20 September 1996

Review is vital for survival

By Tony McDougal

As hill farmers struggle to cope with the BSE crisis and fodder shortages, FW reporters look at the vital role of HLCA payments. We examine the prospects for hill incomes throughout the UK and Eire

DEMANDS upon government to safeguard the position of suckler cow producers within the less favoured areas will be at the forefront of the NFUs campaign to raise hill livestock compensatory allowance payments this year.

With auctioneers fearful the autumn suckler calf sale prices could be as much as 20% lower this year due to the BSE crisis, the union is arguing that the economic viability of hill suckler herds is at serious risk.

Lobbying has already begun in earnest prior to the 1997 HLCA rate announcement during the November budget. And the union is once again inviting MPs on to farms to view the hardship faced by producers.

Latest figures show a 20% decline in the number of full-time farmers and farmworkers within the LFAs since 1987. That leaves a current workforce on UK LFA farms of just over 170,000.

Chris Peeler, NFU LFA spokesman, said recent studies showed the importance of agricultural jobs within LFA areas to the fabric of rural society. "Agriculture provides many more people with employment through support industries.

"Recent studies have shown that for every 10 jobs provided directly by agriculture in the Grampian region, a further 13 were engaged in support industries."

And studies by Aberystwyth University suggest that in Wales, the impact is even greater. For every 10 people directly engaged in sheep and beef production in the hill and upland areas, a further 25 are engaged in local supply industries.

Mr Peeler argued that it was time the government increased HLCAs, citing the overall reduction in payments from £152m in 1992 to just £105m in 1996. Cuts took place in 1993 and 1994, while Chancellor Kenneth Clarke announced that rates would be left unchanged in last Novembers budget.

Since 1992, UK HLCA payments have fallen from £63.30 per beef cow in severely-disadvantaged areas to just £47.50, while the rate in disadvantaged areas has dropped from £31.65 to £23.75 in the corresponding period. The ewe DA rate, which rose to £2.86 a ewe in 1993, was just £2.65 a ewe – scarcely above the £2.61 minimum EU level

Figures from the European Commission show Britain also lags well behind its European partners in HLCA rates. The maximum EU ceiling per hectare in SDAs is £128.48/ha compared with £88.70 in England and Wales. The differential in DAs is even larger – £128.48 set against £60.85.

Mr Peeler said last years drought resulted in severe shortages of fodder and grazing coupled with high feed prices during last autumn and winter has also left LFA producers facing hardship.

According to Mr Peeler, there are other extenuating circumstances which also need to be taken into account. He said the abolition this year of the Farm and Conservation Grant Scheme following cuts in 1993 and 1994 had placed uncertainty over aid for restoration of hedges and dry-stone walls.

At a glance…

lTotal LFA UK 9.89m ha (24.4m acres) (53% of agricultural land, 70% of beef cows and 60% of breeding ewes.) England and Wales: 3.27m ha (8m acres) (28% of agricultural area).

lHLCA payments Established in 1973 after UK entry into Europe. 75% of payments from government, 25% from European Commission, which sets minimum and maximum rates.

lJobs Up to 170,000 full-time jobs in UK LFA.

European compensatory allowance rates in the Less Favoured Areas in 1994 (ecus/livestock unit – EU 12)

CountryEcus/livestock unit










United Kingdom47



Danish figures unavailable.

Max rate 150 ecus/livestock unit.

Min rate 20.3 ecus/livestock unit.

UK HLCA rates lag behind those paid by most of our European partners.