15 October 1999

EUOSR forecast might mean big money for UK

By Robert Harris

OILSEED rape growers in the UK are in line for a massive £50m aid boost this winter if latest EU planting estimates are borne out.

Next years payments will also be much higher.

Official European Commission predictions released recently put the area of oilseed food crops grown in member states at 4.855m hectares, just under the maximum guaranteed area of 4.934m hectares set under the Blair House agreement.

Figures will not be confirmed until January. But if the forecast proves to be correct – and many think it will – then previous over-planting penalties which have accumulated since 1996 will be wiped out, says Richard King of farm business consultants Andersons.

"This means that only the arable area overshoot penalty of 0.94% announced last week would apply to 1999 UK oilseed area payments, rather than the 33% we had been predicting." That would raise values from £284/ha (£115/acre) to £423/ha (£171/acre) in England, he says. Scottish lowland growers would receive £450/ha (£182/acre).

Recently revised figures from EU grain traders body COCERAL add weight to the commissions forecast. Although it reckons farmers have planted almost exactly 6m hectares of oilseeds, 1.13m hectares of that is thought to be for non-food use and does not count towards the MGA.

That leaves 4.947m hectares for food use, says Mike Bullen of FPDSavills Research. "But it also reckons that over 90,000ha of that is grown on farms producing less than 92t of seed, which are also exempt from the Blair House agreement." That cuts the area to 4.855m hectares, just under the MGA.

He believes a switch to non-food cropping is behind the fall. Such crops attract set-aside payments, which, at one time, looked like being worth more than the oilseed payment.

Drought in Spain and Italy is also thought to have reduced the area of sunflowers and other oilseed crops, says Mr King.

Year 2000 harvest will also begin with no scalebacks if the EU figures are correct. "So, even if we exceed the MGA in 2000, the penalties will be substantially less then they would have been."

As well as making spring oilseed rape look more attractive, growers will also be able to switch winter crops being grown for non-food use back into food use to attract the bigger payment, says Mr Bullen. "The deadline for switching is May 15. Although contracts will need to be set up before then, it will still be well after the January decision has been made."

Assuming a 5% penalty, growers would still receive about £300/ha (£121/acre) under the new Agenda 2000 regime, compared with about £240/ha (£97/acre) for set-aside, says Mr Bullen. &#42