The European Commission has spent more than €1.4 billion ($1.75bn) annually on restructuring European vineyards over the past three years, but the reforms have now been criticized by the European Court of Auditors (ECA).

In a report released on Tuesday, the ECA found many failings in the implementation of the reforms – introduced in 2008 in a bid to improve the competitiveness of European wine producers, and to balance supply and demand. They included a subsidized vine-pull scheme known as “grubbing up” and the “restructuring and conversion of vineyards.”

The Commission set a grubbing-up target of 175,000 hectares Europe-wide, with the aim of alleviating the European wine surplus of around 18.5 million hectoliters. However, the ECA found that while producers requested subsidies to eradicate a total of more than 350,000 hectares, less than half that number of vines were actually removed. As a result, total European wine production was reduced by just 10.2 million hectoliters per year.

The ECA claims the fault lies with the original 175,000-hectare target, which it says was "not sufficient to correct the existing market imbalance." However, the Commission rejects this. Roger Waite, spokesman for agriculture and rural development, said: “The Commission does not share the Court’s analysis." He added: "Stock declarations at July 2011 do show equilibrium between production and stock levels, which proves that no ‘structural surplus’ exists.”

The ECA found misuses of the subsidy system and slammed “inefficiencies” in the use of EU money. For example, a Spanish grower was given €420,000 ($525,000) of taxpayers’ money to grub up vines he had planted only 11 years earlier, even though the vineyard was considered to be competitive. The report said that in the future, "The grubbing‑up of modernized vineyards should be avoided by establishing additional eligibility criteria linked to the vineyard itself and not only to the farmer."

Additionally, the auditors criticized the fact that the reforms were not only designed to reduce the amount of land under vine, but were also aimed at restructuring and modernizing European vineyards. The ECA said this had caused vineyard yields to increase, offsetting the effects of grubbing up. In the wine region of Castilla-La Mancha, for instance, the auditors found that yields from restructured parcels of vines were 60 percent higher than those of neighboring vineyards – thereby undermining the goal of reducing the European wine lake.

Commission spokesman Waite said that the economic situation of the wine sector would be evaluated in a 2012 report to the European Council and Parliament. In particular, it would address "the evolution and trends of production, trade, consumption and stocks" and "evaluate whether any measures are needed to address possible imbalances.”