Arable area aid cash pruned as plantings grow
By Robert Harris
ARABLE area aid cheques due to be sent to growers from Oct 16 will be smaller than expected, following the ministrys confirmation of excess plantings last autumn.
Maize growers have also been hit for the third year running. Latest indications suggest oilseed rape growers face much bigger cutbacks this season, and next years payments could fall by 50%.
Payments on cereal and protein crops and set-aside in England and Wales have been reduced by 1.4% after ministry figures confirmed an arable overshoot of 52,600ha.
Cereal payments will be reduced by £3.38/ha (£1.37/acre) as a result. Pea and bean subsidies are down £4.89/ha (£1.98/acre), and linseed payments by a third as much again. Set-aside payments will fall by £4.28/ha (£1.73/acre).
The main reason, says Francis Mordaunt of consultant Andersons, is the rise in break crops and continued ploughing of grass. "We are probably still seeing some kind of BSE effect," he notes.
As usual, maize growers will receive just over a third of their area payment. Plantings were almost three times the 33,200ha base area, so growers will receive £88.15/ha (£35.68/acre) for their eligible area of maize, and £111.67/ha (£45.21/acre) for the associated set-aside.
Fortunately, there will be no penalty set-aside uncompensated following Brussels decision in June to suspend it for a further year.
Oilseed rape scalebacks are expected to rise dramatically. Although this seasons payments will not be confirmed until the New Year, last autumns plantings are thought to be about 500,000ha, 45% above the base area.
That alone would trigger a 20% scaleback, Mr Mordaunt reckons. But penalties are cumulative, so last years 7% penalty must also be added. An 11% price penalty stemming from better than expected crop values is also likely, taking the overall scaleback to 35% and the final payment to just £279/ha (£113.40/acre).
Even that may look generous next year. This autumns sowings are thought to be at least as high again. If confirmed, the 1999/2000 oilseed area payment could be cut by a massive 47%, to £224/ha (£91/acre), Mr Mordaunt predicts.
Cargills Ian Wallis reckons 55-60% could be deducted from 1999/2000 payments on the back of increased plantings this autumn. If so, profitability for conventional crops will fall below industrial ones, since the area payment would be worth less than the set-aside payment.
Converting at least 10% of conventional plantings into industrial use on voluntary set-aside would reduce the overshoot and therefore the penalty, bringing the crops into line, explains Mr Wallis. That could add about £60/ha (£24/acre) to the margin. *