CELEX: 51980PC0036
Language: en
Date: 1980-02-01
Title: Proposal for a COUNCIL REGULATION (EEC) laying down general rules on distillation operations for table wines for which the distillation contract must be approved before 15 April 1980 (submitted to the Council by the Commission)

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DOCUMENTS "COM"
COM (80) 36
Vol. 1980/0015
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 ---pagebreak---  COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(80)36 final
                                              Brussels . 4 february 1980
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                              Proposal for a
                      COUNCIL REGULATION ( EEC )
laying down general rules on distillation operations for table wines
        for which the distillation contract must be approved
                             before 15 April 1980
                ( submitted to the Council by the Commission)
  C0M(80) 36 final
 ---pagebreak---                              EXPLANATORY MEMORANDUM
After the exceptionally abundant harvest in 1979 the Community wine market
is faced with a serious crisis such as it has not known since 1974 / 75 .
The wide range of structural and market measures , the basic principles of
which were adopted by ^Jie Council at its meeting on 10/ 11 December 1979 #
in line with the action programme put forward by the Commission in July
1978 , should produce a better balance in this sector in the medium-term .
But for the time being the market crisis which has been worsening since
September 1979 in France and in Italy can oily be warded off by a rapid
Decision to take the so-called exceptional distillation measures decided
by the Council on the basis of Artiole 15 of the basio Regulat£on .
( Regulation 337 / 79 ).
For its part , the Commission has put into operation , since the start of
the current wine year and in line with the forecasts of production and
supplies , all the intervention measures at its disposal :      preventive
distillation ( Article 11 ), distillation limited to holders of long-term
contracts ( Article 12 ), distillation of surplus wines from the Charentes
region ( Article 13 ), short-term storage and long-term storage .
It is estimated that the distillation operations already decidedf on might
result in about 12 million hi of wine being withdrawn from the market ,
         the
However , forward estimates for the wine year , adopted by the Commission on
14 December 1979 , show a production figure of 167 million hi which is
about 25 million hi higher' than normal Community consumption plus exports
and taking , into account imports .   This estimate was drawn up taking into
account only those distillation measures already decided upon .       Those are
the measures listed above as well as the decision to apply , in France , the
provision concerning supplementary wins deliveries for distillation
 ( Article HO of Regulation 337/ 79 ) at a rate of 3J& , which corresponds to an
obligatory distillation of low price wines ( 50$ of the guide price for
white wine ) and will enable a further 1.2 million hi of table wine to be
withdrawn from the market at a limited cost to the EAGGF .
 ---pagebreak--- At this :'tage the Coram is si on has there Tore exhausted all the devices for
managing the market, under normal conditions which the Council put at. its
disposal when the wine Regulation was revised in 1976 .          The Community is
now faced with exceptionally high production which , at the provisional
figure of 167 million hi , is only slightly less than the all-time record
of 170 million hi in 1973 .      The forward estimate drawn up in the
conditions referred to above , indicates that stocks at the end of the wine
year will be 87 million hi , a figure which was reached previously only in
197M at a time when there was a serious market crisis between Italy and
France .
Prices have fallen to very low levels and the Community representative
price . at the beginning of January 1980 was only 85 /C , 8 1 % r 67$ of the guide
price for red wine of types R I , R II and white wine A I respectively .
If this crisis is to be averted , it is urgent for the Council to take a
decision which makes clear its determination to bring the table wine
market into balance following the 1979 harvest .          The Commission is ,
                                                                                   1
therefore , proposing to the Council that it should permit distillation of
table wines under Article 15 of the Regulation ( EEC ) No 337 / 79 .
As regards the rules for carrying out these distillation operations           it
should be recalled that the procedure adopted in 1975 of setting
quantitative limits on the quantities distilled through the lodging of
applications which were met4.n proportion to the quota decided upon and
the total number of applications was a most unsatisfactory one .
( Regulation 267 / 75 ).  The Commission is therefore proposing the usual
limitation in terms of the period of distillation , together with the
condition that the quantities distilled may not exceed 10% of each
producer 's 1979 harvest of table wine , although this limit may be
increased to 20 ? for small-scale producers .        The quantities distilled
should , therefore , be between 6 and 8 million hi .
