Commission wants farm price freeze

THE European Commission yesterday adopted its farm price package for 1997-`98, providing for a price freeze across the board.

Although substantially in line with expectations, the Farm Commissioner, Mr Franz Fischler, warned the proposals were subject to EU ministers also accepting cuts of £1.1 billion in aid to cereal farmers if the farm budget is to be kept within a proposed 3 per cent increase next year.

The issue will go to the next farm council on March 17th, but is unlikely to be approved then. A Commission spokesman said a final decision had to be made before July.

In preparatory work on the budget, Commission sources say cuts of between 2 per cent and 5 per cent had been proposed, but a revision of the Commission's calculations, helped by the continuing strength of the dollar and of the lamb and sheepmeat sector, appears to have allowed Mr Fischler to confine his cuts to the arable sector, where production is booming.

He said he was particularly concerned not to see further pressure on the hard-pressed milk and beef sectors, where he would also be proposing significant reforms later in the year. These were crucial in the face of EU enlargement and the next round of trade talks.

The cereal cuts, representing a 7.2 per cent cut in premiums, have already been rejected once by farm ministers and MEPs, but Mr Fischler said if they were to do again, ministers would have to come up with alternnative means of balancing the agriculture budget. It might even be necessary to put them face-to-face with finance ministers, who would certainly not be willing to see increases.

Mr Fischler also confirmed that with the EU likely to reach its GATT export limits for cereals, the Commission was likely to have to propose increased "setaside."

Yesterday's announcement is in the context of the gradual reduction since 1993 in support prices for farm products, notably cereals and beef, with corresponding increases in compensatory payments to farmers under the MacSharry reforms.

The Commission reports the latest estimates for the average real increase in EU farm incomes last year at 4.8 per cent, giving a cumulative real increase of 19 per cent since 1993.