29 January 1999

OSR area aid cuts resisted

By Philip Clarke

Europe editor

CONTROVERSIAL plans to put oilseeds on the same area aid as cereals are looking increasingly shaky, after further negotiations on Agenda 2000 this week.

Oilseed rape and sunflowers enjoy a premium of about 30% over cereals throughout Europe. Cutting payments would put a big dent in farm profit.

Opposition to the proposal, being discussed in the high level group in Brussels, was led by France, which argued that area aid should remain unchanged. Reducing it would encourage producers to switch from oilseeds, a deficit crop, back into cereals, a surplus crop.

That would put further pressure on the grain market, as well as increasing the need for set-aside.

Only the UK, Denmark, Sweden and the Netherlands supported a single rate. The EU Commission says that is the only way to escape the stranglehold of the Blair House agreement, which has knocked about 20% off aid cheques in recent years due to over-planting.

So long as oilseed producers do not get special payments, then the Blair House penalties do not apply, a view endorsed this week by the councils legal services.

"Despite this, a large majority said they still wanted additional payments for oilseeds to continue," said one UK source.

On the other main aspects of reform, most member states accepted that the 20% cut for cereal intervention prices was the minimum needed to balance the market.

But there was still much argument about compensation for the cut, with several countries demanding 100% rather than the 50% proposed by the commission.

The UK and France were among the few countries to support the commission, adding that the payments should be reduced over time.

On set-aside – which the commission is proposing to cut to zero – there was a 50:50 split. Several member states, such as Germany and Austria, are calling for a higher rate, (10%), in order to help cereal prices. Others, such as Spain and Belgium, say they will accept a lower figure in return for a better deal on oilseeds.

The high level group meets again next week, and every week, until farm ministers convene for a week-long council at the end of February, when final agreement on CAP reform is expected.