, such as encouraging efficiency measures like larger conglomerate farms, increased its own costs as well as the productivity of the wine industry.40 Since planting was not quantitatively restricted, and farmers were given greater assurances of support (even if this support was not automatic, as in the case of most other product common markets), planting increased, particularly in Italy. The Italian market had at this time only recently been better organised, to a standard more like that of France, the traditional leader in this regard. In fact, the modernisation of the Italian market was such that its efficiency gave it an ‘embarrassment of success’; in the decade from 1948–49 to 1958–59, Italian wine production had jumped from 40.5 to 67 million hectolitres, an increase of over 60%.41 The wine consumption per person in France decreased steadily from 1951 to 1976 and the Italians did not, as hoped, consume enough to absorb their own production (and consumption from the second half of the 1970s onward would show a clear downward trend). Forced to reconsider, the Commission and Council pinned their hopes on a new assumption. They presumed that the new markets provided by the first enlargement in 1973 of the European Economic Community would ease the problem of overproduction by having new consumers take in excess wine. But the markets of Denmark, Italy, and the United Kingdom did not actually take in more alcohol as the Community had hoped in the years immediately after See Knudsen, Farmers on Welfare: The Making of Europe's Common Agricultural Policy.
This was made quite obvious by the fact, noted by the Commission Report of September 24, 1973 on vine planting in the Community, that despite the total wine-growing area in the Community diminishing over the years, ‘Community wine production has continued to rise since 1959-60’.
Niederbacher, Wine in the European Community, 33.