7 January 2000

Stronger £ will push headage payments down

BEEF headage payments will fall sharply this year due to the strong £.

After a recent change to the rules, the k-based subsidies were converted into sterling using the average exchange rate for December, which worked out at k1=62.67p.

This is a marked drop on last years rate of 71.11p, and more than wipes out the increase in the k value of the payments agreed under Agenda 2000, says NFU economist Peter King.

So, while rates in eurozone countries will rise (by k18 for suckler cow premium and k13 for beef special premium for steers), UK sterling values for 2000 have dropped.

Suckler cow premium is worth just over £110 a head, including £8 a head from the national envelope introduced to help offset beef price cuts.

But farmers who claimed a headage payment in 1999 will also receive a second tranche of compensation to offset the abolition of the old agrimoney system which unfroze the green rate of exhange, says Mr King. This is worth an extra £5 a head, bringing the total closer to last years £118.

Beef special premium for steers in 2000 is worth £76.46 a head, and for bulls £100.27. These will also be topped up with smaller amounts of agrimoney compensation, taking payments to about £80 and £104.50, respectively (compared with about £88 and £109 in 1999).

Additional compensation is also available to offset the lower exchange rate used to calculate the 2000 headage payments. But the government is unlikely to claim it, since it would have to foot most of the bill (Business, Dec 10).

However, farmers leaders are to launch a campaign to claim this and other agrimoney compensation, thought to be worth a total of £450m, in the next few days. Full details will be included in next weeks issue. &#42