89% in Languedoc face financial difficulties: report

As the EU slashes winemaking subsidies, Languedoc winemakers' fortunes are plummeting, according to new figures released this week

The European Union this week signalled its intention to stop spending an annual €1.3bn on subsidising the wine sector.

At the same time a study released by France’s Centre for Rural Economy Studies (CER), shows the situation for winemakers has worsened over the past three years, with 89% saying they will be in severe difficulties by the end of 2006.

The study is based on survey of 1215 winemakers in the region, looking at their financial situations for 2004, 2005 and projected for 2006.

Vincent Lacanal, the regional director of CER, said, ‘Independent winemakers are those who are suffering the most. Winemakers who sell to cooperatives have from the buffering effect of a body that can dig into its own reserves, or offer loans to help out.’

He suggested that the EU’s recent decision might not be widely welcomed.

‘The percentage of businesses in difficulty has doubled in the last two years, and pulling up of vines has made the profitability worse in the short term. The decrease in vines after grubbing up means a rise in the cost of production for the vines that remain because certain fixed charges [such as salaries, interest on loans, taxes, and insurance] don’t change.’

Lacanal added, ‘I know these figures are depressing, but it’s important to make them public so we can face what has to be done, and re-orientate the market towards the sectors of winemaking that are profitable.’

See also:

EU plans radical overhaul of wine sector

Written by Jane Anson