UKfight is hotting up to keep green rates frozen

22 May 1998

UKfight is hotting up to keep green rates frozen

By FWreporters

FARMERS groups are upping the pressure to stop Brussels scrapping frozen green rates when economic and monetary union begins next year.

Producers could lose £400m in the two years from 1999 if it goes. The freeze, designed to protect direct payments from big revaluations, means UK farmers receive 11.5% more than the green rate at the time payments are fixed.

"Amid all the current crises, this is a major one waiting to happen in seven months time," warned Scottish NFU president George Lyon last week.

"We have to be aware that 11 other countries are likely to say that if we remain outside the euro, then we must face the consequences. And the four countries on the outside do not have a blocking vote in the council of ministers."

In the case of sheep annual premium, two advance payments could be made in August and November – only to find that Brussels was clawing back money rather than making a final payment next spring, added Mr Lyon.

Using harvest year 1998 as an example, the absence of the freeze would reduce cereal area aid from £242/ha to £217/ha (£98/acre to £88/acre) says James Baugh of the HGCA.

"But dont be surprised if it does disappear next year because the cost to the EU purse is substantial – and those that are in emu dont care too much for those that are out."

NFU chief economist Sion Roberts would like to see the freeze go only over a transition period – during which time, hopefully, sterlings value will fall. But selling this idea to Brussels is an "uphill struggle".

"Together with getting the beef ban lifted, it is the number one policy issue," he told delegates at the Farming Economy 1998 conference in London last week.

The event also saw the launch of an NFU working party last week to study the single currencys long-term impact. Monetary union should bring much-needed stability, after the "boom-bust" era of the 1990s when farmings fortunes rose and fell with exchange rates, said Mr Roberts.

Northern Foods chairman Chris Haskins warned that the currency instability that had "bedevilled" agriculture for the past five years could get worse next year with Britain not joining the first wave of EMU. "Affected by the dollar and the euro, the £ will be pulled both ways."

A point could come in 18 months time when, regardless of the politics, the economic case for participation in EMU would be "overwhelming, added Mr Haskins.

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