Fischler re-examines his options

Date: 27/02/1997

UNDER intense pressure from his colleagues, Agriculture Commissioner Franz Fischler looks set to drop plans to make significant cuts to the guaranteed prices European farmers receive for their produce.

After a lengthy debate at the full European Commission meeting this week, Fischler's officials hinted that the long-awaited 1997/98 price proposals would merely roll over the existing safety net underpinning the sector.

But his decision to drop planned price reductions may give Fischler more leverage in his attempts to force through proposals to slash the compensation payments received by cereal and oilseed farmers.

Early this week, Fischler appeared to be moving towards calling for a 5&percent; reduction in prices in every agricultural sector in an effort to save 1.15 billion ecu. This would be in addition to the 1.4 billion which would be saved by reducing set-aside payments by 27&percent;, cereal payments by 7&percent; and oilseed payments by 4&percent;.

By the time of yesterday's (26 February) Commission meeting, 1.15 billion ecu had become 500 million ecu, and sources were suggesting this money could be found during the course of the year without having to cut prices.

More cynical observers pointed to the obvious opposition of a number of Commissioners to any attempt to reduce farmers' incomes. Some Commissioners saw an attack on farm prices now as particularly badly timed given that the future financing of the Common Agricultural Policy is slowly coming to the forefront of the EU agenda.

Fischler claimed he had been able to reduce his spending forecasts because of the recent rise in the dollar and earlier overestimates of financial needs in sectors such as cereals and sheepmeat.

Despite this, Fischler presented his colleagues with four options to make significant savings in the 1998 farm budget.

This stringency has been forced on the Commissioner by the decision to limit next year's increase in EU spending to 3&percent;. With expenditure on regional funds already programmed, agriculture is having to bear the brunt of Union governments' drive for budgetary discipline.

In a five-page paper, Fischler calculated that the farm budget could rise by no more than 0.5&percent; next year to 41.009 billion ecu, even though spending was initially forecast at 43.604 billion.

The Commissioner's plan to reduce support to the arable sector would save an estimated 1.4 billion ecu.

Last year, after the majority of ministers rejected arable aid cuts, this money - needed to prop up beef producers' incomes - was raised by delaying payments to oilseed farmers until the beginning of the 1997 financial year.

Fischler will be hoping for more luck this year, and may tell ministers that this is the only alternative unless they are prepared to accept price cuts for all products.

Four other options for saving money all appear to have been rejected by a majority of his colleagues.

Fischler's favoured option was a linear cut in all farm prices, which he argued was consistent with the long-term aim of bringing EU farm prices closer to the world market.

Option two would have concentrated the pain on those sectors which have benefited most from increased expenditure over the past two years - not least the crisis-riven beef market.

The third alternative would have split arable aid payments in two, with the possibility of reducing the second payment if savings failed to materialise during the year.

A final option of adjusting the 'green money' rules would have gone against the Commission's recently stated intention not to change the system substantially before the introduction of the single currency.

Farm ministers will debate Fischler's proposals for next year at their meeting beginning on 17 March.