EU wine investment ‘not justified’

1st July, 2014 by Neal Baker

There is no justification for investment measures specific to the wine sector, according to a report published today by the European Court of Auditors (ECA).

19091_Logo_24LangThe report, conducted by the EU internal spending watchdog, claims that supportive measures for wine growers already exist under the overall EU rural development policy.

It also questions the role of EU grants for the promotion of wines, stating that “they were often used for consolidating markets, rather than winning new markets or recovering old markets”.

“The coexistence of similar investment measures under two different schemes is a source of complexity, which in some Member States has resulted in implementing delays or in an excessively restrictive scope of the eligible investments” claimed Mr Jan Kinšt, the ECA Member responsible for the report.

He continued, “Also, when the EU contribution incites enterprises to proportionally reduce their own funding for promotion actions, it becomes essentially a partial subsidy of these companies’ operational costs.

“This is not an efficient use of public money.”

The European Court of Auditors in Luxembourg

The European Court of Auditors in Luxembourg

The EU auditors found that there is a “lack of sufficient relevant information to show the direct results” of specific investment, and of the effects that were noticed, they “could not be easily separated from rural development investments” according to a statement attached to the report.

In the case of the promotion actions, although wine exports to third countries have significantly increased in absolute terms, the audit claimed that “EU wines have lost market shares in the main third countries targeted by promotion actions and that exports of EU wines not eligible for support also increased.”

Member States spent €522 million (£417 million) in EU funds under the promotion measure between 2009 and 2013. For 2014-2018, there has been a large increase in funds allocated to the Member States for this measure: €1.16 billion (£926 million).

There were apparent difficulties experienced by the Member States in spending the 2009-2013 budget initially earmarked for promotion actions, and so the ECA claim there is a risk that the 2014-2018 budget is set too high, “endangering the application of sound financial management principles.”

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