22 August 1997

Lower livestock aid looms as £ changes again

By Philip Clarke

THIS weeks 3.6% revaluation of the green £ will have a direct impact on headage payments, leading to lower subsidies for livestock producers.

Earlier this year, Brussels agreed to an 11.5% "buffer" for direct income aids. That meant green rates could fall by up to 11.5% before sheep, beef and suckler cow premiums would be affected. But the new green rate, which came into effect yesterday (Thur), takes the total revaluation since Jan 1 to above 16%. That means headage payments will now fall when they are converted into sterling.

Assuming there are no special top-ups, no scalebacks and no further green rate changes, next years live-stock premiums will be as follows:

lBeef special premium (steers), £84.32 (down £3.72).

lBeef special premium (bulls), £104.73 (down £4.61).

lSuckler cow premium, £112.41 (down £4.95).

lExtensification premium (1.4 lu/ha), £28.08 (down £1.24).

lExtensification premium (1 lu/ha), £40.34 (down £1.78).

Sheep annual premium for 1997 will also be reduced. Estimated at £12.50 by the Meat and Livestock Commission, the final rate will not be known until next year. Compensation payments under the various BSE-related schemes will be hit more immediately. The new rates will be:

lOTMS cull cows, 55.7p/kg lw (down 2p) from Sept 1.

lOTMS prime cattle, 62.6p/kg (down 2.3p) from Sept 1.

lCalf processing, dairy types £80 (down £2.90) from Oct 1.

lCalf processing, beef types £100.88 (down £3.64) from Oct 1.

On the arable side, area aid payments will not be affected, as these were set for the current season on July 1. But there will be yet another drop in the rate of cereal intervention to £83.62/t for November. This is equivalent to an ex-farm price for barley of about £78/t for November delivery, compared with a traded value of just £70/t, says the Home Grown Cereals Authority. Sales to intervention seem inevitable if things do not pick up soon.

Further revaluations remain a distinct possibility, despite some weakening in the value of sterling in recent days. Head of agriculture at Midland Bank, Norman Coward, believes currency will remain volatile for the rest of this year and could trigger further cuts in support. But economic downturn in the UK, and further recovery in Germany, could ease pressure on sterling next year. &#42