Fischler ignores pleas for large cuts to price package

Date: 08/02/1996

EU farmers have little to fear from this year's agricultural price package.

Despite growing evidence that farmers were massively over-compensated for price cuts under the infamous 1992 reform of the Common Agricultural Policy (CAP), the European Commission will propose next week that support prices are left virtually untouched.

The only significant item on Agriculture Commissioner Franz Fischler's agenda is a change to beef subsidies intended to stave off the threat of a new build-up in the EU beef mountain and bring an end to accusations that the Union supports bullfighting.

With the Commission preparing reform proposals for the olive oil and tobacco sectors, and ministers still agonising over proposed wine and fruit and vegetable reforms, little of a controversial nature remains to be included in the price package - traditionally a source of major disputes prior to the CAP reform.

Cautious as ever and mindful of its constituency, the Commission will ignore calls from UK Agriculture Minister Douglas Hogg to deepen the price cuts already made under CAP reform.

Hogg has written to Fischler arguing that the markets are so strong and farm incomes so healthy that this is a perfect opportunity to reduce support. He is demanding price cuts of 5&percent; for butter, 10-15&percent; for cereals, 10&percent; for beef and sheep and 3-5&percent; for sugar.

The UK claims that since the 1993-1994 season, EU cereal growers have been over-compensated to the tune of 9 billion ecu and beef producers by 3 billion.

The unexpected upturn in the markets since the reform means that intervention buying, the farmers' safety net, has barely come into play. The Commission accepts that farmers are doing rather nicely, a fact borne out by recent Eurostat figures showing that average farm incomes in the EU rose by a further 2.6&percent; in 1995. Incomes were even steady in new member state, Austria, despite a 23&percent; slide in prices for farm produce since its entry into the Union.

But the Commission is aware of the political danger of proposing additional cuts in aid until this becomes crucial under a further reform of the sector towards the end of the century. “With the markets as stable as they are, the Commission changing intervention prices will have little impact on the market. Beef is the only potential danger area, especially if we have any more scare stories,” said a Commission official.

Despite the minimalist nature of its proposals, the Commission is bracing itself for the usual struggle to reach an agreement, even though Fischler told MEPs this week that he wished “to complete the debate this year earlier than usual”.

Inevitably, a whole package of measures is coming together and it might take until the early hours of a June morning to get agreement, with trade-offs possible on unrelated issues such as olive oil, tobacco and geographical denominations of 'traditional' products. The only areas where Fischler is considering changes is in the beef, sugar, grain and butter sectors.

To take account of falling consumption of beef, the Commission will propose that farmers producing beef from young bulls should no longer be eligible for two payments. The move is designed to encourage slaughter at around 16 months, when the meat is of better quality and animals are smaller and not mature enough for the bullring.

Fischler is also expected to recommend trimming the monthly payments for sugar and grains held in storage and may propose minor cuts in the intervention price for butter, partly to make it more attractive than rival spreads.