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There is an arm wrestling match between the European Commission and the Agriculture Committee of the European Parliament on delegated acts for exceptional market measures for the wine sector. MEPs objected to one of the acts in order to obtain more ambitious support, notably for the wine and fruit and vegetable sectors. The Commission announced that it would propose a new act “before the summer” and before Parliament takes a final position of rejection (or not) at its July plenary session. 

Concerning Covid direct aid which could be financed by EAFRD balances, ComAgri members also voted to increase the funding ceiling for the measure to 2% of the total EAFRD of each Member State, as opposed to the 1% proposed by the EC. 

As part of the revival of the agricultural and agri-food sectors, the recovery plan unveiled by the European Commission includes €15 billion to boost the rural development fund, and the revised MFF allocates an additional €5 billion to the second pillar and €4 billion to the first pillar (€2018) that the Commission’s proposal of June 2018. As a reminder, the CAP 2021-2027 budget proposed by the committee shows a slight increase in current euros (and a decrease of 34 billion in constant euros, taking into account the non-integration of inflation). 

 Highlights in chronology 

05/19 USDA details the Coronavirus Food Assistance Program

05/20 Two new strategies for more sustainability… and safety?

05/25 Extension of corridor’s rules to Germanyowski à l’appel du secteur viticole

05/26 MEPs reiterate their request for amendments to delegated acts

05/27 A €750 billion coronavirus recovery package

05/27 Commission rejects ComAgri’s applications

05/29 Paris announces wine support

05/29 World trade is expected to fall by 10 to 16% in 2020

06/02 ComAgri insists for more aid for wine, fruit, vegetable sectors

06/04 The threat of stimulus funds too late

06/08 Some agri ministers voice for a new package of aids measures 

06/08 Italy launches its “export pact”

06/09 Commission announces additional measures for wine

06/11 Agri MEPs agreed on a revised Rural Development temporary support plan

06/12 New ComAgri’s call for wine, fruit& vegetables sectors

06/12 Budget call for wine sector recovery

06/12 Review of the State Aid’s Temporary Framework

06/16 €2 billion loss for the Italian wine sector


05/19 USDA details the Coronavirus Food Assistance Program 

The US Department of Agriculture (USDA) announced details of its Coronavirus Food Assistance Program (CFAP), providing up to $16 billion (€14.7bn) in direct payments to farmers hit by the pandemic. Through its Farm Service Agency*, the USDA will accept applications from May 26. The sources of funding are some $9.5bn (€8.7bn) under the Coronavirus Aid, Relief, & Economic Stability (CARES) Act to compensate farmers for losses due to price falls between mid-Jan & mid-Apr 2020, with a further $6.5bn (€6bn) from the Commodity Credit Corporation Charter covering losses due to on-going market disruptions.*https://www.farmers.gov/cfap 


05/20 Two new strategies for more sustainability… and safety? 

The Commission unveiled the Farm to Fork and Biodiversity strategies. 

On paper, the COVID-19 pandemic plays a central role in the text, as it brings to the fore “the importance of a robust & resilient food system that functions in all circumstances … capable of ensuring access to a sufficient supply of affordable food for citizens.” Authors of the text underline the importance of such a food system, particularly in the post-pandemic era. 

However, the combined two proposed strategies, if implemented as such, would result first and foremost in a reduction of 15% EU agricultural production and a sharp decline of EU food security. 

They propose very precise restrictive measures to be implemented by 2030 on inputs use, on the share of agricultural land to be let unproductive (10%) and on the share of EU agricultural land under organic farming (25%). 

These proposals were presented without providing an impact assessment by the Commission. 


05/25 Farm Commissioner’ answer to wine sector plea 

Farm Commissioner Janusz Wojciechowski rejects the proposal of 70 MEPs who wrote to him on April 15 seeking more help for the wine sector. He told them that the EC is not prepared to support grubbing up of vineyards, “or of any permanent crops such as fruit orchards,” because such schemes have “in the past, given a negative image of European agriculture & of the CAP.” “The solution to today’s crisis is not the destruction of producers’ production potential,” Wojciechowski adds. 