Finally , tb <=> Commission proposes fchnfc fchfl prio<» paid for the wine distilled
should be 8'V/o of the ^ruide price for red wines R I and R II and 80% of that
for white wines A I or 2.16 ECU per % vol and per hectolitre and 1.90 ECU
per fo vol and per hectolitre respectively. Since the difficulties on the
market as reflected in price levels are more serious for white wine of
type A I than for red wine , distillation operations will give preference
to white wine .    The distillation aid is based on the market prices for
alcohol in Italy .
 ---pagebreak---                                    Proposal ror a
                           - CQUNCXL REGU LATIO» ( E^C )
       laying down general rules on distillation operations ior tabxe winsa
               for which the distillation contract must be approved
                                 before 15 April 1980
                            ;      ,                                     -      v
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European Economic Community ,
Having regard to Council Regulation ( EEC ) No 337/ 79 of 5 February 1979 on
the common organization of the market in wine ( 1 ), as last amended by
Regulation ( EEC ) No         /  ( 2 ), and in particular Article 15(1 ) thereof ,
Having regard to the proposal from the Commission ,
Whereas Article 15 of regulation ( EEC ) No 337 / 79 provides that provisions
concerning the distillation of table wines may be adopted where
application of the market support measures provided for in that Regulation
are unlikely to be effective in restoring price levels ;
                                                                              /
Whereas this is the case at present in view of the fact that this year 's
abundant harvest and the large stocks from previous years have created
supplies which considerably exceed the normal requirements for this wine
year ;    whereas , moreover , all the support measures have already been taken
but they have not yet succeeded in restoring reasonable price levels ;
 ( 1 ) OJ No L 51», 5.3.1979 , p. 1
( 2 ) OJ No L
 ---pagebreak--- Whereas the conditions under which these distillation operations may take
place should be laid down ; whereas in particular the price of the wines
going for distillation should not be such as to encourage the production
of wine principally for distillation , although they should be sufficiently
attractive for the operation to be effective ;
Whereas the marketing of the alcohol produced under this Regulation should
not he allowed to have a negative influence on the market for the product
Whereas the maximum quantity of table wine which may "be distilled for each
producer and the duration of the distillation operation should "be limited
in order to limit the cost of the operation ;
V/hereas the maximum quantity of table wine which may "be distilled for eaoh
producer to be paid to him , as a general rule , within time limits which
will enable him to obtain a profit comparable to that which he would have
obtained from a commercial sale ;
Whereas provision should be made for producers who have concluded a
distillation contract to terminate it where the market situation would
enable them to dispose of the wine more profitably ;
Whereas provision should te made for producers to conclude contracts with
 distillers subject to approval by the intervention agency , in order to
 facilitate the control of the progress of operations and of the observance
 of the obligations of both parties ;   whereas this system would have the
 added advantage of making it easier to monitor the quantitative effects of
 distillation on the market ;
Whereas , in order to ensure appropriate control of the distillation
 operations , distillers should be subject to a system of approval ;
Whereas the price of wine going for distillation is not such as to enable
 the products obtained from this operation to be marketed normally ;
 whereas , it is therefore fnecessary to grant aid and to fix the amount of
 aid , taking into account normal costs , at a level enabling the products
 obtained to be marketed ;
 ---pagebreak---                                        - 3 -
Whereas , on the basis of experience , a certain margin should be allowed
for the quantity of wine specified in the contracts for the distillation
of wines ;   whereas , moreover , provision should be made , in the event qf
accident or force majeure , for aid to be paid in respect of the quantity
of wine which has actually been distilled ,
HAS ADOPTED THIS REGULATION :
                                     Article 1
1 . Producers wishing to distil part of their harvest of table wines
    pursuant to Article 15 of Regulation ( EEC ) No 337 / 79 shall conclude
    contracts for the delivery of table wine with an approved distiller
    before 1 April 1980 .
2 . For the purposes of this Regulation the quantity of table wines
    distilled by any one producer may not be less than 10 hi and may not
    exceed the following percentages of the quantity of table wine stated
    in the producer 's harvest declaration for the 1979/ 80 marketing year :
    - 20$ for the first |50 hectolitres declared ;           i
    - 10 * for the remainder of the declared production .
                                     Article 2
The supply contracts shall not be valid unless approved by the
intervention agency before 15 April 1980 .
