23 November 2001

Sheep premium reform talks run into a brick wall

By Philip Clarke Europe editor

SHEEP producers could be faced with another year of rock-bottom ewe premiums, following this weeks failure by EU farm ministers to reform the support regime.

Despite months of preparation, negotiations fell apart on Tuesday night in a row between the council and commission over money.

With just six weeks to go before the current system expires and with just one more farm council in mid-December, EU farm commissioner Franz Fischler warned there might not be enough time to implement a new deal.

In that case he would have no option but to roll over the existing arrangement into next year, with ewe premium determined by market prices. "It is likely it will be much lower than the premium currently on offer as sheep prices are relatively high," he said.

Under the commissions original proposal, sheep producers would have got a flat rate k21/head (£12.90/head) premium, with a further k7/head (£4.30/head) in the less favoured areas. At this weeks council, Dr Fischler offered to put a further k70m (£43m) into a national envelope, which would pay an extra k1 (61.5p) to sheep producers.

While this would be more than double this years rate, it fell far short of the sums envisaged by the Irish and Spanish farm ministers.

Sheep industry representatives at the meeting greeted the decision to abandon the talks with a mixture of frustration and relief.

"Once again member states have overlooked the real needs of the sheep sector," said NFU livestock adviser Kevin Pearce. "With six weeks to go to the new marketing year, our members are still unable to plan. We are also extremely disappointed the commission did not put more money on the table. Whats on offer falls well short of what is needed."

Mr Pearce also had concerns about putting any extra funding into a national envelope. Under the commissions plan this money could be used for a variety of things, including quality incentives, extensification programmes, marketing initiatives or a quota buy-up scheme.

"Our concern is how the UK would implement this scheme," said Mr Pearce. "We want this money to go to sheep farmers, not to be sidelined into fancy environmental schemes."

The main issue, however, is whether farm ministers can agree a level of funding for the flat rate premium at their next meeting.

Spain, Ireland and Portugal voted against the deal this week because there was not enough money put forward. But Denmark and Sweden voted against because there was too much, while Austria was unhappy with its share of the national envelope.

Under the EUs complex voting arrangements, only one of these will have to change its mind for the deal to go through in December. "Its very finely balanced," said one senior commission official. "Simply putting more money in is no solution. It may persuade some ministers to vote yes, but it could equally make others, like Germany and Holland, vote no." &#42