Pig Scheme Still Has A Long Way To Go

By Peter Crichton

Now that further details of the Pig Outgoers Scheme are being published in draft form by MAFF, industry analysts are pointing to a further swing in the number of small and medium sized producers who will be closing down their units for good. A handful of large scale operators including feed compounders are expected to take up the slack.

According to MAFF the proposed deadline for Outgoers Scheme applications has now been extended and claims will need to be made no later than the end of March 2001 with payments promised by June.

Applicants will have to undertake to de-commission all their pig accommodation and to agree to a 10 year ban from keeping pigs on the site or being personally involved in other pig enterprises except as a waged individual.

According to the EU State Aid Rules the Scheme has to see at least 16% of the June 1998 sow places removed.

There appears to be no requirement for an actual reduction in the number of pigs in the UK herd nor any restrictions on others moving in or expanding their herds to improve efficiency or to reduce their costs.

Even those producers who are already out of pigs may be able to apply for payments under the Scheme provided that they can prove they were engaged in pig breeding in 1998.

In the case of application made by a tenant the landlord will also need to join in the application. This could lead to conflict in those cases where a landlord is reluctant to agree that his property will be rendered useless as a pig unit for the following 10 years.

Outdoor pig producers may also be able to claim under the scheme but it is thought that the 10 year ban will apply to the whole of an agricultural holding rather than just the fields used at the time.

The basis of compensation has yet to be finalised. Earlier reports had put this at 70% of the actual costs of de-commissioning the buildings. However, MAFF are now looking at a dual approach.

The first part of this would be a payment of 10% of the current value of the unit as a pig farm. The second part would be based on a 50% payment of the decommissioning costs.

MAFF will then look at the applications received to ensure that they satisfy two basic principles. First of all they will have to receive enough applications to cover at least 16% of the June 1998 herd size. If this target is not hit the whole scheme may collapse.

Assuming that the 16% rule is satisfied the applications will be processed by MAFF according to a “good value” ascending order, i.e. those applications which offer the lowest cost per sow place decommissioned will be at the top of the list. The most expensive applications may not be allowed.

Any producers who are considering making an application under the scheme are advised to seek appropriate professional advice before they decide to submit what could be binding contractual obligations in the future.