How Much Government Assistance Do European Wine Producers Receive?

Abstract

AbstractThe European Union's (EU) long-standing financial support for its wine industry has been nontrivial but very difficult to estimate. The Organization for Economic Cooperation and Development's (OECD) generic producer support estimate methodology has been able to capture some of the supports, but it excludes such measures as subsidized distillation of low-quality wine, grants to promote wine generically, protection via import tariffs, and grubbing-up premiums. Nor does the OECD disaggregate EU supports to individual member countries. This article provides a new set of more complete estimates of support to EU wine producers. It also reveals how unevenly those supports are spread across EU member countries. The new estimates suggest that during 2007–2012, annual assistance amounted to approximately 700 euros per hectare of vines or 0.15 euros per liter of wine produced in the EU as measured at the winery gate. That is equivalent to a nominal rate of direct plus indirect producer assistance of approximately 20%. (JEL Classifications: F14, H25, L66, Q18)