Green revaluation hurts farmers

21 August 1997

Green £ revaluation hurts farmers

By Boyd Champness

FARMERS have renewed their calls for currency compensation after the fourth green pound revaluation for the year was announced yesterday – further reducing farm incomes.

The green pound rate is the formula used to translate EU agricultural prices and payments from Ecus into Sterling. Yesterdays adjustment reduced the green pound rate by 3.5%, strengthening Sterling against the Ecu to 69.67p from 72.08p previously.

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

The National Farmers Union (NFU) claims that this has reduced the UKs agricultural output by £1.8 billion or 10% compared to 1996. The union has appealed to the Government to seek a green pound compensation package from the European Union Commission. The EC has granted currency compensation packages to eight other EU-member states in the past, whose farmers have suffered at the hands of currency fluctuations.

NFU president Sir David Naish will meet with Bank of England governor Eddie George next month to highlight the losses incurred by farmers. According to EC accounting methods, UK farmers are entitled to £930m in compensation paid over three years.

Figures released by the NFU show that farm prices have dropped dramatically over the past year, with the biggest falls recorded in feed wheat, down from £122/t in January 1996 to £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, while milk prices have declined from 25.01ppl since January 1996 to 20.72ppl in June 1997 (down 17%).

Although Arable Area Aid payments were not affected by yesterdays revaluation, because they have already been set for 1997, other support prices will be reduced.

The changes to intervention prices will be as follows:

• Although the cereal intervention price fell by £3.09 to £83.62, UK cereal growers wont be affected because intervention for 1997 has already closed.

• 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.

• The calf processing scheme for dairy will drop by £2.90 per head to £80, while the calf processing scheme for beef will fall by £3.64 to £100.88.

• 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 beat growers owe British sugar £1.30/t.