WINE SECTOR: impact of the U.S Presidential election

The US presidential election involved all political commentators, trying to understand what Biden’s election as President of the United States could mean for Europe. It is reasonable to expect a return to more relaxed relations between Washington and Brussels. Which could lead, for example, to a shared solution on the tariffs front, which has seen the acceleration of the EU, ready to follow the spiral in which the US and the EU have become entangled in recent years.

However, the Trump administration has decided the extension of the 25% additional taxes to all EU non sparkling wines and to Armagnac, Cognac…

The crisis due to the Covid pandemic, the closure in many countries of the Horeca continues to worry the wine sector. The French, Italian and Spanish wine cooperatives – which represent more than 50% of European production – organized a public debate together with the European Think Tank Farm Europe on the crisis of wine sector due to Covid-19 pandemic and on the way to overcome the current crisis.

On December 16, the European Commission published the EU Agricultural Outlook 2020-2030 for the EU wine sector. It foresees that consumers are expected to favour less alcoholic and sparkling wine, slowing down the decline in consumption. In parallel, other uses such as distillation should increase. Regarding trade, EU exports should be driven by high demand for wine with a geographical indication and sparkling wines. Overall, EU wine production should slightly decline.

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NEW BREEDING TECHNIQUES: MEPs remind the potential of NBTs

During December, the CRISPS methodology has found a new appliance for a Covid-19 test using the Cas 13 protein, while MEPs wrote a letter to Health and food safety Commissioner reminding her the possible benefits that New breeding techniques could have in reaching the Green Deal objectives set in the Farm to Fork and Biodiversity strategy.

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CAP REFORM NEGOTIATIONS: RECOMENDATIONS FOR STRATEGIC PLANS

During the last month of the year the CAP reform negotiations went on, with Commissioner VP Timmermans starting negotiations on the Green architecture, however, MEP voiced their concerns on the Strategic Plans and the risks of concrete nationalisation of the European agricultural policy. At the same time, Council and Parliament agreed on the set of rules to assure a smooth transition from the current CAP rules to the future ones, by granting a two-year transition period. The incoming Portuguese Presidency of the Council assured that innovation, knowledge transfer, and digitalisation are a top priority to put forward in its agenda. The Committee of the Regions adopted its opinion on the Farm to Fork strategy, supporting it as a fundamental pillar of the post-2020 CAP. Furthermore, the Commission adopted its recommendations for the Strategic Plans to Member States.

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THE US FURTHER STRENGTHENS SUPPORT FOR AGRICULTURE AND FARMERS

While everyone has been getting ready for the end of the year festivities, it is worth mentioning that the US’s Congress has just passed last week its $900 billion COVID-19 relief package.

Evidently, this includes a new round of aid to a wide array of agricultural sectors and farmers on top of the previous packages, which aimed to already cope with the COVID-19 crisis and the effects of the trade war with China.

Just as a quick recap, the Coronavirus Food Assistance Program (CFAP) Funding alone has made available $30 billion in relief to the ones in need in the form of direct financial assistance and not loans that need to be paid back.

The share of this new round is estimated to be at $13 billion directly to agricultural programs managed by the Agriculture Department with another $13 billion towards nutrition and food assistance.

The comprehensive relief package includes once again aid for dairy, livestock and poultry as well as crop producers, who are eligible to receive a payment of $20 per eligible acre of the crop. Finally, biofuel producers have not been left out either, as they have suffered significant losses due to the decline in fuel consumption.

The bill not only contains provisions for direct financial support but also has a great deal of other agriculture-related provisions to ease the pressure on US farmers, ranchers and other food producers and processors.

On this side of the Atlantic, in the EU, the previous emergency measures taken were necessary but obviously not enough for some sectors, notably the EU wine one.

President Trump has signed this week the coronavirus relief and it is therefore now up to the EU, to be able to match this ambition for its own farmers, not only in words but action.

PALM OIL FROM DEFORESTED AREAS DEFRAUDS EU CERTIFICATION – THE NESTE CASE

The Dutch branch of the NGO Friends of the Earth has denounced that “Neste’s suppliers have been responsible for the deforestation of at least 10,000 hectares of tropical forest in the period January 2019–June 2020. Moreover, almost 13,000 fire alerts involving these companies were documented on plantations in 2019.” 1

The Finnish oil company Neste “is the world’s largest biofuel producer and operates Europe’s largest biodiesel factory in Rotterdam, the Netherlands. In 2019, the company processed 1.3 million tonnes of palm oil products. Neste’s palm oil supply predominantly originates in Malaysia and Indonesia…”

Palm oil and PFADi, a derivative, are widely used in the EU to produce biodiesel.

