Oilseed overshoot will bring reduced aid cheques in 99
By Philip Clarke
LATEST oilseed figures from Brussels indicate a bigger than expected base area overshoot last harvest, signalling a further cut in aid cheques for 1998/99.
In particular, the data allows for an extra 70,000ha (168,700 acres) of Italian sunflowers excluded from earlier trade estimates.
After deducting industrial crops, Brussels believes the EU as a whole increased its oilseeds area by 9% to 5.7m hectares (14m acres) in 1998, taking it way above its maximum guaranteed area.
For the UK, the area claimed is put at just over 514,000ha (1.27m acres) – a massive 48% over base area. UK growers now face an aid cheque scaleback of 24-25% under the terms of the 1992 Blair House agreement. Previous estimates suggested a 20-22% penalty.
A further 6.6% will be docked, rolled over from last years scaleback, plus 1.4% in England and 7.1% in Scotland for exceeding the separate arable base area.
On this basis alone, growers in England would see their 1998/99 payments drop from £427/ha (£173/acre) to £299/ha (£121/acre). With £185/ha (£75/acre) paid in advance last month, that would leave a balancing payment of just £114/ha (£46/acre) next April.
Then there is the price penalty. Last year this knocked another 11% off area aid as EU oilseed values exceeded the world reference price by more than 8%. But EU values have weakened in recent weeks and Brussels now believes that, if the trend continues, this years penalty could be avoided.
Looking ahead, the evidence suggests producers have not cut back on oilseed plantings in the UK, so further penalties are likely next season.
But, given new flexibility in the IACS rules, Francis Mordaunt of consultants Andersons says it may be worthwhile switching from growing a commercial crop to an industrial crop if the set-aside payment is likely to exceed area aid.
"But producers must also remember the likely price premium for a commercial crop, which could amount to £20/t, plus the possibility of a £10/t oil bonus.
"Also, the more farmers who go for industrial rape, the lower will be the area aid penalty for commercial growers."