31 October 1997

OSR growers face three-prong strike on area aid

By Philip Clarke

OILSEED rape growers face a "triple whammy" on their area aid this season, after release of recent plantings figures and the surge in prices since harvest.

The first blow results from domestic growers overshooting the arable base area. For farmers in England this is more of a "whammet", knocking a minuscule 0.08% off aid cheques. But in the Scottish non-LFA the deduction is a more hefty 7%, taking oilseed payments down to £476/ha (£192/acre).

The second deduction follows the publication late last week of commission plantings figures, which confirm the EU as a whole has exceeded its oilseed base area (by 3.3%), and the UK has also topped its individual base area (by 28%).

Under the EUs complex system of offsetting overshoots in some member states with undershoots in others, the result is a scale back for the UK of about 7%. (Italian growers will see 10% off their area aid, with 3.5% deducted in France.)

The third whammy is yet to be confirmed and depends on the average price of oilseeds in the EU over the first half of the season, compared with the so-called "world reference price". This stands at about £153/t. If EU prices exceed this by more than 8%, then further aid cuts are triggered.

The final figures will not be known until January. But with ex-farm rape trading at £160/t (compared with the £130/t low point in July), there is a possibility penalties will apply.

"It all depends on price movements in the next few weeks," says United Oilseeds boss, Martin Farrow. "Demand is currently good, especially for vegetable oil to eastern Europe, and crushers are working to full capacity.

"But we wont see huge rises in oilseed prices from now on, as there is an awful lot of seed still on farm and imports are available from France and Germany."

With advance area payments already paid out at 50% of the full rate, the effects of any deductions will not be seen until balancing cheques are posted in the spring.

But assuming a 7% plantings penalty and a 3% price penalty, Francis Mordaunt of consultants Andersons estimates the final payment for English growers at £183/ha, on top of the £227/ha advance. Non-LFA growers in Scotland can expect about £175/ha, on top of the £254/ha advance.

"The real problem is that the area aid penalty is cumulative," says Mr Mordaunt. "If the EU and the UK are over base area again in 1998, this years 7% cut will be carried forward and added to whatever penalty is triggered next year."

With winter rape plantings reported to be well up this autumn, much will depend on spring plantings to determine whether these penalties will be triggered again. &#42