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How Much Government Assistance Do European Wine Producers Receive?*

  • Kym Anderson (a1) and Hans G. Jensen (a2)

Abstract

The European Union's (EU) long-standing financial support for its wine industry has been nontrivial but very difficult to estimate. The Organization for Economic Cooperation and Development's (OECD) generic producer support estimate methodology has been able to capture some of the supports, but it excludes such measures as subsidized distillation of low-quality wine, grants to promote wine generically, protection via import tariffs, and grubbing-up premiums. Nor does the OECD disaggregate EU supports to individual member countries. This article provides a new set of more complete estimates of support to EU wine producers. It also reveals how unevenly those supports are spread across EU member countries. The new estimates suggest that during 2007–2012, annual assistance amounted to approximately 700 euros per hectare of vines or 0.15 euros per liter of wine produced in the EU as measured at the winery gate. That is equivalent to a nominal rate of direct plus indirect producer assistance of approximately 20%. (JEL Classifications: F14, H25, L66, Q18)

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The authors are grateful for very helpful comments from two referees and for funding support from the University of Adelaide and the University of Copenhagen. The views expressed are the authors' alone.

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References

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Anderson, K., and Aryal, N.R. (2015). Growth and Cycles in Australia's Wine Industry: A Statistical Compendium, 1843 to 2013. Adelaide, South Australia, Australia: University of Adelaide Press.
Anderson, K., Kurzweil, M., Martin, W., Sandri, D., and Valenzuela, E. (2008). Measuring distortions to agricultural incentives, revisited. World Trade Review, 7(4), 675704.
Deconinck, K., and Swinnen, J. (2015). The economics of planting rights in wine production. European Review of Agricultural Economics, 42(3), 419440.
European Commission. (2006). Communication from the Commission to the Council and the European Parliament: Towards a Sustainable European Wine Sector. COM(2006) 319 and SEC(2006) 770. Brussels, Belgium: Commission of the European Communities.
European Commission. (2013). Wine CMO Financial Execution 2012. Commission Regulation EC 555/2008. Brussels, Belgium: Commission of the European Communities. Accessed March 15, 2015, at http://ec.europa.eu/agriculture/wine/reforms/index_en.htm.
European Court of Auditors. (2014). Is the EU Investment and Promotion Support to the Wine Sector Well Managed and Are Its Results on the Competitiveness of EU Wines Demonstrated? Special Report No. 9. Luxembourg: Publications Office of the European Union.
Gaeta, D., and Corsinovi, P. (2014). Economics, Governance, and Politics in the Wine Market: European Union Developments. London: Palgrave Macmillan.
Meloni, G., and Swinnen, J. (2013). The political economy of European wine regulation. Journal of Wine Economics, 8(3), 244284.
Organization for Economic Cooperation and Development (OECD). (2013). Producer and Consumer Support Estimates database. Accessed March 2015 at http://www.oecd.org/tad/agricultural-policies/producerandconsumersupportestimatesdatabase.htm#country.
Organization for Economic Cooperation and Development (OECD). (2015). Producer and Consumer Support Estimates database. Accessed July 20, 2015, at http://www.oecd.org/tad/agricultural-policies/producerandconsumersupportestimatesdatabase.htm#country.
Spahni, P. (1988). The Common Wine Policy and Price Stabilization. Aldershot, UK: Avebury.

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