Italians dig up vines, wine output growth slows

What follows is a Reuters story about how the Italian government is paying an incentive to growers for digging up their vines in order to cut back wine output.

Wed Jul 15, 1:18 pm ET

MILAN (Reuters) – Wine output growth in Italy, a major producer, will slow down this year after farmers dug up vines because of incentives under the European Union wine sector reform, research showed on Wednesday.

Italy's wine output is expected to rise 5 percent from 4.6 billion liters (1.012 billion Imp gallons) produced in 2008, when it jumped 8 percent, farmers' research center ISMEA and wine industry body Unione Italiana Vini (UIV) said in a statement after conducting joint research.

With growers actively digging up vines, this year's output is likely to be below a 4.8 billion liter average of the past five years, but much depends on a weather ahead of harvesting, ISMEA and UIV said citing preliminary estimates.

The EU reform, which started in August 2008, offers cash to less competitive winemakers to dig up vines to cut back output aiming to drain Europe's "wine lakes." Under a three-year scheme, the cash premium is the highest in the first year.

Italian winemakers applied for cash to subsidize the removal of 11,600 hectares of vines in the 2008/09 year, the research said. The figure compares to a total of 788,393 ha under vines in Italy in 2008, according to Italy's statistics agency ISTAT.

The EU reform aims to remove 175,000 ha of land under vines out of the EU's existing 3.6 million ha.

Italian growers' increasing efforts to prune grapes to improve quality would also rein in quantity, the research said.

Wine output in Tuscany, famous for its Chianti red and its premium cousins Brunello di Montalcino and Nobile di Montepulciano, is expected to be flat on last year, it said.

The region of Piemonte, known for its full-body red Barolo, is likely to see a bigger wine output this year, while forecasts are stable or slightly higher for Italy's main wine producing regions, Sicily and Puglia.

Wine harvesting is expected to start about 10 days earlier this year spurred by hot weather, Italy's biggest farmers group Coldiretti said in a separate statement.

(Reporting by Svetlana Kovalyova, editing by Anthony Barker)