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Jefford on Monday: Fear Stalks the Hills

What’s going on in the Douro? While wine drinkers across the wintry north smile at the prospect of a decanter brimming with vintage or crusted port to illuminate Christmas, those who grew the grapes are fearful and anxious – and not simply because of the travails of the euro and the battered Portuguese economy.

There have been three demonstrations in the region over the past six months, one of which saw broken windows at the Douro and Port Wine Institute’s offices in Régua.

Back in September, Daniel Campelo, the Portuguese Secretary of State for Forestry and Rural Development, called the five largest port shippers into his offices. He told them that the Douro farmers were in a desperate situation, and suggested that shippers pay them an additional ten per cent in 2011.

Since the five were seen, in best head-masterly style, one after the other, no communal response was immediately forthcoming – but the shippers have grievances of their own, and would certainly have told Senhor Campelo that a part of the problem is that the Douro is chronically mal-administered.

A few figures illustrate the crisis. The dramatic topography of the Douro makes it one of the world’s most labour-intensive vineyard areas. There are 38,400 farmers working the Douro’s 33,000 ha of vineyards, giving each farmer a notional average of 0.86 ha. (In fact 23,800 farmers are part-timers with less than 0.08 ha, but even full-timers often have very modest holdings.)

Slowing sales mean that production limits were set at 85,000 pipes of port in 2011, almost a quarter down on 2010’s figure of 110,000 pipes. (A pipe is 550 litres in the Douro.) The timing is catastrophic: pre-crisis optimism saw much recent planting. The regional surplus means that up to 100,000 pipes of wine have been denied fortification.

Yes, Douro table wine is the alternative – but, crucially, its production is not regulated in the same way that port production is, and its price is consequently much lower: around 200 euros per pipe compared to around 950 euros per pipe for port. The cost of growing the grapes for a pipe of either wine or port is around 600 euros in the lower Douro, rising to 800 euros in the higher (and higher quality) upper Douro. The table-wine price, in other words, is a distressed one. Why has the problem suddenly become politically acute? Because 85,000 pipes of port is simply not enough to keep 38,000 farmers in business.

The Douro’s organisational structure has long needed a radical overhaul. The ‘Sistema Moreira da Fonseca’ – an intricate and magnificently comprehensive vineyard classification instituted in 1947 – is still the basis on which the authorisations to make port each year are issued, yet it needs revision.

Varietal plantings didn’t exist in 1947; climate change means that the lower-graded, high-altitude plantings are, in 2011, looking increasingly attractive; the re-emergence of fine Douro table wine for the first time since Baron Forrester’s day has greatly changed the economic perspectives for some farms, but left others in a worse position still.

There is a flourishing, and technically illegal, trade in ‘paper’ each year (meaning the authorisations to make port), since not even the greatest port farms are at present allowed to produce port alone. Port, in effect, subsidises table wine in the Douro, yet with port sales on a gentle downward curve over the past half-decade, and with supermarkets and big retail groups striking ever more brutal bargains, port is barely able to carry its overweight sibling any further.

The administration of the Douro, meanwhile, is sunk in a bizarre quagmire, as it has been for two decades. The Casa do Douro was formerly both regional regulator and farmer’s union – and, fatally, it also traded in port: a double conflict of interest. In 1990, it made the catastrophic decision to buy 40 per cent of Royal Oporto; technical bankruptcy eventually followed.

Its legal powers were, between 1993 and 2003, re-appropriated by the government, with whom it is locked in a surreal argument about compensation for the land register which constitutes the basis of the vineyard classification and the issue of port authorisations.

Everyone growing wine in the region is still obliged to belong to the Casa do Douro, though many farmers have given up paying their subscription fees and leading farmers like Vito Olazabal of Quinta do Vale Meão and Cristiano van Zeller of Quinta do Vale Dona Maria have reportedly described it as an unrepresentative irrelevance.

For some impoverished growers in the region, though, the Casa do Douro is still seen as the ‘farmer’s friend’, and a bulwark against merchant exploitation. This, plus legal difficulties, may be one reason why the government has found it so hard to dispatch it once and for all.

A new interprofessional organisation (overseen by the Instituto dos Vinhos do Douro e Porto) is in place, but the fundamental reforms appear to be some way off, and in any case the Casa do Douro threatens to veto essential changes unless it is compensated for the ‘loss’ of the register.

Nothing is moving, in other words. And until port and table wine can be put on an equal fiscal footing, life may get still harder for those eking out a living on the lonely Douro terraces.

Written by Andrew Jefford

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