BRUSSELS - The European Union has opened tenders to sell off wine surpluses in France and Italy to make biofuel or industrial alcohol at a cost of 131 million euros (US$168 million), the European Commission said on Wednesday. France would distil a maximum of 1.5 million hectolitres of table wine and the same amount of quality wine, while Italy would distil 2.5 million hectolitres of table wine and 100,000 hectolitres of quality wine, it said in a statement.
The raw alcohol resulting from the distillations could only be used for industrial purposes or as biofuel so as not to disturb the market for potable alcohol, it said. The Commission was also examining distillation requests from Spain and Greece.
France, Italy and Spain are the EU's three largest winemakers by volume. Last year they received more than 180 million euros in EU cash to distill some of their excess wine, both table and quality, into industrial alcohol or biofuel.
Later this month, EU Agriculture Commissioner Mariann Fischer Boel will present four broad policy options for reforming the wine sector, the world's most important by far.
However, she is known to favour abolishing the existing system of "crisis distillation", an emergency market tool used as a short-term measure to correct serious supply imbalances.
Fischer Boel has repeatedly complained that the EU wine industry still depends too much on distillation to rid itself of unwanted "wine lakes" at the taxpayers' expense, saying that a fundamental reform is needed to make EU wines more competitive.
"Crisis distillation is becoming a depressingly regular feature of our common market organisation for wine," she said in a statement. Crisis distillation is one of the biggest drains on the EU wine budget, currently some 1.2 billion euros a year.
"While it offers temporary assistance to producers, it does not deal with the core of the problem -- that Europe is producing too much wine for which there is no market. That is why a deep-rooted reform of the sector is needed urgently."
REUTERS NEWS SERVICE