The Neste case shows how weak the EU certification system is. Although all palm oil destined for biodiesel production in the EU must be certified as sustainable, the reality is that the paper certification process fails to stop the use of palm oil from recently deforested areas. The same can be said about imported UCO (Used Cooking Oil), which contains little real UCO and lots of virgin palm oil of dubious sustainability pedigree.

These blatantly unsustainable fuels compete unfairly in the EU, against genuinely sustainable domestically produced biodiesel, and harm the reputation of biofuels in general. EU sourced biodiesel is produced under strict and well monitored sustainability criteria, contributes to reducing GHG emissions in transport, supports EU rural communities and reduces the EU’s feed protein deficit.

We have publicly called on the European Commission to act, and stop the importation of products from recently deforested areas, in particular palm oil. Paper certification by bodies outside direct EU control does not give sufficient guarantee. The European Parliament has taken the lead in formally demanding the European Commission to propose mandatory legislation. It is well overdue.

1 https://en.milieudefensie.nl/news/neste2019s-suppliers-responsible-for-deforestation-of-at- least-10-000-hectares-over-the-past-18-months


i PFAD – Palm Fatty Acid Distillate. While companies like Neste argue that any and all PFAD is a waste, the reality is that any additional volume of PFAD entering the EU is greenwashed palm oil by another name. In any case PFAD never is or was a waste. PFAD is “feed grade palm oil”- or oil with impurities that is absolutely suitable for feed – and until a decade ago all PFAD in the world was used for animal feed, including in the EU. This makes it no different than other oils used for biodiesel. Rapeseed, sunflower and soya oils have both food and feed grade qualities, and it is the feed grades of these that the EU biodiesel industry processes into renewable fuel, and not food grade oils. This highlights a breath-taking failure of EU biofuel policy – feed grade oils produced in Europe by European farmers with no nexus to deforestation or bad labour practices are vilified, but feed grade oil produced in Asia and associated directly with the exploitation of people and biodiversity is expertly recast by a certain group of lobbyists as the opposite of what it really is. If PFAD was correctly labelled “feed grade palm oil” instead of identified by an acronym no one understands, the reality of this greenwashing would be clear to all.

Measures and Impacts related to the Covid-19 Crisis: conclusions from the first and second lockdown for the sector

In the second half of November, several EU countries have adopted recovery plans for coping with COVID-19-related impacts on the agriculture sectors. At European level, agriculture and fisheries ministries drew conclusions on various sectors affected by the pandemic during first and second lockdown during a meeting on November 16th.

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Livestock in the EU: Animal Welfare discussions, fast spreading bird flu and COVID-19 cases in mink

The month of November has been marked by several reports published an animal welfare, as well as a meeting of the Committee of Inquiry on the Protection of Animals During Transport (ANIT) where issues related to animal transport were discussed on November 20th. On a European level, much discussed topics were the fast spreading bird flu, which threatens the EU poultry industry and a large number of COVID-19 cases in mink in several countries.

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New Breeding techniques: new EFSA positions

During this month the European Food Safety Agency (EFSA) published two opinions on synthetic gene drivers techniques and on gene editing techniques. On the former, the agency believes that existing guidelines are sufficient for evaluating risks associated with technology, but further guidance is needed; on the latter, the EFSA assessed their safety.

Researchers from the Tel-Aviv University discovered a possible technique for fighting cancer using CRISPR technology.

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CAP REFORM NEGOTIATIONS: Confusion over environmental concerns

The month of November 2020 has been marked by some major developments in the CAP on-going negotiation among the European institutions. Notably, on November 10th the trilogue session kicked-off the interinstitutional discussions on the three legislative files; it was reached an agreement among the co-legislators on the Recovery plan for the agricultural development (including €8.7 bn); and the public debate was fired up by the Commission’s VP Timmermans’ statements on green claims for the CAP.

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Wine sector: the crisis and a strategy for the future

Today, 2 December 2020, French, Italian and Spanish wine cooperatives have organized a public debate together with the European Think Tank Farm Europe on the future of wine sector.

