Ministers meet on German CAP compromise

25 February 1999

Ministers meet on German CAP compromise

By FWi staff

TALKS on reforming the Common Agricultural Policy resumed this morning (Thursday) as European agriculture ministers debated a new 18-page compromise paper from Germany.

In an attempt to find some common ground between the 15 member states before the weekend, Germany proposed reductions in beef support prices of 25% rather than 30%.

The first major departure from the commissions original proposals also introduces the idea of a new European calf premium of Euro50 a head (£34.50).

Proposals to suckler cow quota allocations would allow countries to base their numbers on figures 3% over the total claims made in either 1995, 1996 or 1997.

This would still be 6% less than is currently claimed in the UK, but would raise the number of eligible cows to 1.7 million from 1.63m.

The latest compromise proposals also raise the regional ceilings, (above which reductions kick in), for beef special premium in Spain, Portugal, Finland and Sweden.

British condemnation

This move has been condemned by British farmers, who warn that prospects for UK producers will worsen with the end of the Calf Processing Aid Scheme in July.

But some farmers could benefit from some proposals at least.

There are signs that the 90-head limit will be scrapped, and it is also proposed to reduce the age for Beef Special Premium claims to 9 months and 21 months.

Intervention looks likely to be retained as a safety net and extensification premiums should also be easier to come by.

• Cereals

  For cereals, the Germans are sticking to the Commissions proposals for a 20% price cut, with partial compensation through extra area aid.
  

  But, to tighten the market and hopefully bolster actual farm-gate prices, it is calling for 10% set-aside in the first two years of reform, dropping to zero for the season 2002/03.
  

  Under todays proposal, export taxes would only be used as an emergency measure, and reference yields would be increased for Spain and Italy (effectively raising their area aid).

• Oilseeds

  On the question of oilseeds, the Germans are sticking with an earlier plan to bring area aid in line with cereals in three annual steps, while abolishing the world reference price system (which cuts area aid in response to firming prices) from 2000.
  

  But this has been strongly criticised by many, including the processor organisation FEDIOL in a letter to German farm minister Karl-Heinz Funke earlier this week.
  

  “This will not allow the oilseeds sector to be freed from the Blair House surface limitations during the interim period,” the letter says.
  

  “Penalties will still apply to a reduced level of farmers compensations.”

At a press briefing before the council reconvened this morning, the Germans conceded that the new proposals would add another Euro4.3 billion (£3bn) to the cost of reform.

The commissions original proposal would have taken the farm budget up from about Euro40bn (£27.6bn) to Euro46.5bn (£32bn) by 2006.

Given that EU finance ministers have already indicated that they want spending back to current levels by 2006, the new proposals would seem to have little chance of success.

Proposals on two key factors – dairy reform and degressivity – have yet to enter the equation, and are expected later today during what is predicted to be a heated debate.