These contracts shall cover :
a ) the purchase by the distiller of the quantity of wine entered in the
    contract ;          -
b) the obligation for the distiller to process the wine into a product
    with a strength of 86£ vol or more , or into a product with a strength
    of 85> vol or less and to pay for it at least the price referred to in
    Article 3 .
 ---pagebreak---                                      - a -
                                   Article 3
1 . The minimum buying-in price for table wine for distillation shall be
    fixed at :
    -  2.16 ECU per % vol and per hectolitre for red table wine of type R I
       and R II ; and at
    - 1.90 ECU per % vol and per hectolitre for white table wine of
       type A I.         f
2 . The prices referred to shall apply to bulk merchandise ex producers'
    premises .
                                   Article 4
1 . The intervention agency of the Member State in which the distillation
    has taken place shall pay aid for each hectolitre of wine distilled .
2 . The amount of the aid shall be fixed , in respect of the wine referred
    to in the first indent of Article 3(1 ) at :
       1.31 ECU per %  vol and per hectolitre if the wine was processed into
       a product with  a strength of 86% vol or more ,
       1.13 ECU per %  vol and per hectolitre if the wine was processed into
       a product with  a strength of 85% vol or less .
    The amount of the aid shall be fixed , in respect of the wine referred
    to in the second indent of Article 3(1 ), at :
        1.05 ECU per % vol and per hectolitre if the wine was processed into
       a product with a strength of 86% vol or more ,
    -  O.87 ECU per % vol and per hectolitre if the wine was processed into
       a product with a strength of 85% vol or less .
 ---pagebreak---                                Article 5
When the total quantity of wine in the contract enters the distillery ,
the distiller shall pay the producer at least the difference between
the minimum buying-in price referred to in Article 3 and the aid
provided for in Article 4 .                    t
Within two weeks of entry into the distillery of the total quantity of
wine in the contract , the intervention agency shall pay the producer an
amount equal to 4051 of the minimum buying-in price referred to in
Article 3 , to be deducted from the aid provided for in Article 4 .
When proof is supplied that the total quantity of wine in the contract
       t
has been distilled , the intervention agency shall pay the producer the
difference between the aid provided for in Article 4 and the amount
referred to in paragraph 2 .
 ---pagebreak---                                         - 6 -
4 . Member States may provide that the amount referred to in paragraph 2
    shall be paid :       i
    -  by the intervention agency to the producer within two weeks of
       approval of the contract ,
    -  by the distiller ;     in the latter case the intervention agency shall
       reimburse this amount to the distiller when the proof referred to in
       paragraph 3 is supplied .
5 . Where distillation takes place in a Member State other than the Member
    State where the producer is located , the minimum buying-in price
    referred to in Article 3 shall be paid by the distiller .
6 . By way of derogation from paragraphs 1 to        the minimum buying-in
    price may be paid by the intervention agency or the distiller in one
    payment after distillation of the total quantity of wine appearing in
    the contract .
                            (
                                      Article 6
Distillation may not take place before 1 April 1980 nor after 31 May
1980 .  It may , however , be decided to bring forward the closing date for
the distillation operations , in particular should the representative
prices for all types of table wine except for types A II , A III and R III
reach a level higher than the respective activating price during two
consecutive weeks .
                                      Article 7
Where the representative price of the type A I table wine in a certain
number of quotations exceeding 50% of the quantities quoted exceeds 90% of
the activating price , it may be decided that the distillation contracts
shall be terminated in whole or in part at the request of the producer .
                                      Article 8
A margin of 10% more or less than the quantity of wine indicated in the
contracts referred to in Article 1 shall be permitted .
The intervention agency shall pay the aid provided for in Article 4 for
the quantity of wine which has been actually distilled within the margin
referred to in the previous subparagraph .
 ---pagebreak---                                      - 7 -
                                   Article 9
Where , due to accident or force majeure , all or some of the wine covered
by a contract referred to in Article 1 cannot be distilled , the distiller
or the producer shall immediately so inform :
-   the intervention agerfcy of the Member State in whose territory the
    distillation premises are located and ,
-   if the producer 's winery is located in another Member State , the
    intervention agency of the second Member State .
In the cases referred to in the previous paragraph the intervention agency
shall pay the aid referred to in Article M in respect of that quantity of
wine which has actually been distilled .
