21 November 1997

EU farmers paid

£3bn too much

since 92 reform

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By FWreporters

EU cereal and beef farmers have been over-compensated by nearly £3bn since the introduction of the 1992 CAP reform package, which attempted to shift support away from production.

The EU Court of Auditors found that cereal farmers had been the main beneficiary, receiving more than £2bn excess aid during 1995/96 due to higher than anticipated world cereal prices.

It has advised the EU Commission to introduce an area aid scheme incorporating a system of advances, as found in the oilseeds sector, where the final payment takes into account base area overshoots and historic yields.

Beef farmers were over-compensated by £700m between 1992-96, with the Court of Auditors unhappy with the beef special premium scheme, and also the Irish de-seasonalisation payments.

The commission admitted cereal producers had been over-paid since the MacSharry reforms, but said its attempts to cut payments had been rejected by both the Agriculture Council and the European Parliament.

But it denied the allegations that beef producers had been paid too much, claiming the auditors analysis over four years was insufficient.

Former NFU president and leading Conservative Euro-MP Lord Plumb said the commission would be conscious of the fact that it had overpaid farmers as the EU headed towards the next round of world trade talks, starting in 1999.

John Wiggins, UK representative on the Court of Auditors, said UK cereal farmers had received about £200m in over-compensation. "We have calculated that UK farmers received 9% of the total over-compensation."

Ian Gardiner, NFU policy director, said UK over-compensation figures were lower than anticipated due to the higher rate of aid for durum wheat, which is not widely grown in the UK, than common wheat.

He said it was wrong to blame anyone for the extra cash paid because few could have predicted the high cereal prices in the mid- 1990s caused by world shortages. "It is time to look to the future and the renegotiation of the support package for the arable sector. Aid needs to be decoupled from current support prices."

MAFF agreed with the auditors report on over-compensation in the cereal and beef sectors but disagreed that modulation of payments based on common EU ceilings on payments was needed.