not that awful

20 February 1998

Agenda 2000 is

not that awful

AGENDA 2000 proposals will have less impact on UK cereal farm incomes than some have painted. But it may not meet WTO requirements, raising the prospect of further reform.

Implementation of the proposals could have a neutral to positive effect on UK arable profitability, NFU chief economist, Sion Roberts, told the annual Arable Outlook conference of the North East Arable Centre.

A static analysis of the impact of the proposals suggested the UK cereal sector would be £330m a year worse off. But it was unlikely that cereal prices would fall by as much as the 20% cut in intervention price proposed, he said.

The cut would put intervention below world market price in all but exceptional years. But in many years trade would be on the export market at above intervention levels. Add to this the anticipated 2% year-on-year increase in cereal yields and the forecast fall in incomes would be significantly offset.

But, it was not clear whether cereal export taxes would be abolished under the proposals, he said. And there was also the possibility of a farm ceiling being introduced on all direct income payments. This would seriously disadvantage the UK and was opposed by the NFU and the UK Government.

Agenda 2000 appears to deal with the current WTO round rather than preparing for the next one, leaving the EU in a weak negotiating position, said Mr Roberts.

Direct area payments do not fall within the so-called green box. That leaves the EU with two options: To fight to maintain the blue box after 2003, or accept that it would be abolished. If the latter is the case the CAP would have to be further reformed, to prevent sharp cuts in the level of support to farmers.

Keep Agenda 2000 cuts in perspective, advises NFUeconomist Sion Roberts.

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