Deal on cereal sector reform now in sight

Date: 04/02/1999

By Myles Neligan

EU OFFICIALS and diplomats are optimistic that an agreement on reforming the Union's cereal regime will be reached at this month's meeting of farm ministers, following breakthroughs during discussions between senior national officials this week.

A workable majority of nine governments now supports the European Commission's proposal for a 20% cut in cereal support prices, with national resistance to the reform strategy focusing principally on plans to eliminate special aid to growers of oilseeds. Some countries are also demanding extra support for cultivators of non-food crops.

A specially convened group of senior national farm officials, chaired by German Secretary of State for Agriculture Martin Wille, will meet again over the next two weeks to put together a compromise proposal on cereals in time for the 22 February ministerial meeting.

"It will be easiest to reach a deal on the cereal reforms. It is a question of introducing successive refinements to the broad agreement that is emerging now," said one EU diplomat.

This optimism has been echoed by Farm Commissioner Franz Fischler, who said last week that he was "more and more confident of a satisfactory conclusion at the end of February".

A group of six countries, led by Germany and Spain, is still holding out for a support price cut of just 10%. These member states are offering to set aside their objections to the Commission's plan to compensate farmers for just 50% of the price reduction in return for a lower initial cut. They have also signalled that they might support the UK's proposal for a phased reduction in compensation as a quid pro quo.

But the Commission has so far resisted calls for a more moderate price cut, arguing that anything less than a reduction of 20% is likely to lead to unsustainable pressure on the EU budget.

Eight countries, including Germany, also remain opposed to the Commission's proposal to eliminate special aid for oilseed growers, arguing that cultivation will die out in many parts of the Union without continued support.

Germany wants the aid to be phased out gradually, while the seven member states in the opposing camp want to retain the status quo. Only the UK is unequivocally in favour of the Commission's plan.

France, Italy, the UK, Austria and Belgium are also pushing for extra aid for the non-food crop sector, arguing that this would help the EU to meet its commitment to double its consumption of renewable energy by 2010.

But Commission officials argue that eliminating oilseed aid is essential if the EU is to abide by its World Trade Organisation commitments.