Angel Villafranca, President of the Spanish agrifood cooperatives introduced the seminar underlining the role of the Spanish, French and Italian cooperatives which represent more than 50% of all European wine production.

Afterwards, Pau Roca, Director General of International Organisation of Vine and Wine (OIV) and Denis Pantini, Director of Nomisma’s Wine Monitor, analyzed the situation of the international and European wine markets following the Covid crisis.

The second part was more political and saw the intervention of the Italian Minister of Agriculture Teresa Bellanova and the Deputy  General Director of the Ministry of Agriculture in France Philippe Declaud as well as the interventions of the members of the Agriculture Committee of the European Parliament Clara AguileraPaolo De Castro and Anne Sander and to conclude the vision of the Commission with Maciej Golubiewski, head of cabinet of the Commissioner for Agriculture and Irène Tolleret, President of the Wine intergroup in the European Parliament.

The debate showed that emergency measures taken last spring in order to try to balance the supply and face the declining of the world demand were necessary but not enough. These measures were financed by the margins that the Member States were able to free up on national support programs, supplemented with national aid in some Members States. Faced with the need to react promptly, and to respond quickly to the effects of the health crisis, in a large number of wine-growing countries it was decided to postpone some of the structuring investments envisaged in 2020.

As this health crisis continues, 2021 is shaping up not as a year of economic recovery for European wines, but rather as a year of vigilance to avoid excessive market imbalances. At the same time, European industries need to be able to continue planning a future that necessarily combines environmental performance and economic performance. Thus, for 2021 as well, emergency measures will continue to be needed.

However, these emergency measures instead must be part of a coherent multi-year plan for the relaunch and for building a strong, long-lasting and resolutely sustainable European wine sector.

First of all, an economic recovery for the next three years is needed to bring again the level of consumption as before the crisis. In fact, it will take at least 2 years to relaunch the dynamics of demand. The crisis has profoundly disrupted consumer habits, making it more difficult and along the path of complete recovery. It will therefore be necessary to act both on internal consumption and focus on exports.

At the same time, the economic crisis cannot be an excuse to forget the ecological transition necessary to respond adequately to climate change. It is in the very interest of the EU and its winemakers to modernize their means and practices to respond to the ongoing ecological crisis. The Farm to Fork Strategy will come with more rules and thus more costs for farmers and cooperatives. Impact assessment are much needed and the Commission should published the one it conducted. It is in the interest of all agricultural sectors to have a fair transition to the new commitments where nobody will be left behind.

Adequate means are needed to respond adequately to the crisis and the challenges of the near future.

First of all, the extension of the crisis measures for the whole of 2021 is necessary. Subsequently, the national support programs must be enlarged and financed with a substantial budget. This is not credible to imagine that emergency measures can be financed within the existing PNA budgets delaying for a second year structural actions EU wine sectors needs to prepare its future.

But the crisis tools are not enough, we need a multi-annual plan that gives priority to viticulture and brings additional economic resources:

 

  • It must be ensured that European viticulture can full access the additional € 8 billion of the NextGenerationEu Fund in the 2nd pillar
  • PNA should not be treated financially worse than the other components of the CAP whereas their budget allocations proposed in the CAP reform decrease by more than the decrease of the 2021-2027 CAP budget,
  • The implementation of the CAP reform in all MS should make sure that EU viticulture will access to 2nd pillar agri-environmental measures and risks management schemes, both being essential to support the ecological and digital transition the EU wine sector is willing to lead.  

Wine cooperatives play an essential role in rural areas joining farmers efforts to strengthening them in the food supply chain. Thanks to cooperatives, farmers can implement projects that they could not alone implement alone, eg. investments in their farms for marketing and commercialization keeping the added value from the market, promotion, research and innovation etc. Cooperatives are key in rural areas allowing farmers to take advantages of the global opportunities giving jobs in rural areas and fighting the depopulation. Promoting cooperatives will make a wine sector more competitive and resilient.

 

To rewatch the event you can click on the following link: 

https://zoom.us/rec/share/DBOF0BWn5ZIRFx3cpICQxWCSvSSni-mKKhvFlcvZT9_wWTSUHb56ZFAWkEoV-HVm.tqD9LBIRcyi_LXyt 

Passcode: BVx6Q!Y7 

Please note that translation was only provided during the event itself, therefore during the recording you can only hear the person speaking in the language he or she has chosen to use.