The three principal methods that EU bureaucrats devised to limit wine production were vine-pull schemes, bans on vineyard expansion, and forced distillation of excess wine. Vine-pull schemes, which paid farmers for each hectare of vines they uprooted, were one of the first solutions suggested for taking vineyards out of production. As early as 1953, the French government had considered its own vine-pull scheme. In 1976 the EU authorized payments to growers to permanently uproot vineyards. It also capped vineyard expansion. Unfortunately, the rapid growth in yields more than offset the reduction of acreage under vine.
Distillation was a more complicated solution. It was considered a solution of last resort because its effects were short term and because it occurred at the end of the production process, not the beginning. Subsidizing the distillation of such excess wine essentially meant that EU monies would pay for not only the growing of grapes, with all its costs, but also the making, storage, and distillation of the wine, plus various transport costs. Though EU countries as of 1969 had agreed that forced distillation could be used to deplete stocks of unsalable bulk table wine, it was only in 1979 that guidelines for the practice were first discussed. Bounteous harvests in 1979 and 1980 further aggravated overproduction problems in both France and Italy. The distillation solution was complex, and discussions continued until 1982, when the EU approved policies of voluntary and forced distillation. It set different percentages of “guide prices” for bulk table wine depending on whether wine producers distilled it of their own accord or under EU coercion. The EU used the following scheme (much simplified here, of course): The producers involved arranged to have their excess wine distilled at a distillery. The distiller paid the guide price to the wine producer. The EU then bought the distilled wine from the distiller. The EU paid for storage of the ethyl alcohol produced by distillation until it could be sold on the bulk industrial alcohol market. Guide prices for each season were based on the market prices for the previous one. It was a byzantine scheme.
The reforms of 1982 proved insufficient to control overproduction, however. EU bureaucrats had not foreseen that they would inadvertently give birth to an industry dedicated to making wine that would be distilled for the sole intention of collecting EU subsidies. By providing technological guidance and matching grants, the EU had helped make viticulture and vinification processes more efficient. Mechanization in vineyards and wineries, often subsidized by EU programs, lowered production costs. These factors not only contributed to the huge oversupply of wine but also made it possible for wine producers to profit substantially even when they sold their wine to the EU for distillation. The industrial production of wine with the express intent of selling it for distillation became both pervasive and perverse in Sicily, reaching its high point from 1986 to 1988, when nearly five million hectoliters (132,086,026 gallons) of wine were distilled each year, the same annual amount that had been exported for sale almost a decade earlier.
COOPERATIVE WINERIES
The wine-producing facilities in Sicily that became the principal protagonists in the making-wine-for-distillation industry were the cooperative wineries. In Italy, a cooperative winery is usually called a cantina cooperativa or a cantina sociale. Cooperatives seem, at least in theory, to be constructive and durable enterprises. Governmental or political bodies provide organizational support to farmers to help them set up cooperative wineries. Participating farmers become part-owners based on an initial contribution of investment capital and the subsequent dedication of all or nearly all of their grape harvests to the cooperative. The cooperative thus has fixed sources of grapes. The winery uses its income to cover its operating expenses and capital costs or to pay farmers higher prices for their grapes. As a result, its taxable profits are usually small. Moreover, cooperatives typically receive tax breaks because they are perceived as providing social benefits to their members. Italian cooperatives are often recipients of subsidies from the EU, the Italian state, and the regional governments (such as that of Sicily). Because cooperatives can deliver large numbers of votes to politicians and their affiliated parties, many become political protectorates. Using their connections, cooperatives tend to have significant leverage in getting regulatory issues decided in their favor.
The cooperative movement arose out of socialist sentiments that were popular in the late nineteenth and early twentieth centuries. The cooperative movement in Sicily got off to a bumpy start. The cantina sociale II Lavoro formed at the end of the nineteenth century but dissolved several years later. The first successful one in Sicily and one of the first in Italy was Cantina Sociale Marsalese, which was created in 1914. This dissolved in 1930 over a scandal regarding the illegal distillation of its wine stocks. Using the same facilities, in that same year, another cooperative formed: Cantina Sociale UVAM (Unione Viticoltori Agro Marsalese). It was unusual in that it was started solely with the capital of its farmer-partners. For twenty-five years it was the only cooperative in Sicily. At the end of the 1950s, only 6 percent of the Sicilian grapes made into wine were processed by Sicilian cooperatives, and nearly all of that by Cantina Sociale UVAM. While the growth of the cooperative movement had been slow in Sicily during the first half of the twentieth century, on the mainland of Italy it was much more successful. As of 1956, there were 169 cooperatives throughout Italy.
The fragmentation of large Italian landholdings into small ones helped set the stage for the rapid growth of cooperative wineries in Sicily. From 1950 to 1962, land redistribution reforms cut sizable chunks off large landholdings (latifundia) for this purpose. For example, Regaleali, Tasca d'Almerita's vineyard and winery site in central Sicily, was downsized from twelve to five hundred hectares (2,965 to 1,236 acres). The appropriated land was redistributed to landless farmers, many of whom took control of land on the farms where they had previously worked as sharecroppers. The Italian government also set up the Fund for the South (Cassa per il Mezzogiorno), which operated from 1950 to 1984. This was a development fund that supported land redistribution and farm and village construction projects; agricultural infrastructure projects such as the creations of dams, dikes, and reservoirs, largely for irrigation works; and the introduction of new agricultural techniques and equipment. The resulting increase in landholdings of smaller dimensions, combined with financial and technical support from the Fund for the South and subsequently from EU programs, stimulated the creation and expansion of cooperative wineries. In Sicily the coincidence of an oversupply of grapes, the rapid proliferation of cooperatives that could process these grapes into wine, and the cooperatives’ low costs of operation, which reduced their bulk wine prices below those of their competitors, made feasible the Sicilian export boom of the 1970s and the “wine lake” distillation saga of the 1980s.
The cooperative movement bettered the lives of innumerable poor farmers. Before the existence of cooperative wineries, growers had been at the mercy of merchants’ agents. These agents often ruthlessly took advantage of a buyers’ market for grapes. An agent, for example, would typically agree to buy a farmer's grapes at the harvest, then intentionally arrive late, after the harvest, when the grapes were on the verge of becoming unsalable. He knew that at this point the farmer would be desperate enough to sell at well below the agreed-upon price. Before the 1970s, small grape farmers made a precarious living in an inhospitable business environment.
The downturn in the mid-1960s of the Marsala industry, by far the largest