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. Last Updated: 07/27/2016

EU Offers Cash to Solve Wine Crisis

BRUSSELS -- Europe's farm chief unveiled an ambitious five-year plan Wednesday that offers generous cash rewards to winemakers to encourage them to dig up some of their grape vines, hoping to drain the EU's substantial "wine lakes."

Under a plan to start in August 2008 -- if the European Union's farm ministers agree -- subsidies to vineyards would fall gradually each year in a carrot-and-stick approach to promote early "take-up."

Authored by EU Agriculture Commissioner Mariann Fischer Boel, the plan would scrap crisis distillation -- an emergency subsidy used to correct market imbalances and a huge drain on the EU wine budget of 1.3 billion euros ($1.77 billion) per year.

The EU is the world's largest producer, consumer, exporter and importer of wine.

In recent years it has lost part of its traditional export markets to cheaper wines from Australia, Chile and the United States, and seen a surge in imports.

Fischer Boel's ideas have annoyed several EU governments, especially the main wine countries of southern Europe such as France, Spain and Italy -- the world's top three producers. Together, the trio accounts for 80 percent of the EU vine area. EU wine policy was last reformed in 1999.

A cornerstone of the plan is to remove the least competitive producers from the market by offering a subsidy if they dig up their vines.