Brussels complicates compensation cash

By Robert Harris

CONFUSION over the amount of agrimoney compensation growers will receive on this years arable area aid is rife as experts struggle to decipher Brussels regulations.

It now seems that set-aside payments for 1999 are likely to stay at or near last years levels, but linseed aid is almost certain to fall.

Compensation was introduced this year by Brussels to protect subsidy payments at 1998 levels after the removal of frozen green rates following the introduction of the euro.

Hidden deep in the Brussels smallprint is a rule which states that the amount of compensation for each crop is based on last years total arable payments.

But the area of set-aside rose by 81% this year, and 160% more linseed was sown. “Compensation per hectare would, on the face of it, be reduced,” says NFU chief economist, Sion Roberts.

On the other hand, the area of cereals and oilseeds for food use has dropped, by 8.6% and 15%, he adds. This means that compensation on these crops should rise.

The hope is that the ministry can persuade the EU commission to reallocate these extra funds to set-aside, since that body dictates minimum set-aside rates, not growers. Unfortunately, the same cannot be said for linseed, so it is unlikely that Brussels would agree to increase compensation on this crop, says Mr Roberts.

Assuming set-aside does benefit, cereals and set-aside payments are likely to stay close to 1998 levels, about £242/ha (£97/acre) and £306/ha (£124/acre) in England before any base area overshoot penalties, says Mr Roberts.

But linseed payments are likely to fall by about 16% to £427/ha (£173/acre), he adds.

Oilseed growers could receive more than last year, due to the reduced area and low world prices boosting payments, says Mr Roberts. But it is more difficult to forecast payments, due to cumulative scalebacks triggered by EU plantings exceeding the maximum guaranteed area.

Mr Roberts suspects the overall oilseed penalty will be similar to last years at about 30%, leaving payments near that years levels.

But Francis Mordaunt of consultant Andersons reckons the 1999 EU area could actually fall short of the MGA removing penalties.

“Spain has applied for a derogation to put 300,000ha of sunflowers into set-aside because of the drought, though we do not know how much of this has been taken up.” And the area of industrial oilseed rape has risen in the UK, perhaps by 80,000ha, and it is also higher in France.

“Last years EU overshoot was just 400,000ha, so it could be close,” he says. “If Europe does not exceed the MGA penalty, all cumulative penalties would be removed, and we would start with a clean sheet.”

Oilseed area aid would jump by £161/ha (£65/acre) to £414/ha (£168/acre) in England. “But we wont know for certain until next January, when all the figures are finalised. It is a nonsense that we have no hard information with which to plan.”