Official Report: Minutes of Evidence

The Chairperson (Ms Ferguson): I welcome Alison Chambers, director of the sustainable agri-food development division; Samantha Swann, head of the poultry meat, eggs, dairy, hops, hemp, wines and spirits policy branch; and Kieran Coghlan, deputy for the food security, beef, sheep and pigs policy branch. I thank you for coming along this morning. When you are ready, brief the Committee.

Ms Alison Chambers (Department of Agriculture, Environment and Rural Affairs): Thank you very much, and good morning, everyone. It is lovely to be here. Thanks for the invitation. I understand that you have already received the impact assessment, as you have just referenced, Chair. That includes a link to the explanatory memorandum, which was prepared by DEFRA.

The proposed regulation was published on 28 March, following recommendations that were made by the High-Level Group on Wine Policy. That group was established to discuss the challenges and to identify possible opportunities for the Union wine sector. The Union wine sector faces a significant crisis, which is driven by a steady decline in wine consumption within the Union and globally. Geopolitical factors and the effects of climate change have worsened the situation, and excess production has put pressure on prices, which is leaving winegrowers with less capital to invest and low financial reserves to weather the severe effects and events. After four meetings, the group endorsed a document, with policy recommendations, in December 2024. The recommendations were broadly welcomed by stakeholders and MEPs in the meeting of the Committee on Agriculture and Rural Development of 13 January 2025.

Due to the positive reaction to the recommendations, the most urgent and sector-specific recommendations have been translated into legislative proposals to help the wine sector address the serious challenges that it faces and become more competitive on the global market. Subject to EU adoption and the democratic mechanisms contained in the Windsor framework, the proposed amendments to regulation (EU) No 1308/2013 will make it easier for member states to address or prevent risk of surplus production capacity by allowing changes to the vine-planting rights arrangements; amend rules on the production of lower-alcohol wine to improve arrangements for the production of low-alcohol sparkling wine, introduce rules to harmonise the use of terms to describe lower-alcohol wine and other rules concerning the labelling of wine; and permit the Commission to come forward with proposals to harmonise the rules on the electronic labelling of ingredients and nutrition information on wine. Subject to EU adoption and the democratic mechanisms contained in the Windsor framework, the proposed amendments to regulation (EU) No 251/2014 will permit the production and marketing of lower-alcohol aromatised wine products, bringing them in line with rules for the alcohol-free labelling of wine products.

Amendments proposed to regulation (EU) 2021/2115 and (EU) 2021/2116 will not apply in Northern Ireland as those regulations do not fall within annex 2 to the Windsor framework. The aim of those amendments is to allow vineyards to restructure to avoid an increase in production; permit producer groups that manage protected designations of origin and geographical indications to benefit from support for developing wine tourism; and to increase investment to mitigate climate change impact.

Changes to marketing standards rules to harmonise the labelling of alcohol-free wine and the e-labelling of wine-sector products and measures relating to the marketing of aromatised wine will lead to a divergence from rules applicable elsewhere in the UK. However, it is the view of the Department that the impact of that divergence will be minimal, given the fact that e-labelling arrangements and rules for producing and marketing partially de-alcoholised and de-alcoholised wine already exist on the market in Northern Ireland. The proposed changes would not add significantly to the existing divergence. Therefore, we consider the impact to be very low and the risk to be low. It is also the view of the Department that no impact is expected from proposed EU updates to support vineyards and winemakers, as there are no wine producers in Northern Ireland.

In view of the crisis that the Union wine sector is facing, the European Commission has suggested that the measures, except those for the new labelling rules, should enter into force as soon as possible. The new labelling rules will need to apply later in order to give producers time to adapt and to allow for the sale of stock that was labelled according to the previously applicable rules to be exhausted. The European Commission indicated that the proposed policy measures should be implemented within a coherent national strategic framework to maximise their effectiveness. Member states must evaluate their impact to ensure efficiency, cost-effectiveness and long-term benefits. Key priorities include avoiding market imbalances, preserving landscapes, sustaining rural employment and enhancing the competitiveness of vine growers and wine producers.

