(Bloomberg) -- France, the world’s top wine producer, secured European Union funding of €120 million ($132 million) to pull up a slice of the country’s vineyards as global demand declines.
The European Commission approved funding for permanent removal of the vines, at a rate of of €4,000 per hectare, according an agriculture ministry statement. That would imply a reduction of about 30,000 hectares (116 square miles), or 4% of the total, according to a Bloomberg calculation.
“The situation of the wine sector is indeed worrying, with a very sharp drop in the harvest forecast due to climate change but also to the drop in wine consumption and a very tough competition,” the ministry said.
Global wine consumption continues to dwindle and production hit a 60-year low last year. Chaotic climate change conditions, along with changing drinking patterns and lackluster economic conditions, are hurting producers around the globe.
France has 789,000 hectares of vines, or 11% of the world’s vineyards, according to agriculture ministry data. Production is seen dropping to 40 million to 43 million hectoliters, down from about 48 million last year and below the five-year average, according to the forecasting department of the agriculture ministry.
The funding for the campaign “provides immediate support in the face of the market crisis facing the sector by contributing to the rebalancing of production volumes with regard to demand,” according to the statement.
--With assistance from Muneeza Naqvi.
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