Monday, April 04, 2005

French winemaker terrorists

Professor Bainbridge linked to a UK news article about "radical wine producers" in France who used dynamite to bomb government offices in Southern France. The professor explained:
France's wine producers are in a crisis, but one they brought upon themselves. Over-production coupled with an inability to compete successfully in world markets has left French producers with a vast excess both in inventory and production capacity. Predictably, however, even non-extremist French wine producers expect the government to bail them out instead of taking personal responsibility for their own problems:
The news article detailed those problems:
Apart from an increase in the €70m in special aid and €3m in export subsidies already promised, the wine growers are demanding more government cash and permission from the European Commission for the subsidised distillation of 2,500,000 hectolitres of red wine to reduce the French "wine lake", which is depressing wholesale wine prices. This is equivalent to removing 333 million bottles of wine from the market by turning them into industrial alcohol. [emphasis added]
This reminds me of the agricultural component of the U.S. Great Depression. Overproduction caused prices to plummet, and when farmers' total earnings started falling, they thought they could produce more to make as much as before. But it generated a cascade reaction: the increased supply lowered prices further, and when farmers tried growing more to compensate for that, prices fell even further. (This is like the "death spiral" of raising taxes.) FDR's solution was that the federal government start paying farmers to destroy crops and livestock, or even to refrain from growing and raising them. It's a dangerous and revolting practice that continues today; even today, we waste so much good food because farmers are stupid enough to grow too much. And like the French winemakers, they want the government to bail them out.

The French government should allow the free market to correct the overproduction problem: stop the wine subsidies. It's the government subsidies that have had a large part in creating France's wine glut, not just sustaining it: the subsidies encourage the least-efficient winemakers to stay in business though they don't have a comparative advance in it. Without subsidies, these winemakers would go out of business, leaving only those winemakers who could afford to stay in business at equilibrium prices.

Are French wines losing their reputation, are global consumers starting to look at the Australian and Chilean competitors, is the European Central Bank's monetary policy too tight (that the euro is too strong)? It's some combination of the three. Are French wines becoming so uncompetitive? Subsidizing the wine industry makes as much sense as the state of Texas subsidizing oil wells. (That brings up something I'll only touch on. Actually there are some U.S. federal tax incentives for the oil industry, mainly for exploration and new wells.)

I have fairly simple tastes when it comes to wine. With red meat, like a well-seasoned ribeye steak, I'm more than happy with an Australian Shiraz. I'm partial to Rosemount, whose varietals I find are generally excellent for the price. With fish and poultry, I like a citrus-hinting sauvignon blanc from New Zealand's Marlborough region. California Chardonnays tend to leave me dry (no pun intended) with their usual heavy, frequently over-oaked nature.


Blogger Brad Warbiany said...

If you're a big fan of Shiraz, you might enjoy good Sonoma County Zinfandels. Specifically, the Dry Creek or Russian River valley appelations. I'm extremely partial to Belvedere, myself. That may be difficult to find, so if you can't get your hands on it, check out Valley Of The Moon, or if you can't find that, the Kenwood Jack London Zinfandel is excellent.

The Sonoma wines are much lighter and less overpowering. I even usually prefer the Sonoma Cabernet to that from Napa. But the red that is done best in Sonoma is Zinfandel.

Monday, April 04, 2005 10:50:00 AM  
Blogger Perry Eidelbus said...

I love a good zin too. St. Francis Old Vines Zinfandel, not too bad for such a yummy wine.

Tuesday, April 05, 2005 12:05:00 AM  
Blogger Brad Warbiany said...

St Francis is right down the street from Kenwood, and on the same street but a mile or two from Valley of the Moon... Good stuff, been there a few times.

Tuesday, April 05, 2005 12:11:00 PM  
Blogger Perry Eidelbus said...

On my vacation to Sonoma a few years ago, I went to St. Francis, and also Chateau St. Jean. This summer I might go again, and visit a few others.

As I said, I'm not a Chardonnay fan, but thinking back, I really liked St. Francis' Yamakawa Chardonnay. I taste too much oak in most California Chardonnays, as if they're trying to compensate for a lack of other flavor.

Wednesday, April 06, 2005 12:05:00 AM  

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