08-06-06

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 EUR 131 mm ($ 168 mm), the European Commission said. France would distil a maximum of 1.5 mm hectolitres of table wine and the same amount of quality wine, while Italy would distil 2.5 mm hectolitres of table wine and 100,000 hectolitres of quality wine, it said.
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 EUR 180 mm in EU cash to distil 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 one of the biggest drains on the EU wine budget, currently some EUR 1.2 bn a year.