Alarm over beef plan funds

Date: 24/10/1996

By Michael Mann

EU FARM ministers will next week continue their struggle to place the beef industry on a stable long-term footing, as MEPs prepare to extend their special parliamentary inquiry into mad cow disease for a further three months.

But anxiety is growing over how to fund plans - costing over 1 billion ecu every year until the end of the century - to bail beef farmers out of their financial crisis.

“We are already looking at severe budgetary restraints for 1997, so it is hard to see how we could sign up to anything without additional sources of funding being identified,” said a member state official.

The financial uncertainty and lack of any clear signals from the Irish presidency and the European Commission ahead of next week's crucial meeting in Luxembourg are dampening hopes of a breakthrough in the long-running crisis.

To some extent, EU governments' hands have been tied by MEPs' refusal to give their opinion on Commission proposals to fund beef support measures by reducing compensation payments to cereal farmers.

The report by German Christian Democrat MEP Honor Funk is still being prepared and Germany's farm lobby has made no secret of its deep opposition to Agriculture Commissioner Franz Fischler's plans.

The Parliament has also made clear that it intends to extend its inquiry into BSE for a further three months and is preparing to call Commissioners Karel van Miert, Pádraig Flynn and Franz Fischler as well as senior Commission agriculture officials Guy Legras and Lars Hoelgaard to give evidence.

The decision coincided with the first direct evidence to come from researchers at London's Imperial College School of Medicine indicating that the new strain of Creutzfeldt-Jakob Disease is related to BSE.

There is now a feeling that much of the political urgency for a beef reform and financing package next week was removed when Fischler agreed last month to free up 500 million ecu in additional aid and extend limits on the amount of beef which could be bought into EU storage.

So far, only the UK, Sweden and Denmark have clearly supported cutting cereal payments, accepting that this sector has been over-compensated for reductions in guaranteed prices introduced in 1992.

Germany and France, around whom policy decisions often revolve, are strongly opposed to the idea, as are most other governments. “Our opposition might weaken if we could gain more concessions in the beef sector. In reality, cereal farmers have had a pretty good year this year,” commented a diplomat on behalf of one of the doubters.

The Commission has put a number of other measures on the table for ministers to consider.

It wants to reduce the number of cattle qualifying for the special beef premium, force all 15 member states to offer farmers a premium for slaughtering calves soon after birth, open up intervention storage to younger animals and extend the limits on intervention.

Officials say the Commission has also shown a willingness to look into German proposals for an “early marketing premium” for calves. This would pay farmers to put very young animals on the market, rather than fattening them up and then being unable to sell them.

“The trouble is that if the Commission were to set a high enough premium, the scheme would be attractive to everyone and would then probably become unaffordable,” stressed a member state official.

The choice of measures ministers eventually opt for will determine the cost. But the Commission is assuming it will need to make available 1.33 billion ecu in 1998 and 1.65 billion ecu every year from 1999.

With finance ministers pressing for the farm budget to be frozen at this year's levels, Fischler will be unwilling to commit himself to this type of expenditure unless he is certain that he can pay for it.