DAERA's assessment is that it is not likely that the proposed amendments would have a significant impact specific to the everyday life of communities in Northern Ireland in a way that is liable to persist. Since all wine placed on the market in Northern Ireland is moved from GB or imported from the EU or the rest of the world, we do not see that the EU's proposed technical change to harmonised arrangements will add any significant cost to traders. We are aware of only one bottling operation for imported wine in Northern Ireland; hence most wine arrives pre-bottled from Great Britain, the EU or the rest of the world.

It is not considered likely that the proposed regulation would have a significant impact on UK internal market movements. That means that qualifying goods would continue to move from Great Britain to Northern Ireland via the Northern Ireland retail movement scheme (NIRMS) without having to meet the new requirements.

Products intended to be marketed in the EU or moved under non-Northern Ireland retail movement scheme arrangements to the market in Northern Ireland will need to adapt to the new harmonised arrangements, but DEFRA does not anticipate that that will cause major problems or add significantly to costs. Moreover, in line with the UK Government's commitment to ensuring that Northern Ireland traders have unfettered access to the rest of the UK internal market, those measures would not have any impact on the movement of qualifying Northern Ireland goods to Great Britain. Such goods would also continue to benefit from the market access principles set out in the UK Internal Market Act 2020 and enjoy unfettered access.

No formal consultation has taken place across the UK at this stage. The European Commission did not conduct a public consultation or an impact assessment on the amendments before it published the proposal for a regulation. The costs and benefits of the initiative will be assessed in a staff working document to be published within three months of its adoption. On 7 April, the Commission opened an eight-week period of consultation until 2 June, via the Have Your Say portal, that UK stakeholders were able to respond to. A total of 23 responses were received by the Commission's closing date. No responses were received from UK or Irish stakeholders. Stakeholders broadly welcomed the Commission's proposals with very few concerns about the technical changes that will apply in Northern Ireland via regulation (EU) No 1308/2013 or regulation (EU) No 251/2014. Concerns raised by respondents included that the terms used to describe low-alcohol wine could be confusing or ambiguous. Several responses remarked that the term "alcohol-light" could also be taken to refer to nutrition or sugar content. Other concerns included calls for an exemption from labelling requirements for EU wines exported to third countries, clarification that mandatory particulars need to appear only once on the label and a request for a clear transition to the new regulations. Feedback was presented to the European Parliament and Council, and updates have been made to reflect those concerns with the aim of feeding into the legislative debate to come.

That concludes my presentation, and we are happy to take questions.

The Chairperson (Ms Ferguson): Thank you, Alison.

Dr Aiken: Just for confirmation, products such as Nyetimber or Chapel Down, which are English wines coming into the Northern Ireland market, would not have to be relabelled, would they?

Ms Samantha Swann (Department of Agriculture, Environment and Rural Affairs): If they are moving under the Northern Ireland retail movement scheme, they are fine to come in as they are, as long as they are staying in Northern Ireland. If they are going to go to the EU, they will have to meet the new EU requirements on labelling. However, in Northern Ireland, there is already divergence. We have difference in our labelling laws already from GB; that is already happening. We have not heard any feedback from stakeholders that it is causing significant problems as is.

Dr Aiken: OK. Thank you.

Mr Brooks: My question was similar. It is an academic argument around whether we have bottling or other industries here if the impact will be on labelling and the goods coming into Northern Ireland from GB. The officials have addressed that. Following on from that, I understand that there have been opportunities for stakeholders to feed in, but has there been a proactive engagement with industry in GB that would serve Northern Ireland in seeing whether there has been any response to that or any concerns? I understand that there may not be, but has there been outreach to the industry?

Ms Swann: I am not aware of whether DEFRA has had outreach to the industry. Its explanatory memorandum stated that it does not think that it will cause issues for GB-based companies. They did have the opportunity to —.

Mr Brooks: Is that specific to GB companies trying to serve Northern Ireland, or is that just in general?

