MAFF ignores millions for farmers

10 December 1999



MAFF ignores £millions for farmers

By Robert Harris

HUNDREDS of millions of pounds of compensation which could help farmers cope with this years stronger Sterling may never be paid.

The government has ignored about £230 million of aid triggered by the strong Pound in 1997 and 1998, and is unlikely to treat new money any differently, claim experts.

Livestock farmers face sharp cuts in headage payments next year as the Euro continues to sink against Sterling.

After a recent change to the rules, Euro-based livestock subsidies are now converted into Sterling using the average exchange rate for December.

But the Euro started the month at an all-time low against the Pound, and has continued to fall since, starting the week at just 62.5p.

Given the downward trend, and the reduced number of fewer trading days in December, Mr King believes the Euro is unlikely to recover during the month.

“There is less trading taking place, so small trades can have an exaggerated impact on prices,” said NFU economist Peter King.

That means UK producers will be worse off while other countries enjoy an 18 rise in suckler premium and a 13 rise in beef premium next year.

Extensification and slaughter premiums are also affected.

But there is a mechanism to compensate direct payments for strong currencies, known as appreciable revaluation compensation.

Assuming the Euro averages 63p during December, beef and sheep headage payments could attract compensation, worth £300m for UK farming, said Mr King.

Farmers could receive £150m next year, a further £100m in 2001 and the remaining £50m the following year.

But the government has to apply for this money, which would be co-funded by Brussels and the UK Treasury, and is under no obligation to ask for it.

Market support measures for cereal, beef and dairy sectors could be worth over £100m paid over three years, based on a 4.1% revaluation during 1999.

“The dairy sector alone would be eligible for about £25m in the first year, about £1000 for the average producer,” said Francis Mordaunt of consultants Andersons.

Scottish farm minister, Ross Finnie, told producers at last weeks DairyScot event in Edinburgh that he did not want to hold out any false hopes.

“I do not want anyone thinking that the Treasury is looking favourably at this at the moment.”

That comment, and the governments past performance, suggests farmers banking on the cash are likely to be disappointed.

“The effect of the strong Pound on agriculture is now dire,” said Mr Mordaunt. “But the government could quite legitimately help the industry.”