                                   Article 10
For the purposes of this Regulation an approved distiller means a
distiller included on a list to be compiled by the competent authorities
of the Member States .
Under conditions to be laid down as part of the implementing rules ,
approval may be withdrawn by these authorities from distillers who do not
fulfil their obligations under this Regulation .
                                   Article 11
1 . Member States shall appoint an intervention agency to be responsible
    for implementing this Regulation .
2 . The intervention agency responsible shall in every case be that located
    on the territory where distillation takes place .
                                   Article 12
This Regulation shall enter into force on the day of its publication in
the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable
in all Member States .
Done at Brussels ,                                  For the Council
                                                    The President
 ---pagebreak---                                  FINANCIAL          STATIPiiT
                                                                                        bats i     30 . 1 . 1 980
                                                                                                   Provisional budget
    1. BUDGET LINE CONCERNED I 691 2 D i s t i 1 1 a T I on of wine                     CREDITS
                                                                                        CREDITS «« appropriations
                                                                                                   appropriations
   I I mm 1 1 I IT I                                                                  '            33*7
                                                                                                     5 „ 7 million
                                                                                                            mi L li on EUA
     2. ACTION *.                 Proposal for a Council Regulation laying down the general rules on
                                  operations to distil table wine for which the disti llation contract
                                  must be approved .                   H
I 3 , LEGAL BA3IS I                 Article 15 of Regulation No 337 / 79
I 4. OBJECTIVER »                   The 1979 wine harvest was exceptionally abundant.' The traditional
                                    market support measures should therefore be supplemented by an
                                    exceptional dipti Llation - provided for under Article 15 of the
                                    Basic Regulation .
    5 . FINANCIAL CONSEQUENCE                          PERIOD  OP 12 MOUTHS  CUKBHCT Hf?«iCIAL TEAR      FOLLOWING FINANCIAL YEAR
                                                                                    f    )                             )
    5.0 EXPENDITURE
              ••CHARGED TO TOE EC BUDGET
                 ( REFUNDS/l NTEHVENTI ONS )
             -CHARGED TO NATIONAL AEÎUNISTH »
                                                         89 .0 m ECU            89.0 m ECU
             - CHARGED TO OTHER NATIONAL CR0UF3                                 or
                                                         or
    5,1 RECEIPTS
             -OWN RESOURCES OF THE EC
                                                         82 »8      EUA         82 -8 m EUA
                 ( LEVI ES/CUSTOt-S DUTIES )
             -NATIONAL
                                                      T£AR • ••»•<?*•••••••• TEAS                        YE£B
   5.0.1 PLURIANNUAL PATTERB OP EXPENHTUHE                  . 82-8 m EUA
   5.2 METHOD Or CALCULATION
 Assumptions : - 8m hi ,. 60% wljite wine and 40% red wine
                                   - average aid : white wine 1.08 ECU / % / hi ; red wine 1.22 ECU / /./ hi
                                   - average alcoholic strength : red wine 11° ; white wine 10°
 Total cost : 0.96 ECU / % / hl x '10 x 4.8 m hl = 46.08 m ECU
                                   1.22 ECU / % / hl x 11 x 3.2 m hl = 42.94 m ECU
                                                                             89.02 m ECU
                                                                         ––
  6.0 FINANCING POSSIBLE WITH CREDITS INSCRIBED IN RJWMIT CHAPTER OP CURRENT EUKICT ?
 illlJl'JUlIJiil. lM"|TTirni 1 r                                                  :
  6.1 FINANCING POSSIBLE BY TRANSFER SEWIIJCN CHAPTERS OF CURRENT BUDGET ?
  6.2 NECESSITY FOR A SUPPfcffiEN TARI iJUXXiEY ?
                                                                                                                                mm
  6.3 CREDlia^TO BE WRITTEN INTO FUTURE BUDGETS
  COIttENTS I
   This is an emergency measure for which no appropriations were Pr°vl ^d . Its
   effectiveness is connected not only with relieving the market hut also with
   psychological effect on operators . Rapid " measures mil reduce the need fo
    storage expenditure and should limit subsequent expenditure .
  < 1 ) The Commission will propose the neoessary ljudgefe cover at "the time its new
                  proposals for the 1980 "budget .                   ,