EC hands down decision onEuro compensation

11 June 1998

EC hands down decision on
Euro compensation

By Philip Clarke, Europe editor

COMPENSATION worth almost £250 million could be paid to UK farmers next year, as part of an overhaul of the EUs complex agri-monetary arrangements.

New proposals, agreed in Brussels yesterday (10 June), seek to do away with the so-called “frozen green rates”, which maintain area aid and livestock headage payments at an 11.5% premium to other subsidies.

From next year, all intervention support prices and direct income aids will be converted into Sterling using the actual exchange rate on the day. The system of fixed green rates will be swept aside.

But Brussels is offering to pay full compensation for any loss of income to farmers as a result of these changes. Importantly, the draft regulation says this aid should be compulsory, not left to member state discretion – during the first year anyway.

The NFU puts the value of the frozen green rates at about £240m. It has been lobbying hard to maintain this as part of the new agrimonetary scheme.

The changes have been prompted by the advent of the single currency. From 1 January, 1999, all subsidies will be paid in Euros for those countries that are part of the single currency. But for those on the outside – namely the UK, Denmark, Sweden and Greece – payments will still have to be converted into national currencies.

For these countries, there is still the risk of farmers suffering income loss if their currencies strengthen. But the draft regulations also provide for compensation should this revaluation exceed 2.6% in the case of price support, or 0.5% in the case of direct income support.

There is also an opportunity for farmers in non-joining countries to receive their subsidies in Euros. “These proposals represent a great victory for the NFU,” said president, Ben Gill. “If agreed, it means vital support will be available to the agriculture industry to help us weather the current storm.”

But he acknowledged there could still be battles ahead in getting the proposals agreed by farm ministers. In essence, Brussels is asking countries joining the Euro to help compensate farmers in those countries staying out. It cannot be assumed they will agree to this.

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