New sheep premium plan revealed
15 February 2001
New sheep premium plan revealed
By Alistair Driver
SHEEP premia are set to be based on a new scheme of fixed rates rather than payments which vary with market conditions, FARMERS WEEKLY has learned.
The simplification of the regime would end the “deficiency payment” system which UK producers say has lost them 100 million in the last two years.
A package proposed by the European Commission is said to include an annual, single and fixed ewe premium of 
21 (13.21).
Preliminary details of the commission proposals also include an additional premium of 7 (4.30) for sheep in Less Favoured Areas (LFAs).
Under the current system, sheep annual premia are based on a “basic price” set by the Commission and then paid to farmers in three instalments.
The third instalment is adjusted to reflect market conditions over the preceding year. LFA payments are calculated in a similar manner.
The Ulster Farmers Union, which has seen the proposals, said it appeared that Brussels wanted to replace variable payments with fixed headage premia.
Although that would simplify the subsidy, UFU cattle and sheep chairman Kenneth Sharkey was worried that the proposed premia are too low.
“The union would be very concerned that the fixed premium rates being suggested are totally insufficient to offset the income crisis in the sector.”
Nevertheless, the proposed payment would still be more than the 10.73 ewe premium received by British farmers last year.
This led the National Farmers Union to describe the current system as “fundamentally flawed”, as it does not take into account currency fluctuations.
The union has also complained that the commission has not adjusted the basic price for a number of years, despite changing market factors.
Les Armstrong, NFU livestock chairman, refused to comment on the new premium proposals, which he said were not yet in the public domain.
The proposals will probably be finalised by the European Commission in March, before being voted on by European farm ministers at a later date.