The reinforcement of promotion activities, which the MEPs also requested “was done already in Jan to address the consequences of the imposition of a 25% tariff on US imports of certain European wines,” he further explains. The Commissioner rejects the MEPs’ call for a derogation to the labelling rules regarding vintage, saying it is “very difficult to understand”. 

On their request for a compensation fund for the sector, he explains that the EU was “facing a critical situation in terms of current budget, & no agreement on the future MFF has been reached yet.” 

Faced with pressure from the European Parliament, a meeting was subsequently held between the Comagri coordinators and the Commissioner, who began to show more openness. 


05/25 Extension of corridor’s rules to Germany 

At the beginning of April, the two federal ministries, with the involvement of the Robert Koch Institute, had created a responsible corridor for the entry of 40,000 seasonal workers in April and May – under strict infection control conditions. These include, among other things, a health check at the airport after landing, the transmission of the results to the responsible health authority, a 14-day de facto quarantine after arrival, strict distance and hygiene regulations in the companies, a lower occupancy rate in the accommodation and working in as small and consistent groups as possible. 

The two Federal Ministers have agreed to the extension. The requirements for health, work and infection protection will remain in place, as will the contingent of 80,000 workers in total. This quota is currently not exhausted: so far, about 33,000 seasonal workers have entered the country. 


05/26 MEPs reiterate their request for amendments to delegated acts 

In an exchange of views with the new Director-General of DG Agri, Austrian Wolfgang Burtscher, MEPs raised the lack of response to their requests for amendments to delegated acts that are currently insufficient to support the wine and fruit and vegetable sectors. The extension of the public storage aid measure to the poultry and pasteurised milk sectors was also asked. 


05/27 A €750 billion coronavirus recovery package 

Commission Chair Ursula von der Leyen unveiled a €750 billion coronavirus recovery package – the so-called Next Generation EU instrument – promising a green, digital & resilient Europe in the post-pandemic era. The new emergency tool comes in addition to the revamped long-term EU Budget of €1.1 trillion – bringing a total “financial firepower” to €1.85trn. The stimulus package includes an additional €15bn earmarked for Rural Development. Under the rules, the distribution key among MS will remain the same, while there will be a shorter spending time (end of 2024) as the extra expenditure is part of the ‘recovery’ part. 

Financing the Next Generation EU will be raised by temporarily lifting the ‘Own Resources’ ceiling to 2% of EU Gross National Income (GNI), allowing the Commission to use its credit rating & borrow up to €750bn on behalf of the Union on the financial markets. This would be done through the issuance of bonds, for measures during the recovery period (2021-2024). The additional funding would be channelled through Community programmes, through grants (€500bn) & loans (€250bn). Proposals on additional new own resources – poss. planned extension of the emissions trading scheme, carbon border adjustment mechanism to counterbalance imports of cheap product from abroad or a new digital tax on companies with a global annual turnover of above €750 million – are expected to be tabled at a later stage of the financial period. 

The central plank of the package is the ‘European Recovery & Resilience Facility’ – worth €560bn (grant facility up to €310bn & €250bn in loans) aimed at investment & reform in green & digital transitions. The latter would be available to all Member States, with a “focus on the most affected countries.” The Recovery & Resilience Facility together with Cohesion Policy [an additional €55bn between now & 2022] & the Just Transition Mechanism (up to €40bn) will be “instrumental” in achieving these goals, while the reinforced CAP 2nd Pillar (additional €15bn) “will support rural areas in making the structural changes necessary in line with the European Green Deal.” 


05/27 Commission rejects ComAgri’s applications 

Farm Commissioner Janusz Wojciechowski has answered letters from COMAGRI Chair Norbert Lins, with a breakdown of why the changes the MEP wants to see in measures for cheese, wine, beef & fruit & vegetables cannot be made. 

