3 July 1998

10% set-aside still not enough

A DOUBLING of the set-aside rate to 10% for the coming season is a hammer blow to the trade, cutting product sales and grain trading volumes. But farmers are more resigned to the cut, hoping it will aid prices.

The HGCAreckons the extra 5% set-aside will remove a further 200,000ha from UKproduction, cutting output by over 1m tonnes.

Last years FARMERS WEEKLY eastern region barometer grower Philip Godfrey of Huntingdon had expected 12%. "10% is probably not enough to have a significant effect on prices. I would have preferred it a bit higher."

Robert Claydon of Newmarket believes the increase is a necessary evil after missed opportunities last harvest when the EU failed to grant export restitutions. "I am not very happy about it. I doubt if 10% is enough unless this bad weather continues."

Wilts farmer Robert Law expected 8%. Pulses will probably be the main casualties as he switches to industrial winter linseed rather than pigeon-prone rape on the extra set-aside.

Chris Monk of business consultant Strutt & Parker slams the EU decision. Grain production will fall too little to affect price and switching set-aside from 5% to 10% and back to 0% under Agenda 2000 makes a nonsense of rotations, he says.

"Farmers will also have to cope with yet another drop in income. The set-aside payment is much less than the arable gross margin on the extra 5% lost."

"From an industry point of view the cake will be smaller next year," stresses Robert Kerr for grain trader Glencore, Thame, Oxon.

"There will be 5% less seed to sell, 5% less commodity to trade and 5% less chemical. It clearly has implications for the trade."

sales and grain trading volumes. But farmers are more resigned to the cut, hoping it will aid prices.