31 August 2001

EUREFORMDEBATINGONAFAMILIARROUTE

Ewe premium, extensification

and quota buy-ups were high

on the EC sheepmeat

regime reforms agenda.

farmers weekly European

editor Philip Clarke reports

ONE of the last actions EU farm ministers and civil servants took before they left for their extended summer holidays was to hold an orientation debate on plans for reforming the sheepmeat regime.

It was an interesting, if somewhat predictable discussion.

Battling hard for their farmers, ministers from Ireland and France in particular said the k21/head (£12.90) flat rate ewe premium on offer was totally inadequate.

Irelands Joe Walsh said specialist sheep producers in his country received just 65% of the average farm income. The number of rearers had dropped 30% since 1992, while the national flock was 15% smaller.

"I do not consider that the proposed level of aid is adequate to provide producers with a fair level of income or to redress the balance between sheep producers and other producers," he said.

The k21 figure should be raised to give equality of income with suckler cows, he suggested, while sheep should also be made eligible for extensification premium.

"The absence of the extensification premium is all the more difficult to defend since sheep are counted for the purpose of the bovine extensification premium."

Frances Jean Glavany was equally strident in demanding a better deal. He also wanted to see individual sheep identification and traceability built into the final deal, plus better labelling – France already has such a scheme.

The Irish and French ministers were joined by their counterparts from Spain, Austria, Greece, Italy and Portugal in calling for a higher ewe premium. The Mediterranean member states also wanted more than the k16.8 (£10.30) on offer for milk sheep producers.

Although DEFRA minister Margaret Beckett believed the k21 basic payment and the k7 (£4.30) LFA top-up on offer were quite sufficient, she did ask the commission to build in more flexibility to allow member states to buy up unused sheep quota from producers quitting the industry due to foot-and-mouth disease.

Realising assets

The word from DEFRA is that this could provide the only way for farmers to realise their quota assets, at a time when market values are on the floor. It would also give government the option to reallocate the premium rights as part of a post-F&M recovery plan or, if necessary, to freeze them for a year or two.

"The current sheepmeat regime does not allow us to do any of this," said one official. "It would be useful to have this flexibility."

The more cynical view, however, is that DEFRA wants to operate a permanent quota buyout scheme to keep the lid on sheep numbers once the F&M epidemic is ended. Over-stocking and over-trading have both been cited as factors in the spread of F&M.

Whatever the motivation, the good news for sheep producers is the commission does seem to accept the k21/head ewe premium will have to go up if any deal is to be achieved this year.

That is not its public position, of course. "One of our major concerns is to respect budgetary neutrality," farm commissioner Franz Fischler told the last council meeting.

But, privately, commission executives realise that, with the weight of council votes already stacking up against them, they will have to find more cash from somewhere.

As the proposal currently stands, it would cost the EU k1.84bn – still within the k1.91bn ceiling agreed for sheep under Agenda 2000.

Raising the ewe premium to k24/head – as suggested by the Italians – would take spending over the k2bn mark, making it likely that such an increase would have to be found from cuts elsewhere. But history shows that, when it has to, the commission can find such savings. "Weve had that level of funding in the past," said one commission sheep expert.

Last decision

As is traditional in EU negotiations, the money side will be the last thing to be decided, probably in the early hours of a Brussels morning after a series of one-to-one haggling sessions.

One particular sticking point relates to the LFA supplement. The draft regulation states that it should be limited to areas where "there are practically no alternatives to sheep or goat production". It goes on to suggest that "member states shall define these areas".

However, such wording offers no guarantee that people who received the LFA premium in the past will get it in the future. Conversely, it provides scope for member states to pay supplementary aid to even more producers, with worrying implications for the EU budget. &#42

SHEEP REFORM PROPOSALS

&#8226 Flat rate sheep annual premium of k21/head (£12.90) from Jan 1, 2002, based on average payments from 1993 to 2000.

&#8226 Milk sheep producers to get 80% of basic premium – k16.8/head (£10.33).

&#8226 Milk sheep producers no longer allowed to produce "heavy carcasses" and claim the full annual premium.

&#8226 A supplement of k7/head (£4.30) for meat and milk sheep producers with over half their land in the LFAs. (Milk sheep producers used to get 90% of the supplement).

&#8226 Aid to be paid in one lump sum (in Oct/Nov) instead of the current system of two advance payments and a final balancing payment.

&#8226 Individual sheep quotas to continue, but with national ceiling specified.

&#8226 Cost of new regime, 1.838bn euro, compared with k1.62bn forecast for this year and k2.2bn at its peak in 1995.

&#8226 Private storage aid to be maintained.

&#8226 Brussels to look further at individual sheep ID.