(1)

Article 30 of Regulation (EC) No 1493/1999 provides for the possibility of opening crisis distillation in the event of exceptional market disturbance due to major surpluses. Such measures may be limited to certain categories of wine and/or certain areas of production and may apply to quality wines psr at the request of the Member State.

(2)

By letter of 7 June 2002, the Portuguese Government requested that crisis distillation be opened in Portugal for 250 000 hl of wine, mainly quality wine psr, produced on its territory (Vinho Verde produced in the Minho region) and for some of the table wine which was not accepted for distillation under Article 29 of Regulation (EC) No 1493/1999.

(3)

Wine production in Portugal was 3,7 million hectolitres in 1998/99 and 7,8 million hectolitres in 1999/2000. It stood at 6,6 million hectolitres in 2000/01 and the latest estimates for the current wine year put table wine production at 7,6 million hl.

(4)

Stocks of wine in Portugal amounted to 7,3 million hectolitres in 1999/2000 and 9,1 million hectolitres in 2000/01, showing a substantial increase (25 %) over the previous wine year. According to Portuguese forecasts for the current wine year, stocks are set to reach 10,2 million hl, representing a further increase of 12 % over 2000/01.

(5)

Portugal thus has around 2,1 million hectolitres more in store now than it did in the 2000/01 wine year. Neither the quantities accepted for voluntary distillation in 2001/02 (695 224 hl), nor the other intervention measures such as private storage for wine (486 000 hl) have had a sufficient impact on the market in wine in Portugal to reduce the stock surplus. According to the Portuguese authorities, this substantial wine surplus has pushed down prices, in particular for Vinho Verde, which has fallen by around 40 %. Production estimates for the next harvest suggest the same high level as for the current wine year.

(6)

Despite a significant increase in intervention during this wine year, and despite the crisis distillation of 450 000 hl launched during the previous year, under which 580 000 hl were actually distilled, stocks were 11 % higher than for the previous wine year and more than 15 % higher than in 1999/2000.

(7)

Production, particularly of Vinho Verde in the Minho region, is substantially higher than in previous wine years, while consumption is falling. According to the figures provided by the Portuguese authorities, stocks increased by 25 % during the last wine year. The specific characteristics of this wine entail a rather short storage period and a low alcoholic strength.

(8)

The crisis distillation measures decided during the 2000/01 wine year have definitely had a positive effect in terms of stabilising prices for a period, but they have proved insufficient when set against the large increase in stocks, which are depressing the market and preventing a return to balance.

(9)

In order to reverse this negative trend in prices and sales, stocks of table wine and quality wine psr should be reduced to a level that can be regarded as normal in terms of covering market requirements, and so deal with the difficult situation on the market. Stocks that have built up over the last three years must be reduced to a reasonable level reflecting more normal consumption requirements.

(10)

Since the conditions laid down in Article 30(5) of Regulation (EC) No 1493/1999 are still satisfied, a crisis distillation measure should be opened for a maximum of 250 000 hl of quality wine psr and table wine in order to reduce stocks to an acceptable level. The measure should apply for a limited period with a view to maximum effectiveness. No ceiling should be set on the quantity that individual producers can have distilled because stocks may vary substantially from one producer to another and depend more on sales than on the individual producer's annual output.

(11)

The mechanism to be introduced is the one provided for in Commission Regulation (EC) No 1623/2000 of 25 July 2000 laying down detailed rules for implementing Regulation (EC) No 1493/1999 on the common organisation of the market in wine with regard to market mechanisms ( 3 ), as last amended by Regulation (EC) No 1315/2002 ( 4 ). In addition to the Articles of that Regulation that refer to the distillation measure provided for in Article 30 of Regulation (EC) No 1493/1999, other provisions of Regulation (EC) No 1623/2000 apply, in particular those concerning the delivery of alcohol to intervention agencies and the payment of advances.

(12)

The price to be paid by distillers to producers should be set at a level that permits the problems faced to be solved by allowing producers to take advantage of this measure. In order to recognise the greater quality effort required of producers of quality wine psr, a slightly higher price should be set for this product. However, that price should not be set at a level that might adversely affect the application of distillation under Article 29 of Regulation (EC) No 1493/1999.

(13)

The product of crisis distillation must be raw or neutral alcohol only, for compulsory delivery to the intervention agency in order to avoid disturbing the market for potable alcohol, which is supplied largely by distillation under Article 29 of Regulation (EC) No 1493/1999.

(14)

The measures provided for in this Regulation are in accordance with the opinion of the Management Committee for Wine,