Strong Pound prompts area aid cuts

By Robert Harris

ARABLE area aid payments have fallen sharply this season due to adverse currency movements and cuts agreed under Agenda 2000.

The average exchange rate between Sterling and the Euro during June, the measure used to convert these payments into Sterling, has been confirmed at 1= 62.8737p.

That means cereal growers in England will receive about 214/ha (87/acre). This assumes a 1.5% scale-back for exceeding the regional base area, though this will not be confirmed until the autumn.

There is some agrimoney compensation to add on, part of the package agreed in Brussels to offset the 15% fall in aid payments when the Euro was born.

That was set at 11/ha (4.45/acre), but is based on the area grown on individual farms in 1999, rather than current cropping.

Even allowing for that compensation, the total for 2000 is still about 14/ha (5.66/acre) below last years level.

Growers in other regions will receive less, due to differing yield and scaleback calculations.

“The cereals cut is purely down to adverse movements in the Pound-Euro exchange rate,” says Francis Mordaunt of farm business consultant Andersons.

“Cereal payments for 2000 actually rise 8% in Euro terms. So those growing grain in the eurozone will be better off.”

But subsidies for other crops have been cut, as agreed under Agenda 2000. That has exacerbated the exchange rate effect in the UK.

“Set-aside has crashed,” says Mr Mordaunt. “It was worth 303/ha in 1999; this year growers will get the same payment as cereals. That is a 30% drop.”

Agrimoney compensation is only slightly higher than cereals, at just over 14/ha.

Oilseed rape subsidy has also fallen sharply. English growers can expect a base payment of 304/ha (123/acre), down 28%.

As with cereals, agrimoney compensation is based on 1999 cropping, and comes to almost 20/ha (8/acre).

Protein crops attract 16/ha (6.50/acre) on the same basis, helping to boost base payments, which slumped by a quarter to 264/ha (107/acre).

The NFU reckons the shortfall in payments will amount to 34m.

“At a time when direct payments (for cereals) to farmers in Europe have actually been increased, it cannot be fair for this country to receive even less help,” says vice-president, Richard Watson Jones.

“The NFU will, therefore, be pressing the government to apply in full for agrimonetary aid for UK arable farmers.”