23 August 1996

Maize area aid could be reduced

By Peter Grimshaw

FOLLOWING the recent EU decision to drop penalty set-aside for overshooting base areas, many farmers are reconsidering claiming area aid on maize again next season.

Without this penalty, they will only have to set aside 5%. But what they actually receive in area payments may still be scaled-back.

Much will depend on decisions taken this autumn by BSE-hit beef producers.

Many could plough up grass and switch to other eligible crops under the Arable Area Payments Scheme. If this occurs, the amount paid on maize next year might be little more than a quarter of the normal cereal aid, warns Francis Mordaunt of consultants Andersons.

He puts the full aid rate in England for 1997 at £247/ha (£100 acre) – assuming the commissions proposed 7% cuts go through and the green pound remains unchanged.

But the final rate for maize depends upon the extent to which the actual acreage claimed exceeds the maize base area of 33,200ha (82,000 acres), after allowing for any "undershoot" from other arable crops.

Under this mechanism, maize growers received 60% of the cereal area payment for their 1994 crops, and the full payment in 1995 (see table). The outcome for 1996 is still unclear, but Andersons anticipates a 50% scale-back.

Looking ahead to 1997, Mr Mordaunt says the worst case would be if the maize area rises to 120,000ha (300,000 acres), but with no undershoot of other eligible crops to set against it. This could result from beef farmers switching from grass to other qualifying crops.

The resulting overshoot of up to 87,000 ha (215,000 acres) could lead to a maize payment of just 28% of the cereal area aid – equivalent to £69/ha (£28/acre).

If these predictions are fulfilled, the decision whether or not to set land aside for maize and claim under the general scheme would be financially marginal. The primary consideration would then be practical circumstances such as the need for forage.n


Effect of scale back on maize aid in England

1994199519961997

estimateestimate

Total maize claims (ha)99,80071,400100,000120,000

Maize base area (ha)33,20033,20033,20033,200

Maize overshoot (ha)66,60038,20066,80086,800

Less "other crops"

undershoot (ha)-44,300-39,900-35,000-

Net maize overshoot (ha)22,300-31,80086,800

% overshoot67%0%96%261%

Area payment made100/167-100/196100/361

= 60%100%= 51%= 28%

Source: Andersons