Brussels still keen on modulation, says leaked report

18 February 1998

Brussels still keen on modulation, says leaked report

By Philip Clarke in Brussels

AGRICULTURAL support might be capped and renationalised under Agenda 2000, which could potentially place UK farmers at a competitive disadvantage.

Formal reforms to the Common Agricultural Policy (CAP) are not due until the middle of next month. But the process of leaks is already well under way.

According to a leaked document in Brussels yesterday (17 February), modulation or capping is likely to feature strongly with a figure of £80,000 (Ecu100,000) being widely quoted as the limit for full payment on any one farm. Thereafter, payments are likely to be scaled back progressively, though there are conflicting reports on the rate at which this will occur.

UK representatives are set to oppose the plan, which they say will discriminate against the UK and undermine efficiency. But, as with the 1992 CAP reforms, modulation has its supporters in Brussels and negotiations, which get under way at a special council of ministers meeting on March 31, are likely to be protracted.

As well as modulation, details are also emerging of plans to “renationalise” income aid – giving more power to individual member states to allocate support funds.

For example, in the dairy sector, the document points to a direct headage payment of £80 (Ecu100) a cow compared with £116 (Ecu145) a cow as proposed in the original Agenda 2000 paper last summer. The direct payment was designed to compensate dairy farmers for a 15% intervention price cut.

The money this would save is expected to be put into a “national envelope” – worth up to £90 million (Ecu113m) in the UK – to be allocated either as additional headage payment or as area aid for dairy farmers. As yet it is unclear whether governments would have to pay all of this or only some of it.

Similarly in the beef sector, the rate of the special premium and suckler cow premium are likely to be cut from the levels indicated last summer. Figures of £136 (Ecu170) a head for steers and £144 (Ecu180) for suckler cows have been mooted. This is to compensate for a 30% cut in intervention prices.

The savings would again be available for member states to top up headage payments or pay area aid to beef producers – up to a maximum £213m (Ecu266m) in the UK.

Individual payments – comprising direct EU support plus national top up – would be limited to £264 (Ecu330) for dairy cows and steers, £284 (Ecu355) for bulls and £180 (Ecu225) for suckler cows.

Although there is still a long way to go, and the final shape of Agenda 2000 will be substantially different to these first leaks, the European Commission is keen that any national payments are non-discriminatory and non-trade distorting.

A spokeswoman for the National Farmers Union said the next official paper on CAP reform was not expected to be handed down until March 18. She said it was customary for leaked documents to filter around Brussels prior to each major paper.

“We dont think its wise to comment at this stage when its only a leaked document. But in principal we support shifting support from prices to direct payments. We also fear that modulation and renationalisation could put UK farmers at a competitive disadvantage,” she said.

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