Feb. 15 (Bloomberg) -- European lawmakers voted to water down measures intended to make wine making more profitable in the region by encouraging farmers to quit the industry and reduce the unsold surplus that undermines prices.

Parliamentarians in Strasbourg, France, rejected a plan by the European Commission, the European Union's executive arm, to ``grub up,'' or rip out, 400,000 hectares (988,000 acres) of vines, or about 12 percent of the total area. The EU paid 506 million euros ($666 million) in 2005 to turn unwanted wine into disinfectant and industrial alcohol.

``There's no way that grubbing up can become the focal point for reform of the market,'' said Katerina Batzeli, a Greek member of the European Parliament's Socialist group who led today's debate and vote. There should be ``a very limited degree'' of vine destruction because the practice threatens to undermine mountainous and remote regions, she told reporters.

Lawmakers voted 484 to 129 against the proposal by European Agriculture Commissioner Mariann Fischer Boel, who says the wine industry is out of balance with rising surpluses, falling prices and exports that fail to adapt to increased competition from the U.S., Australia and Chile and lower consumption.

Instead of destroying vines on such a scale, the Parliament proposed phasing in the process and giving young farmers the right to plant more high-quality vine varieties.

Fischer Boel plans to present formal proposals to revamp the industry by May and aims to reach an agreement with EU governments and the Parliament by the end of the year.

Labeling Rules

She also wants the EU, the world's biggest wine producer and consumer, to change labeling rules to allow all grape varieties to be named on bottles. Under existing rules, lower quality table wine isn't allowed to carry grape varieties such as chardonnay or sauvignon.

While Fischer Boel agrees with parliamentarians that promoting EU wines to boost demand is important, ``profitability is even more vital,'' she said Feb. 13. The EU, which makes and drinks about three-fifths of the world's wine, has a 1.3 billion-euro budget to promote and subsidize the drink.

To contact the reporter on this story: Warren Giles in Geneva at wgiles@bloomberg.net

Last Updated: February 15, 2007 10:38 EST