Ms Swann: It is in general, but those companies will be serving Northern Ireland as well as the EU. If they are serving the EU anyway, they will have to adapt to meet the regulations. Regardless of whether it is in place in Northern Ireland, they will still have to adapt to the EU regulations. They did have the opportunity to respond to the EU's Have Your Say consultation, but there were no responses from the UK.

Mr Brooks: That is fair enough. I am just conscious in all these things that companies will be different sizes. Some will have the ability to have public affairs operations to monitor such stuff, but others will not, so sometimes you have to reach out proactively. I guess that it comes down to the fact that I am not always convinced that the UK Government's engagement is much more than a desktop exercise, and that is probably shared around the table.

I will ask this question out of curiosity: what proportion of wine supply from GB to NI currently goes through the NI retail movement scheme?

Ms Swann: We do not have the figures on it, because it would involve checking the packing lists, and it would cause disruption to obtain those figures.

Mr Brooks: OK. Fair enough. Thank you.

Mr Buckley: Following on from David's last question, obviously, the key issue here is the labelling requirements and whether those impact on the flow of trade in goods from GB into Northern Ireland. Do we have any grasp of the amount of trade that the wine supply to Northern Ireland accounts for vis-à-vis the European Union?

Ms Swann: We do not have the numbers on trade. It is not captured in the Department.

Mr Buckley: OK. Following on from that and David's specific question, do you have an indication, even roughly or a grasp, of how much wine is going through the internal market scheme and that which is not or which is finding difficulties in accessing that scheme? That is the nub of the question here, because, if there are already GB suppliers who feel that they cannot access that scheme, the new labelling requirements might make that worse. I am trying to identify how successful that has been.

Ms Swann: Again, we do not have the numbers for the goods moving, because, if they are moving under the Northern Ireland retail movement scheme, in order to get that, you would need to check the packing lists for every individual lorry that comes in. However, it is worth mentioning that there are already different labelling requirements in Northern Ireland from those in GB. This is just an update to that rather than its being something that is newly diverging. We have not had any feedback from stakeholders that the current divergence is causing any issues.

Mr Buckley: When did those differentials that are already in place come into effect?

Ms Swann: 2021.

Mr Buckley: 2021. Did we notice anything in relation to trade patterns with traditional supply chains with GB?

Ms Swann: No. There were no issues recorded from stakeholders on that.

Mr Buckley: You mentioned earlier that those wanting to access the Northern Ireland retail movement scheme have to satisfy it that the goods will not move beyond Northern Ireland into the European market. If an English bottle of wine, say, ends up in one of our supermarkets that is accessible to people on a cross-border basis would that wine, theoretically, not be able to go into the movement scheme because it could be accessed by consumers in the EU?

Ms Swann: That would just be the case if it were moving via the company: if the company were sending it to Northern Ireland with the intention of selling it in the EU. Consumers purchasing it and moving it will not cause any issues.

Mr Buckley: That clarity is important: the company supplies the supermarket; it is on the shelf in Northern Ireland; if consumers from the Republic of Ireland access the supermarket to purchase that bottle of wine, that does not discount it from being included in the internal market scheme. Is that correct?

Ms Swann: Yes.

Mr Buckley: OK. Thank you.

Mr Martin: Thank you very much for your evidence this morning. I have a technical question on the impact assessment. Your evidence states:

I am just wondering, more for my own knowledge, whether impact assessments by the Commission are optional or mandatory. You may not be able to answer this: was the proposal viewed as exceptional? I do not know whether you can answer that one.

Ms Swann: I think that it was viewed as exceptional, because of the urgency and the issues in the wine sector at the minute. The Commission therefore wanted the rules to come in as quickly as possible.

Mr Martin: OK. So, the Commission can, if it wants, not conduct an impact assessment. Again, I know that this is DEFRA evidence, so if you are not sure, it is fine.

Ms Swann: I will need to check the process.

Mr Martin: That is fine. Will you get back to us on that just to see? It is more out of interest.

The Chairperson (Ms Ferguson): There are no more questions. On behalf of the Committee, I thank Alison, Samantha and Kieran for their presentation this morning.