Set-aside rate to rise to 8%?

By Philip Clarke, Europe editor

THE set-aside rate for next season looks increasingly likely to increase, with most pundits suggesting the eventual figure could be as high as 8%.

EU farm ministers are expected to decide at their meeting in Luxembourg later this month. This week the commission proposed a 10% rate – double the current level.

It believes the move will prevent another grain mountain, since it would take an extra 1.8 million hectares (4.5m acres) of land out of cultivation, cutting production by 8m tonnes.

“At the end of this season we are going to have 24 million tonnes of grain in merchants stores and another 14.5 million tonnes in intervention,” said EU farm commissioner Franz Fischler. “Half of last years rye crop in Germany is still in store.”

As Europe heads towards another big harvest – more than 200 million tonnes – and with demand seemingly static at home and abroad, Brussels believes intervention could top 20 million tonnes by the end of the 1998/99 marketing year and 30 million tonnes by June 2000.

The chief concern is that depressed market prices will make it harder for the commission to realise the proposed 20% support price cut included in its Agenda 2000 reforms.

Getting Council to agree such a high rate is another matter, and some form of compromise seems likely. Initial discussions in April revealed a split between the French, who wanted less than 5%, and the Germans and Austrians, who wanted more.

Germany is particularly keen on higher set-aside, as about half the EU grain stocks are held in its stores. But France wants a lower rate to remain competitive in world markets.

The UK is angling for 5%. “It makes little sense to raise set-aside now, when Agenda 2000 aims to cut it to zero,” said an NFU spokesman in Brussels.

EU grain traders body COCERAL agrees. “The reason intervention stocks have increased this year is because the commission has conducted such a bad export campaign. Any rise in set-aside now means we have less grain to trade with.”

See more