14 March 1996

Green £ threat to arable aid

CHANGES to the agri-monetary rules could hit area aid and headage payments, despite earlier assurances that they would be fully protected.

After the last green £ revaluation on Jan 21, which knocked over 5% off intervention prices, MAFF applied to Brussels to "freeze" the rates used to calculate direct income support.

That would have left area aid unchanged until 1999, based on the green rate applying on July 1, 1996. That was 8.5% better than it is now.

But new Brussels proposals, due to be discussed at next weeks Council meeting, aim to limit this benefit, by restricting the difference in the two rates to just 7%. That would mean arable area aids having to drop 1.5% on July 1.

And with another green £ revaluation on the cards for Mar 29, the fall could be much greater. Last year a figure of about 83p in the ecu was used to calculate area aid; this year it could be down to 79p, a cut of 5%. That would take cereal area aid down to £253/ha (£102/acre) for English growers.

&#8226 As FW went to Press on Wednesday, the green £ gap stood at 7%, suggesting a 3.5% revaluation on Mar 29.n