Wojciechowski urges the EP & Council not to object to the necessary Delegated Regulations without delay, so the market measures can go ahead. On concerns raised by Lins over private storage aid for cheese, Wojciechowski stressed that the eligibility criteria are designed to avoid subsidising storage, which would have taken place in any case, because it is part of the cheese-making process. It remains to be seen if the EC will consider the redistribution mechanism included in the Delegated Act opening Private Storage Aid (PSA) for cheese, for quantities not claimed. At the Ministerial discussion on May 13, Italy & Lithuania slammed the quota distribution “only per production” key, as it failed to take into account export proportions (a point backed by Ireland). The Commissioner rejects the idea of allowing MS to set sub- quotas within the quantities allocated to them as the same conditions for access must apply everywhere in the EU. 

On PSA for beef, Wojciechowski points out that the aid is limited to hind quarters because it is designed to respond to a shift in demand away from steaks due to the closure of restaurants. He indicates that some of the measures the MEP suggest for fruit & vegetables were “not possible under the current financial circumstances”. 

On wine, Wojciechowski points out that the funds under National Support Programmes would have been underspent, particularly because operations may not have been completed because of the pandemic. In response to a call for an additional budget for fruit & vegetables, Wojciechowski reminds that the EU was “facing a critical situation in terms of the current budget”. 


05/27 Commission launches trade policy review 

Wishing to draw lessons from the Covid-19 crisis, the European Commission has decided to launch a thorough review of EU trade policy. The vision at the heart of this review, which is expected to be completed by the end of 2020, is a new concept of “open policy autonomy”, which foresees a continuous opening of markets to discourage import and export restrictions while strengthening shorter chains to improve the EU’s autonomy and self-sufficiency. 

In parallel with the trade policy review, the Commissioner indicated that a profound reform of the WTO must be carried out before the end of the year. 


05/29 Paris announces wine support 

France has introduced a series of support measures for the wine sector. This plan* adds €30 million to €140m announced on May 11. It includes €15m for a private storage aid scheme covering 2 million hectolitres, to complement crisis distillation. The budget envelope for crisis distillation has been increased by €5m for fixed purchase price of €78/hl for AOP (Appellation d’Origine Contrôlée) & IGP (Indication Géographique Protégée) wine & €58/hl for VSIG (Vins Sans Indication Géographique). There will be an aid paid to distilleries of €40/hlap (hectolitre d’alcool pur) up to a total envelope of €10m. The Government also confirmed that wine sector companies particularly affected by the COVID-19 crisis will be eligible for a planned exemption from employers’ social security contributions. *https://agriculture.gouv.fr/filiere- viticole-le-gouvernement-annonce-un-nouveau-programme-de-soutien 


05/29 World trade is expected to fall by 10 to 16% in 2020 

The European Commission estimates that world trade is expected to fall by 10-16% in 2020. A month earlier, the forecast was 9.7%. For the EU, the contraction is expected to be between 9 and 15% for exports to third countries and between 11 and 14% for imports from third countries (including goods and services). The Commission points out that exports of primary sectors (other than energy) and trade in services are less affected than manufacturing sectors, although most of them see their exports contract by 15%. 


06/02 ComAgri insists for more aid for wine, fruit, vegetable sectors 

The European Parliament’s AGRI Committee voted to recommend that Parliament vetoes a delegated regulation adopted by the Commission, saying that the market measures for wine, fruit & vegetables it contains do not go far enough. COMAGRI MEPs want the Commission to add additional targeted measures, inc. increased co-financing rates & an extended list of eligible measures & expenses under the fruit & vegetables operational programmes. They also want the carry-over of unused funds from these programmes to the next year to be allowed, & call for greater flexibility in regulations on national wine support programmes. The Committee set the deadline for a potential veto by Parliament for Aug 31 to give the Commission more time to come up with improved proposals. 


06/04 The threat of stimulus funds too late 

The long lead time to mobilize in EU funding for the coronavirus crisis is sinking agriculture, said Coldiretti president Ettore Prandini. “We are very concerned – stressed Mr Prandini – about the timing of the resources made available by the EU to address the coronavirus emergency, while the Regulation foresees that these new funds cannot be used before 2022 at the earliest”. 


