Assistance for European Wine producers and international envy
700€ per hectare and 0,15€ per litre of wine, this is the assistance for European Wine producers that the rest of the world looks at with envy,without considering the off-set
It is well known that abroad the assistance for European wine producers and farmers is looked upon with suspect, as if they were a disturbance to competition but in a dishonest way. And wine is one of the products to be questioned.
A few years ago, to be able to export, all wineries were forced to send to China a declaration stating what contributions had received. It all ended when Europe accepted the commercialization of Chinese solar panels.
The last episode of this saga is the article “How Much Government Assistance Do European Wine Producers Receive?”published by the Journal of Wine Economics by Kym Anderson from the School of Economics in the Adelaide University and by Hans G. Jensen of the Institute of Food and Resource Economics from the Copenhagen University.
These two academics have estimated the European aids to be an average of 700€ per hectare and 0,15€ per litre of wine so roughly a nominal tax rate of about 20%of costs.
An enormous amount 2,341 billion per year, of which France alone gets about one third of the total (830 million Euro), Italy and Spain about a fifth each 570 the first and 405 the second) while all the other nations are under 100 million Euro.
If we go and see these total we realize that the vineyards with most contributions per hectare are the Austrian ones .They get 2.400 € so more than double everyone else. After this initial help the aid per hectolitre of wine is superior in Austria with respect to every other European nation: 370€. In this list we find Slovakia in second position then Slovenia, Check republic, Portugal, France and Bulgaria all above the European average of 145€, while we in Italy are below with 140€.
Another interesting element regards the division of the indirect help, so those for the Vineyard or those relative to marketing and sales, more marginal are those who support economically. As was foreseeable based on the previous results Austria is the nation that aims mostly at financing for production while Italy is, out of the three major producers, the one that invests more in marketing.
At the end of their report Kym Anderson and Hans G. Jensen state that the government aids for European wines are superior to those present in all other nations and this puts the producers in the rest of the world into difficulty especially for what regards sales. Here there is not a dumping accusation, not quite.
In my opinion, the two academics have not considered properly the downside, in other words all the limits imposed by Europe to wine makers for the aids they receive: regarding the
surface area of vineyards, production per hectare, building cellars ….A system of rules and checks that does not exist anywhere else in the world and that, in truth, stops this sectors growth but has permitted the preservation of the landscape and has saved small enterprises by keeping the countryside inhabited. In other words, if the European producers were so much at an advantage why in the rest of the world does wine production grow more than here?