5 January 2001
Unions unite in agrimoney fight

By Robert Harris

FARMING unions are joining forces in a bid to secure over 220 million of agrimonetary compensation to offset the effects of the strong Pound on UK farm businesses.

The unions are preparing to lobby government for the cash.

Their main lever will be the dire state of farming incomes, which, according to MAFFs own estimates, fell a further 27% in 2000, to just 1.7bn.

That completes a 4.36bn fall from the 1996 high, and incomes are now at the lowest level since the 1930s.

The main reason for the crash is the strength of Sterling relative to the Euro.

But EU legislation allows for this, by providing compensation payments. Several fresh compensation packages have recently been triggered, thought to be worth about 220m.

Beef, dairy and sheep farmers stand to gain most, though there is some arable compensation, too.

But national governments have to apply for the money, and only have until April to do so.

Much of the Brussels cash also has to be match-funded, but the UK government will have to pay much more under terms agreed during the budget rebate negotiated at Fontainebleau in the early 1990s.

Nevertheless, NFU deputy director general Ian Gardiner believes lobbying will pay off.

“We got a fair bit of money from the Treasury last time round. And arable farmers have since received about 37m.”

However the Euro is now rising, and on Thursday (04 January) afternoon was worth 63.26p, about 2.5p more than its average during 2000, suggesting that the beleaguered currency may be fighting back.

A sustained recovery would make imports more expensive, exports more competitive, increase support prices and boost direct payments.

“For every 1% change in the Euro/Pound exchange rate, the value of farm outputs rises about 0.5%,” said NFU chief economist Sion Roberts.

“The Euro has already moved a long way – about 9% off its autumn low,” he added.

“No one can say for definite whether this will be a permanent recovery, but the fundamentals are in place.”