12 June 1998

Reform might see aid rise

AREA aid and livestock headage payments could be increased by almost £250m next year if proposals for agrimoney reform released by the Commission this week go through unchanged.

The money is part of a compensation package for removing "frozen green rates", which protect direct income payments from currency revaluations.

The shake-up of the green money system has been prompted by the advent of the single currency. From Jan 1, 1999, joining countries will no longer need to convert Brussels subsidies into national currencies because their farmers will all be paid in Euros.

And a new system is being developed for non-joining countries – UK, Denmark, Sweden and Greece – which EU farm commissioner, Franz Fischler, says will be much simpler.

Included in that are the commissions aims to realign frozen green rates for direct payments with market rates – a fall in value of at least 11.5%. Brussels would pay compensation for the income loss in three tranches, paid for in full by EU funds in the first year.

NFU chief economist Sion Roberts says the package should pay UK farmers between £230m and £240m.

"On face of it, this looks like a good deal for the UK. We have been lobbying hard to keep the value of frozen green rates while we remain outside the Euro – it has been our number one priority," he said.

The draft suggests compensation will be compulsory, rather than being left to the governments discretion.

But whether countries joining the Euro agree to compensate those staying out remains to be seen. &#42