Weak Euro will trigger compensation Andersons

By FWi staff

THE weak Euro in 1999 will trigger the opportunity for the UK government to pay farmers further agrimonetary compensation in 2000, according to Andersons business consultants.

The chances are not high, but the perilous state of farm income and the implications for the rural economy may persuade ministers to change their minds, says Francis Mordaunt, head of Andersons Research.

Two types of compensation will be automatically triggered at the end of this year including market support of milk, beef, cereals and sugar, estimated at 1.5%.

Direct aid for livestock will also be due, covering Suckler Cow Premium, Beef Special Premium Sheep Annual Premium and extensification, estimated at 9.3%.

The market support is likely to be in the order of £50-£60 million payable in 2000, of which about £25m could be for dairy farmers, says Mr Mordaunt.

“The problem is that there is no mechanism for paying dairy farmers direct payments and so the administrative cost of distributing approximately 0.185ppl (£11/cow) would undoubtedly deter ministers, even if they could persuade the Treasury to come up with the money.”

Mr Mordaunt says the balance in compensation, ie £25-£35m would be available between beef, cereals and sugar beet and in total a further £50-£60m could be paid in 2001 and 2002.

Approximate amounts available for Direct Aid compensation
SCP 8.50
BSP (bulls) 7.90
BSP (steers) 6.40
Extensification (higher) 3.00
Extensification (lower) 2.10
SAP (lowland) 1.30
SAP (LFA) 1.70
Source: Andersons estimates

He says the amounts available for direct aid compensation are easier to estimate at this stage, illustrated in the table.

Figures calculated for approximate payments per head payable in 2002 but based on 1999 applications.

Amounts are the maximum which could be paid, but first the UK have to apply.

The government could go just for a 50% Brussels contribution, or it could match the Brussels amount and pay UK farmers the total amounts shown in the table, says Mr Mordaunt.

Mr Mordaunt says that further lumps of these maximum amounts could be paid at 2/3 and 1/3 in 2001 and 2002 respectively.

Total direct aid compensation to UK farmers would be approximately £140m.

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