06/08 Some agri ministers voice for a new package of aids measures 

French and Spanish delegations voiced the necessity to table further measures for some specific sectors as a consequence of the combined effect of the Covid19 and US tariffs. In particular, France asked storage for veal, pigmeat and goat meat already frozen, and the establishment of a wine compensation fund, while Spain argued for storage aid for the olive oil sector. 

Commissioner Wojciechowski replied that “to this time there was no reason for market intervention”. For the wine sector, Commissioner recognized controversies with the MEPs and referred to further discussion with coordinators. 


06/08 Italy launches its “export pact” 

“74% of food companies that export have recorded a drop in their foreign sales due to a rain of cancellations from customers from all over the world”, according to the Coldiretti/Ixè survey, which shows that “the heaviest bill was paid by the wine and flower sector, but difficulties are also reported for fruit and vegetables, cheese, cold meats and preserves”. 


06/09 Commission announces additional measures for wine 

Commissioner Wojciechowski announced to ComAgri political group coordinators that he would present “before the summer” a new delegated act containing measures to provide additional support to the European wine sector. The promised new provisions should make it possible to increase the co-financing rates for promotion, green harvesting and restructuring measures, to extend the period for planting vines for the year 2020 until July 2021 and to trigger the crisis cartel measure allowing operators to agree on quality requirements, marketing and joint promotion. Anne Sander, Parliament’s negotiator on the CMO, hopes for further progress. 


06/10 the worst recession outside of wartime in 100 years 

The coronavirus pandemic is on track to cause the worst recession outside of wartime in 100 years, the Organization for Economic Cooperation and Development warned. 

Global supply chains have been halted, inequality and debt levels have soared, and confidence levels have fallen. 

“The recovery will be slow and the crisis will have long-lasting effects, disproportionately affecting the most vulnerable people.” 

Laurence Boone, chief economist at the OECD, told that “the uncertainty we are facing is very high,” but the organization expects economic activity to pickup in the coming months. 

“We are going to see an upturn, which will look like a V-shape recovery” Boone said. A so-called “V-shaped” recovery refers to a sharp decline in economic activity which is then matched by an abrupt rebound. 

“But, because tourism, entertainment, leisure, and so on cannot work as before, this V will start very quickly and then the climb up to where we were before is going to be much more difficult,” she added. 

The OECD published two forecasts for global growth: the first assuming there is a second wave of Covid-19 infections; the second assuming a second wave is avoided. 

In its first scenario, the OECD said global growth will contract by 7.6% in 2020, and “remain well short” of its pre-crisis level by the end of next year. If there is no second wave, the OECD said the world economy will still contract by 6% in 2020, but will recover to almost pre-crisis levels by the end of 2021. 

“Both scenarios are sobering, as economic activity does not and cannot return to normal under these circumstances,” the OECD said. “By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.” 

France, the United Kingdom, Spain and Italy are expected to face the sharpest economic contractions this year. These countries are among those worst-hit by the health crisis so far. 

However, growth in the United States is also expected to contract by 7.3% in the single-hit scenario and by 8.5% if there’s a second wave. 


06/11 Agri MEPs agreed on a revised Rural Development temporary support plan 

The EP’s Agriculture Committee has agreed rules designed to give farmers and small & medium sized agri-food businesses more financial support from rural development funds. They voted unanimously to adopt a set of amendments, already formally agreed with Council, to improve the EC’s proposal. The plan involves allowing MS to make lump-sum payments to help farmers & rural businesses continue to operate amid the pandemic. 

The new changes involve raising the ceiling for payments to individual farmers to €7 000, €2 000 more than proposed by the EC. They made no change in the proposed limit of €50 000 for payments to agri-food SMEs. COMAGRI members also voted to raise the limit on finance for the measure to 2% of the total contribution from the EAFRD to RD programmes in each MS, from the 1% proposed by the EC. They also agreed to extend the Dec 31, 2020 deadline for payments under the scheme to June 30, 2021. Applications will have to be approved before Dec 31, 2020. 


06/12 New ComAgri’s call for wine, fruit& vegetables sectors 

COMAGRI Chair Norbert Lins has again pressed Commissioner Janusz Wojciechowski on further assistance for the wine and fruit & vegetables sectors. 

