Europe in a quandary over beef reform compensation

03 November 1998

Europe in a quandary over beef reform compensation

By FWi staff

EUROPEAN Union countries are deeply divided on how to reward farmers for accepting abolition of intervention payments for beef under Agenda 2000 CAP reform proposals, reports the Financial Times.

Differences between member states pit countries with extensively farmed beef herds against farms with mostly intensive herds. Countries where beef is reared in specialist herds are set against those where beef is a by-product of dairy cows.

The European Commission wants a 30% cut in the level at which market support is triggered and also plans to abolish intervention.

It has offered financial aid for private storage of unwanted beef after July 2002, but will no longer take it off farmers hands at intervention prices.

Austria, Spain and Finland have argued for intervention to be retained, but the main point of contention between countries is over compensation.

The Commission is offering compensation at four-fifths of the predicted 30% fall in support prices. Most countries want more.

The Commission hopes to deal with the objections by introducing “national envelopes” under which half the increase in direct payments will be given to member states to distribute according to national criteria suiting farmers needs.

But intensive farmers in Germany and the Netherlands want the envelopes to be bigger, while extensive farmers, including those in the UK, claim they will disadvantaged if this is the case.

Besides the compensation issue, other changes which could have a large impact on farmers income. These include varying the direct payment sizes or changing the proportion of money distributed through national envelopes.

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