Set-aside set to double

25 June 1998

Set-aside set to double

By Philip Clarke, Europe editor

CEREAL growers will have to take more land out of production this autumn, under a plan currently being thrashed out by European Union farm ministers to raise set-aside.

Farm ministers were locked behind closed doors yesterday afternoon (Wednesday), discussing a UK presidency proposal to double the set-aside rate to 10%.

Meeting in Luxembourg to finalise this years price package, most member states supported this figure, though Germany and Finland favoured 12% or more. But ministers were expected to end up agreeing a lower figure – probably 8% – in the face of stern opposition from French minister, Louis le Pensec.

The farm council was also expected to confirm the removal of penalty set-aside (for overshooting base areas) for the third year running. Increasing set-aside is widely supported so as to slow down the build up of intervention stocks (currently at 15 million tonnes) and to give cereal prices a boost.

But the move has been criticised by traders, opposed to such market intervention. EU body COCERAL believes commission estimates of stocks rising to 30m tonnes by the end of 2000 are overly pessimistic. It says EU cereal output will not exceed last years 201.5m tonnes, while domestic usage and export demands are both set to increase.

Meanwhile, farming groups have blamed the commissions restrictive export policy for allowing stocks to build up. It has not made full use of the subsidies available to it under the last GATT agreement. But they have welcomed the early decision by the Council, which will give farmers more time to plan their 1998 plantings.

Other aspects of the price package include a cut in area aid for hemp because of the rapid take up of the crop. Hemp growers currently receive Ecu716.6/ha and the proposal was to cut this by 20%. In addition, hemp farmers will be required to have a contract with a recognised processor in order to claim aid.

Also on the table is an increase in the number of cattle eligible for beef special premium in Spain and Portugal.

But most of the time at this weeks marathon session in Luxembourg was spent dealing with the slippery subjects of olive oil, bananas and tobacco.