Green revaluation hurts farmers

20 August 1997

Green £ revaluation hurts farmers

By Boyd Champness

DESPITE falls in the strength of Sterling recently, the Government imposed another green pound revaluation yesterday, which is destined to have a negative affect on farm incomes.

The new green pound rate will be £0.696 per Ecu, which represents a revaluation of 3.6%. As a result, farm prices will cut by 3.5%, according to the National Farmers Union.

Direct payments for livestock and arable aid have already been set for 1997, and these wont be affected. However, intervention prices for cereals, beef, dairy and sugar will drop, taking effect from tomorrow.

The change to intervention prices will be as follows:

• Cereal growers will be least affected by the revaluation because current UK prices are well below EU intervention prices. Intervention is now closed for cereals with the November price set at £82.62/t.

• The rate for the over thirty-month scheme (OTMS) will change from September 1. The OTMS rate will fall by 2p/kg with cows, dropping to 55.7p/kg liveweight, and 62.6p/kg liveweight for others.

• The target price for milk drops from £22.33/100kg to £21.55/100kg.

• The guaranteed price for A/B sugar beet in 1996/97 has been reduced by 12p. This takes the price down to £36.42 from £37.72 and means beet growers owe British sugar £1.30/t.

• The NFU concedes that the revaluation lowers input prices such as the cost of fertiliser. However, the NFU maintains that the loss in revenue caused by the fall in output prices (e.g falling milk prices) will be significantly greater that any savings chalked up from lower input prices.

Figures from the NFU show that:

• Feed wheat prices have dropped from £122/t in January 1996 to just £77/t in August this year – a fall of 37%.

• Beef prices have dropped from 117p/kg to 100p/kg (down 15%) during the same period.

• Milk prices have declined from 25.01ppl since January 1996 to 20.72ppl in June 1997 (down 17%).
  

Over the past year, Sterling has appreciated by some 20% against the Ecu and some 30% against the DM.

The NFU has appealed to the Government to seek a green pound compensation package from the European Union Commission. The EC has in the past granted currency compensation packages to eight other EU member states, whose farmers have suffered at the hands of currency fluctuations.

“Todays revaluation of the green pound, increases the size of the compensation package for the UK, using EC methodology, to some £930m over a three-year period,” according to a statement put out by the NFU.