Lins notes that his Committee colleagues had asked Wojciechowski to “explore” the idea of flexibility for the wine sector on rules for labelling of harvesting year. They had also asked for “further clarification on the concrete possibility to use state aids to finance the measures that would be adopted by operators in accordance with Article 222 of the Single CMO Regulation”. Lins reiterates “on behalf of the coordinators,” the need to increase co-financing rates for fruit & vegetables & “increase the scope of actions” under the Wine National Support Programmes, to cover wine tourism. Lins also calls for the reestablishment of a High-Level Group to discuss the future of the wine sector, “to re-establish trust & dialogue between the Commission, the EP & the wine sector.” 


06/12 Budget call for wine sector recovery 

The Assembly of European Wine-growing Regions (AREV) has urged the Commission to put in place an extraordinary budget to fund the recovery of the wine market. The organisation would also like to see the (re)establishment of a high-level group set up to propose measures to stimulate the sector. 

The wine-producing regions deserve a “real & urgent” recovery plan to improve the sector’s economic & environmental performance, with a special budget, something which has been done in the meat & dairy sectors. The proposed high-level group would be made up of representatives of the EC, MEPs & stakeholders, with the aim of making recommendations before the end of September on how to stimulate the sector & ensure the sustainable development of wine- producing regions. It would look at promotion on EU & 3rd country markets as well as consider other contributions that the sector can make, such as wine tourism. AREV would also like to see market measures, such as green harvesting, distillation & storage, maintained in 2021, with the possibility of flexibility on the blending of vintages. 


06/12 Review of the State Aid’s Temporary Framework 

The Commission is seeking to further extend the scope of the State Aid Temporary Framework (originally adopted on March 19) to support certain small & micro businesses inc. start-ups that were already in difficulty before Dec 31, 2019. A draft proposal sent to national capitals for consultation would also provide incentives for private investors to take part in recapitalisation measures related to the COVID-19 crisis. 


06/16 €2 billion loss for the Italian wine sector 

The wine sector between March and May 2020 in Italy alone lost some €2 billion, “which is equivalent to 20% of the unrecoverable revenue in 2020”, according to an analysis of wine consumption before and during the lock-down in Italy, presented by Davide Gaeta, associate professor at the Department of Business Economics at the University of Verona. 

For Italy, two thirds of respondents (1,146 in total) said they had reduced wine consumption in forced confinement; there was an increase in on-line purchases with a 15.5% share going beyond the wine shop channel and directly to the cellar despite the massive organisation of deliveries (chosen by 10.5% and 14.3% of the sample respectively). 

For Davide Gaeta, “the analysis of consumption before and during the confinement highlights the current liquidity crisis of Italian wineries, to which is added the dramatic difficulty of revenue even in relation to sales on the horeca market at the end of 2019. We now need urgent economic policy measures to restore consumption growth. One lever could be the reduction of a few VAT points, as well as a new approach to the consumer. Approximately 70 % of the sample concerned is sensitive to the purchase of local wine to support the economy and cellars of the region’

The 20% loss of turnover in the Italian wine sector predicted by analysts in 2020 will have a significant impact on company balance sheets. According to Luca Castagnetti, director of the management studies centre DiVino, who analysed a sample of 618 companies (all companies in the sector with sales of 3 million euros or more) simulating performance in 2020, “the projections see small companies making significant losses (Ebit, i.e. operating profit before financial charges and taxes, at -3.6%). A significant drop also for medium-sized companies (Ebit -2.3%), compared to a stable average over the last three years of +4%; for companies with revenues of more than 30 million euros, the simulation shows a positive Ebit value of 1.1%, but compared to a value of +5.7% in recent years. 

According to Mr Castagnetti, “the cancellation of management cash flows will cause the need for financial instruments to explode, with an increase which, for companies, from 3 to 10 million euros, will be 7 times higher than in the pre-Covid period”. One necessity, that of financial intervention, which according to the analyst will be fundamental to defend the supply chain against excessive downward pressure for grapes and wine and thus to maintain the balance of the distribution of value.