16 February 1996

French and Irish say no to call for intervention cut

By Tony McDougal

IRISH and French farmers leaders have firmly rejected a call by farm minister Douglas Hogg for sweeping cuts in intervention prices as part of this years EU price package.

But the UKs two largest farming bodiess, the NFU and Country Landowners Association, agreed support price cuts were necessary.

Both said the cuts should be part of World Trade Organisation talks, starting in 1999, and should involve enhanced environmental aid.

Mr Hogg revealed this week that the UK had lobbied strongly in Brussels for a 10-15% cut in the cereal intervention price, a 5% cut in sugar and butter intervention prices and a severe cut for beef.

He claimed former EU farm commissioner Ray MacSharry had failed to foresee the sharp rise in world cereal prices in his 1992 CAP package and as a result direct payments had been fixed too high.

As the calculation had not been reduced, Mr Hogg said farmers in the cereals sector had been over-compensated by £7.5m, while beef farmers had received a £2.5m windfall since 1992.

Claiming farmers across Europe had received a substantial rise in incomes, Mr Hogg argued it was time to move EU prices in line with the world market price before the opening of world trade talks.

There was some support for the UK stance, notably from Sweden, Denmark and the Netherlands. But strong opposition came from Ireland and France, with both nations claiming their beef farmers would be catastrophically hit.

The Irish Farmers Association called for the retention of the existing support mechanism, with payments indexed to inflation. An IFA spokesman said recent cuts in beef support refunds had led to a £10m loss in farmer income since September, prompting Irish farmers to take to the Dublin streets. And any cuts in intervention would be fiercely resisted.

French beef farmers have also demonstrated. French sources said that while cereal farmers had fared well in the past year, the strong franc had not helped beef prices.

John Malcolm, NFU chief economic adviser, said support price cuts were inevitable due to cutbacks in subsidised exports and community enlargement. "We will have to have a second tranche of CAP reform, and that ought to come before the end of the century."

But the reform package should be on a worldwide base and it was not sensible for the Community to unilaterally reduce support.

Mr Malcolm did criticise Mr Hogg for down-playing the role of a devalued sterling in helping to boost to UK farm incomes, claiming the devaluation was the result of poor government economic policy between 1989-92. &#42

Douglas Hogg continues to press the case for price support cuts.