24 July 1998

Ministers seek new green money system by late October

By Philip Clarke

A NEW system for converting EU subsidies into national currencies for those countries staying out of the euro should be agreed sooner, rather than later.

EU farm ministers, meeting in Brussels this week, said farmers and traders would need plenty of time to understand and prepare for the change, due to take effect from Jan 1, 1999.

Under the proposals, the complex system of fixed green rates will be replaced by daily market rates of exchange (between the £ and the euro) for working out income supports and export subsidies. Compensation will be paid to farmers who are adversely affected.

In the first round of substantive talks on the subject, most countries welcomed the commissions proposals, which will be simpler and cheaper to operate.

French minister, Louis le Pensec, said compensation for revaluations in non-euro countries should be optional, rather than compulsory. And Germany and the Netherlands argued that decisions should be delayed until late December, so the extent of any compensation would be known before ministers had to sign up to an agreement.

But this was opposed by most other member states, who supported the Austrian presidencys aim of wrapping it all up in October.

UK farm minister, Jack Cunningham, supported the use of daily exchange rates. But the other non-euro countries, (Sweden, Denmark and Greece) preferred average monthly rates to ease the administrative burden.

As for paying direct income aid to UK farmers in euros, Brussels has said this will be acceptable so long as those taking up this option are no better off than those receiving their money in sterling.

The commission fears that, should the £ weaken between the time farmers receive their euros and the time they convert them to sterling, there will be opportunity for speculative profit. But, at this weeks council, the UK said the opposite could happen. Farmers opting for euro payments could actually be worse off than those taking sterling from the start.

The onus is on the UK to find a system that guarantees equality. &#42